By Invitation

Golden Rule III – New Product Introduction

Published

2 years ago

June 12, 2024

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L.R.Natarajan, Partner- Strategy and Systems Consulting

LRN has worked at senior level positions in companies like Eicher Motors, Hero Motors, Greaves Cotton, Ashok Leyland, and Hindustan motors. His last employer was Titan Company limited. Eleven years in Titan Company limited (eight years in Tanishq) and retired as CEO for the new business division. LRN was also heading the innovation council at Titan and was an active member of Tata Group Innovation Forum.

LRN had successfully spearheaded the TOC implementation in Tanishq retailing.LRN had started a school for Innovation in Titan and the school had produced over 400 trained innovators.

LRN also undertakes consulting assignments from corporate companies on Strategy, Retail excellence and Innovation. He has recently authored two books, a book on Innovation titled “The 9 Nuggets of Innovation” and a book on retailing titled “Demystifying Retail” – The Four golden rules.

Prabhakar Mahadevan, Founder Director of Strategy and Systems Consulting & Focus and Flow

Technologies Pvt Ltd

Prabhakar is a certified Theory of Constraints consultant (TOC) by Goldratt Schools Israel, certified expert on TOC by TOCICO (www.tocico.org) & is associated with TOC for the last 22+ years.

Through his consulting companies,Prabhakar and his colleagues are involved in several comprehensive TOC consulting projects across several industry verticals such as fashion jewellery, fast moving consumer goods, consumer durables, automotive OEM, capital machinery, pharmaceutical, heavy engineering, fashion retail etc.

In continuation of my article titled “The Four Golden Rules for securing retail excellence”, I am detailing through this article, the third Golden Rule: “Processes for New Product Introduction”.

1. Background

NPI, New Product introduction, is an essential part of any retailing. However, if the NPI is not guided by right processes, NPI process will turn out to be the key driver for accumulation of obsolescence. A wrong NPI process may give room for replacing the fast movers in accommodating new designs which do not have any sale history. Therefore, having the right NPI process will guide one through in which category, in which price point, how much of merchandise is to be introduced. With the right NPI processes in place, the obsolescence can be considerably minimised, and the fast movers can be increased.

2. New Product Introduction Process

There are four parts to the NPI process as defined below. Having the right processes for each aspect of NPI process, should lead to defining the comprehensive NPI process

1) What should be the frequency of NPI?

2) How much of Newness in each NPI?

3) The understanding of distribution of newness, across category and price points.

4) Zeroing down on the right set of designs, to maximise the chances of success.

2.1 What Should be the Frequency of NPI?

It is very important to arrive at the logical answer to this question. While newness is a prerequisite for any retail, it is to be understood that the new products come with Zero sale history. Also, one needs to vacate some of the merchandise from the current inventory mix to accommodate new products. The risk of obsolescence will be high with higher NPI. Conversely the excitement of NPI introduction and its impact on sale will be less with lesser NPI.

How does one arrive at the frequency of NPI?

It is to be understood that the NPI is be done to create excitement followed by desire in one’s customer base to walk in and buy and NPI is not being done to fulfil the Merchandising/ retail teams need. Having very clearly understood this, one should try and understand the customer buying behaviour. A customer buying Jewellery perhaps will frequent the Jewellery showroom (most of the customers) once or twice in a year.

From the customer walk-in data available, one should compute what % of customers are buying once/twice/thrice in a year and arrive at the average per customer repeat walk-ins in a year. Assume this number arrived at is 2 for a given retailer, meaning on an average, the customer walks in twice in a year. Therefore, when the customer walks in for the second time, there should be newness in the showroom.

With this one can conclude that the new products for this retailer, is to be done once in 6 months, and during the seasonal months

2.2 How much of Newness in each NPI?

Having decided that the NPI will happen every 6 months, the next logical question that needs to be addressed is how much of new products to be introduced in each NPI meet.

50% newness once in 6 months, results in the entire merchandise will be new in a year. And with 10% newness every 6 months, in a year 20% of merchandise will be new. Too much of newness, will lead to greater risk of obsolescence and too less newness, will not create the excitement in customer base.

The suggestion here is that key members from Product design / Marketing / Category / Merchandise and retail should understand the ramification of introducing newness and arrive at a consensus on the quantum of newness to be introduced in the NPI event. Based on the impact of introducing the newness based on consensus arrived at, the next year newness % can be fine-tuned.

Our recommendation will be to plan for a newness of 30% every year, 15% during Diwali/ Dhanteras and 15% during Akshaya Tritiya.

2.3 Understanding of distribution of newness across category/Price points

Referring to my earlier article on the second golden rule, Planogram and Replenishment process, I had explained about the 2*2 process. We had compiled the sale and stock turn of each showroom category/ sub-category/ price point wise, and compared the same with the group average sale and group stock turn and arrived at to which of the four quadrants the individual line item in a showroom belongs to, Q1, Q2, Q3 or Q4. I am compiling the 2*2 matrix for one’s ready reference, with certain additional notes.

As can be inferred from the above, for a given showroom, for the category / Sub- category/ price points falling under Q3 and Q4 are the areas where maximum of new products is to be introduced. Here again the quantum of new products will be governed by the newness % arrived at earlier.

