Don’t Underestimate the Importance of Category Management

How much power does category management have on your overall profits? It might be more than you think. If you still think that category management is just for retail and all about the planograms, think again! Food and beverage brands all need to have a focus on category management, and to stay head of the ever-changing behaviour shifts in consumers.

While we all want our overall marketing and advertising efforts to pay dividends, if we focus on category uplift in one area, it’s likely to positively impact growth. Take UK-based Marks & Spencer, who reported a couple of weeks ago that they had a better-than-expected 8.1% rise in sales over the Christmas trading period, and that this was driven by ‘market-leading growth’ in food and a strong performance in womenswear.

Different categories have a tit for tat relationship. In the US, C. Douglas McMillon, president and chief executive officer at Walmart Inc has been quoted as saying that if they can reduce food prices, especially in the dry grocery and consumables categories ‘that will free up dollars to be spent in general merchandise’.

And at Aldi, it is estimated that the middle aisle accounts for between 15% and 20% of Aldi's sales, which is why it’s growing sales at the fastest pace among supermarkets, with an increase of 21 per cent in August from a year earlier, according to Kantar, and its recent sustainability goals have been met too. Definitely one to watch.

Supermarket news has stated that ‘Instead of focusing on individual items, store managers are looking at overall categories and even entire Centre Store aisles to enhance the shopping experience, retain loyal customers and develop new markets.’In numbers there’s a 19% average dollar sales growth to category management, according to a recent study by Cannondale Associates.

So how can you get more category uplift, whatever your business?

The right promotion

Stocking the right range is crucial, but it’s equally important to have the right promotions and displays in place to entice shoppers. This has moved away from Christmas alone, and there’s Halloween, Christmas, Easter, Valentine’s Day, Mother’s and Father’s Day with much smaller interim periods between seasonal days to focus on.

Within this, it’s also key to consider new angles like bundle deals, limited-time offers to drive urgency, cross-promotion with another supplier, as well as loyalty programmes.

The right place

Trends shift. KP found that there has been a huge decline in the traditional weekly family shop, with their stats showing only 28% of the UK now visit the supermarket for main shops. Their learnings? Be at the right place. For KP, this meant a move into convenience stores.

Not only is it the kind of store, but the kind of POS. For instance, a Partnering Group study showed that sales of hot and cold cereals, when the entire cereal category was coordinated for display and promotion, increased by 55% for cold cereal and 33% for hot cereal within a year at a select group of retailers.

QSRs

We’ve already seen that 2024 is a great year for QSRs over traditional restaurants…In short, it’s all about being agile and able to adapt to changing market conditions. You can allocate resources, adjust inventory levels, and refine your category management strategies based on each store's unique dynamics, change tactics entirely, but that all starts with….

The right tools

Software plays a vital role in modern category management by providing the tools and capabilities needed to analyse data, optimize operations, and make strategic decisions that enhance profitability and efficiency within specific product categories. It empowers businesses to adapt to dynamic market conditions and customer preferences, ultimately maximising their competitive advantage.

Orderly gives the right insights at the right time to QSR and grocery store partners, predicting the future of a session to help them plan better around peak demand, growing their categories and reducing waste at the same time. It’s a full solution that replaces a lot of tools, all while using AI to future-proof your business. Speak to us today.