Chris Anderson in his novel, The Long Tail, discusses where the future of business is headed. Stores are moving away from selling a lot of one specific product to selling small amounts of a lot of items. How does it work though? There are a couple rules to follow to help you understand how it works.

Lets say you have 1,000 men’s dress shirts, 200 of those shirts add up to 80 percent of your revenue, where the other 800 shirts add up to the other 20 percent. This is because certain shirt colors are more appealing and better sellers to the audience.

Do you ever wonder why your favorite color shirt is sold out or not in your size? It is because that shirt color is popular and they only make so many in each size.

There is another rule, the 98 percent rule. This rule states that within a 3-month period, if you have 100 CD’s on your shelf, 98 of them will sell at least one copy meaning you are selling less of more products.

This is how items end up on clearance or in stores like TJMAXX, I would imagine. All the products that are not sold after a period of time have to go somewhere, so stores will discount the price in hopes to sell more and still make some profit, or they will sell the product to discount stores like Marshalls or TJMAXX.

There is a method behind store’s strategies. As I learn and understand more about Global Strategy, I learn more about the retail world including how and why it works the way it does.