To reap the full benefits of NPI, it is recommended that NPI should have more variants (70 to 80%) falling under Q3 and Q4, and less variants to be introduced for the line items falling under

2.4 Zeroing down on the right set of designs, to maximise the chances of success

Having arrived at showroom wise Category/ Sub- category/ Price point wise, number of new products to be introduced, (say 10 for a given line item)

For a category/ Sub- category/ Price point if 10 new designs are to be introduced
Secure 30 new designs (Three times the final requirement)
Let the category/design/retail team choose 20 best ones from the above, by appropriate voting process
Show case these 20 to your loyal customer base and have processes in place for short listing the best 10

Processes described above for NPI will for sure increase the chances of success at the marketplace. However, the caution here is that one needs to prepare a calendar of activities, covering all the processes described above, to ensure that one adheres to the deadline defined for NPI.

Summing up

While introducing new products is essential for any retail business, one should think through and arrive at the appropriate processes, for the four steps given below

What should be the frequency of NPI?
How much of Newness in each NPI?
The understanding of distribution of newness across category and price points.
Zeroing down on the right set of designs to maximise the chances of success

New product introduction, done without proper processes, will be the starting point of sludge stock generation in the inventory.

Related Topics:2024 byinvitation jbinsights

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By Invitation

Owner vs. Staff

The Contradiction At The Heart Of Every Jewellery Store

Published

2 weeks ago

October 5, 2026

JewelBuzz Spread The Buzz

By Shivaram A

The Core Issue

The owner carries the entire risk of the business — investment, gold stock, working capital, loans, everything is in their name. The long-term asset also belongs to the owner — reputation, brand, the customer base built over years, often meant to pass to the next generation. But the moment that matters most — when the customer is standing at the counter, when trust is being built or broken — that moment is entirely controlled by the staff.

The person with the most risk is not present at the decisive moment. And the person with the least to lose holds the most power in that moment. This structural mismatch creates frustration on both sides — and it’s rarely discussed openly.

Making the Conflict Explicit

The real tension is this: the owner wants business growth and profit, while staff are under pressure to hit targets.

The owner thinks long-term — how does the brand grow, how does a customer come back after ten years, how does the business pass to the next generation. For the owner, every transaction is a building block toward something bigger.

The staff’s reality is completely different. Their monthly target is fixed. Their salary, incentive, and sometimes even job security depend on how much they sold this month, this Diwali. For staff, every customer is a chance to hit today’s number — right now, this moment. They cannot afford to think about whether this customer comes back in three years, because their performance is reviewed at month-end, not three years later.

So when the owner says “build the relationship, be patient,” and in the same breath increases the target by 20%, these two instructions directly contradict each other. Staff are not confused about what they should ideally do — they understand it perfectly. But they don’t have the choice. The target has to be met, so pressure-selling becomes necessary — even if it means pushing a customer slightly, or using lines like “buy today, rate will go up tomorrow” that create small cracks in trust.

These cracks don’t show up immediately. But after Diwali, when that customer doesn’t return a second time, the owner assumes it’s the staff’s fault. The staff believes the owner set an unrealistic target. Both are right, and both are wrong — because the real problem is in the system, not in the people.

The Challenges on Both Sides

Owner wants both profit and brand, but only measures the profit number
Owner puts pressure on staff to hit targets, then also expects “relationship-building” — without acknowledging the two often can’t coexist
Owner hesitates to invest in long-term things (training, ownership, trust) due to fear that staff will leave anyway
Staff’s target pressure is so real that there’s no time left to think about the long-term customer
Staff gets no financial or professional credit for the relationships they build
Incentive structures reward only this month’s number, not next year’s loyal customer
Both sides see each other as a risk factor rather than a partner — the owner assumes staff will eventually leave, staff assumes the owner only cares about numbers

What Owners Can Actually Do — Starting the Mindset Shift

Stop treating targets and relationships as separate — align them. Don’t set targets purely on sales numbers. Tie a small portion of the target to repeat customers or referrals, so staff know that long-term customers count too.
Name the asset explicitly. Tell staff directly: the relationship you’re building with a customer is your professional asset, not just the store’s. This has to be shown in practice, not just said out loud.
Extend the reward horizon. Don’t reward only Diwali-week sales — when a customer returns six months later and asks for that staff member by name, recognize that, even if the sale itself is small.
Give staff ownership of the follow-up. Make each staff member the named owner of their customers’ after-sale journey — repairs, exchanges, the next occasion. This helps them feel the relationship is theirs, not just a transaction.
Show patience even under pressure. If Diwali week only rewards closed sales, staff will only chase closing. If a staff member who handles a “not buying today” customer well is also appreciated, that’s when the mindset actually starts to shift — because staff notices what the owner actually rewards, not just what they say.

Top 3 CTAs for owners this Diwali

Review your target structure this week. Does it only measure sales numbers, or does it also give weight to repeat customers and referrals? If not, try a small adjustment starting this Diwali.
Ask each staff member to list their top 20 known customers. Tell them this is their list, not just the store’s. This builds a sense of ownership.
After Diwali, start a “best follow-up” recognition. Base it not on the sale number, but on how patiently and well a difficult customer was handled. Staff need to see that patience is rewarded too, not just closing.

Shivaram A
Retail Gurukul