How can you use category management to optimize your retail operations?

2 Assign roles to your categories

The second step in category management is to assign roles to your categories based on their strategic importance and performance for your retail operations. A category role is a statement of the objective and contribution of a category to your overall business goals. For example, a category role could be traffic builder, profit generator, image enhancer, or transaction builder. To assign roles to your categories, you need to evaluate your categories based on their sales volume, profitability, growth potential, customer loyalty, and competitive advantage, and prioritize them accordingly.

3 Develop category strategies

The third step in category management is to develop category strategies based on the roles and objectives of your categories. A category strategy is a plan of action to achieve your category goals and meet your customer needs. For example, a category strategy could include increasing variety, improving quality, lowering prices, offering discounts, or creating bundles. To develop category strategies, you need to understand your customer segments, their needs, preferences, and behaviors, and how they differ across categories, and tailor your value proposition accordingly.

4 Implement category tactics

The fourth step in category management is to implement category tactics based on your category strategies and customer insights. A category tactic is a specific decision or action to execute your category strategy and deliver your value proposition. For example, a category tactic could involve changing your product assortment, shelf layout, display design, pricing structure, promotion plan, or supplier relationship. To implement category tactics, you need to coordinate with your internal and external stakeholders, such as store managers, merchandisers, marketers, suppliers, and distributors, and ensure consistency and alignment across your retail operations.

5 Measure category performance

The fifth step in category management is to measure category performance based on your category goals and key performance indicators (KPIs). A category performance measurement is a process of collecting, analyzing, and reporting data on the results and outcomes of your category management activities. For example, a category performance measurement could include tracking your sales, margin, market share, customer satisfaction, loyalty, or retention. To measure category performance, you need to establish your baseline, set your targets, define your metrics, and use reliable and relevant data sources and tools.

6 Review and adjust your category management

The sixth and final step in category management is to review and adjust your category management based on your category performance and feedback. A category management review and adjustment is a process of evaluating, learning, and improving your category management practices and outcomes. For example, a category management review and adjustment could involve identifying your strengths, weaknesses, opportunities, and threats, benchmarking your performance against your competitors and best practices, and implementing corrective or preventive actions. To review and adjust your category management, you need to conduct regular and systematic audits, surveys, and tests, and involve your customers, employees, and partners in the process.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?