Most retailers do not have an effective category management strategy. They are worried about the amount of work it will take to review inventory and refresh product mixes by category. Whatever be the reason, it’s high time for big and small retailers to adopt category management best practices to boost category sales and ensure profitability in the long term.
Retailers need to know that category management isn’t a one-size-fits-all approach. They have to make use of available data to make better decisions regarding optimum range, merchandising, and price and promotion of product categories. If they fail to understand categories, the cash flow will be badly impacted. Therefore, we have listed the category management best practices to help companies address customer objectives in a better way.
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Category Management Best Practices that You Should Know
Category management best practices #1: Trust your distributors
Distributors are of great help when it comes to improving category management. They possess information about the products that are performing well in the market and can create planograms based on existing sales. This will help businesses to adopt a systematic, disciplined approach to managing a product category as a strategic business unit. Also, if a certain product category doesn’t meet customer expectations, it can be identified beforehand.
Category management best practices #2: Put numbers on shelf tags
Putting numbers on shelf tags will help you track each product’s sales velocity. This will allow easy identification of best sellers and help you ensure the availability of those SKUs in stock. Additionally, assigning number-one to a top-selling item (a product that sells 4-times a week), number-two to an item that sells three times week will help in monitoring category sales. You can review these numbers in every six months as sales velocity of product changes with changing seasons and trends.
Category management best practices #3: Consolidate data
Consumers, today, have plenty of options to meet their needs. Retailers who can utilize data effectively to understand the needs of their customers have better chances of retaining shoppers and increasing sales. Identify products that are most important to shoppers and have the most price sensitivity to the best customers. This will help you understand whether your category management process is efficient enough to meet consumer needs or not.
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Category management best practices #4: Automate processes
The market changes rapidly and sometimes in a very short period. A sudden weather event or influencer tweets can change the market dynamics, putting procurement category managers in a position where they will have to need to react swiftly. Automating different parts of category management will allow managers to analyze product categories, categorize spend and calculate cost related to those products in no time. Such automated reports will improve decision making and help in prioritizing categories that are most important to look at, focusing on resources and labor in the right places.
Category management best practices#5: Low price is not the key
Often retailers chase pricing against the competition. However, this is not required all the time. Leverage data to and identify customers groups and price the product right. You don’t have to compete with the bigwigs on every price – you just need to be more targeted. This will help you invest margins in better places and achieve substantial gains.