When was the last time you did a category review?
A category review encompasses analyzing category sub-segment performance, vendor performance, market performance, competitive review, understanding consumer behaviours and trends, planogram productivity, pricing, promotions and more.
Retailers today find little time to take advantage of this precious process. You must! It will result in a balanced action plan covering controlled label, promotion, pricing, planograms and, of course, assortment. It will improve your sales and profitability like no other short term action.
Why are category reviews important? In a nutshell, category reviews help to:
• Create a strategic approach will drive sales and profit. Tactics alone do not suffice.
• Optimize assortment with improved store penetration on important SKUs
• Improve planograms, which improve sales per linear foot.
• Ensure you’re priced right against the right items and competitors.
• Create effective promotions. You can shift focus to better items, more profit and more sales.
• Enhance of controlled label sales and profit performance.
• Make working capital more efficient
• Align your store with consumer trends and help you understand where a category is headed.
I encourage you to ensure time is created for category reviews, at least once annually. The holistic review of the category along with some strategic planning doesn’t need to take long with the right system solution, and will yield many more benefits than all the minor tactical efforts to build sales.
To get started, here are five key principles of a category review:
1. Consumer focus. Remember your role as a category manager is to increase sales and profit of your category while satisfying more consumers.
2. Understand the category role, as your customers see it, and tailor the assortment and action plans against that role. Pick your battles and fight them very well.
3. Fact-based action. While intuition is a very good thing to have, intuition is built upon knowing the facts over time. Use details to make your strategic decisions. Follow the facts, not the folklore.
4. Build strategies and plans based on facts and the opportunities that are presented through analysis. If the data is telling you that you can grow same store sales by 3% because you are missing some of the key items in some planograms, then you will build 3% same store sales if you take advantage of that information.
5. Category review milestones must be completed to successfully launch your plan and track performance against your strategic objectives.