CASE STUDY

Category Management Helps A Leading Specialty Retail Client to Perform A Systematic Analysis of Sales Performance, Profitability, And Customer Metrics

Apr 4, 2018

Overview of the Specialty Retail Industry

The global specialty retail industry is highly fragmented and comprises of stores that focus on catering merchandise including pharmacies, grocery stores, and boot stores. Over the past decade, the specialty retail industry is witnessing a significant growth owing to the rapidly growing middle class, strong economy, and the availability of trained workforce.

Prominent organizations in the specialty retail space are focusing on innovative ways to delight their customers and strengthen loyalty as customers are craving for innovations, authenticity, and convenience in the products offered to them. Also, the radical shift toward the customer-centric environment is compelling establishments to look for transformative possibilities to change their retail outlook and offer personalization through extensive product knowledge.

However, our analysis of the latest retail industry trends shows that several factors may influence the growth of the market although the specialty retail market will witness exponential growth due to the macroeconomic factors including rising disposable income, GDP, and consumer spending. A few factors include:

  • Increasing consumer demands: Today, busy lifestyles are forcing customers to look for more convenient options in their shopping activity. Moreover, the shopping preferences of the customers are changing, and are looking for authenticity in the product and service offerings. Therefore, to efficiently cater to the growing demands of the customers, organizations in the specialty industry space are spending highly on R&D activities.
  • Growing E-commerce: In recent years, the specialty retail space has witnessed the entry of leading-edge e-commerce giants. Moreover, consumers today are demanding more and are looking for convenient ways in their shopping activities. Therefore, it becomes essential for brick-and-mortar retailers to devise e-commerce platforms to stay on par with the growing technologies.

Many such factors are compelling firms in the specialty retail industry space to leverage the use of category management solutions. request free proposalCategory management solutions help firms enhance their competitive position leading to increased market share, improved positioning, and sustainable customer loyalty. These solutions also help firms improve the alignment of their marketing programs.

The Business Challenge and Journey

Client background: The client who approached SpendEdge is a pioneer in the organized retail industry with one of the largest chain of supermarkets across the globe. 

Client issue: The client had experienced difficulty in achieving growth and addressing margin problems. Like many supermarkets, it carried a wide range of product categories with different rates of inventory turns, different freshness issues, and different buying relationships with suppliers. The management team believed a new approach was required but were unsure as to how to proceed. SpendEdge was hired with three goals in mind: to demonstrate opportunities to improve sales and margins, to change the basis for negotiations with suppliers and, to transfer such capabilities to the internal organization.

SpendEdge’s category management experts followed a comprehensive research methodology and carried out discussions with prominent stakeholders in the specialty retail space to improve sales and margins. The experts also compiled information from a wide array of proprietary sources such as paid industry databases, company presentations, and industry forums.

Client journey: During the course of this category management engagement, the client was able to conduct a  full value-chain analysis to understand the full breakdown of costs for a designated category and identify effective pricing strategies. Additionally, the client established internal centers of excellence with formal methodologies, tools, and training for knowledge transfer to the other teams in the organization.

Key questions answered in this category management engagement

The Results

With the help of SpendEdge’s category management solution, the specialty retail industry client identified significant savings potential—$10 million in the first three months as a result of full value chain analysis with $18 million identified from improved category management. Additionally, one important high-margin category benefited from a 54% reduction in inventory, which allowed the client to switch to a pull inventory approach.

To know more about our category management solutions

request free proposal


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