The Category Management Playbook
Ten tools every retailer needs to build the best stores
Voice of the Shopper data should come from a combination of supplier data, POS data and household surveys from third-party firms such as Chicago-based IRI, and the retailer’s own data from a loyalty program, intercept surveys and shopper focus groups, among other places.
When building your Voice of the Shopper, consider the following types of data:
- Category structure/consumer need states: how shoppers segment the category;
- Path-to-purchase/ethnographic research: behavior in home and in store;
- Demographic/psychographic segmentation: answering who the shopper is;
- Market share trends: answering what they are buying;
- Usage and attitude data: why they are buying it;
- Channel trends; where they are buying it;
- Seasonal, occasion and purchase-trigger data: when shoppers buy;
- Assortment, price, placement and promotions from vendor success models and internal POS analysis: how we are influencing shoppers.
Step 2: Category Shopper Insight Platform
The second tool in the CMA’s ROI Improvement Plan takes the Voice of the Shopper and applies those insights to come up with the strategies, policies and goals for the category. It includes:
- A definition of the category;
- The structure of the category;
- The role that the category plays within the total store;
- The top 10 assessment trends going on in the category and their implications;
- Tactics such as identifying traffic drivers and transaction drivers;
- Pricing strategies for optimization, such as between premium, popular-price and private-label brands.
“It’s the document that you use as a manufacturer to express and deploy your strategies based on your vision of the category. For the retailer it’s the flip-flop: Here’s what I think the category is; here’s how I want to manage that category; here is the role that it plays within the total portfolio of the store; here are the eight or 10 most important learnings; here are the strategies and tactics,” says Wade.
An important element of this step is identifying how the consumer segments the category and makes decisions accordingly. Shown above is a consumer decision tree for water purchases, indicating that shoppers now consider brand more than ever, with more practical considerations such as package size and pack count close behind. Create similar decision trees for every major category and subcategory, and lean on suppliers for such insights.
Step 3: Category Business Analysis
This step is meant to create a standardized approach to understanding a given category’s performance. It is actually a document the manufacturer should provide to the retailer that identifies what’s going well and not so well within the category. It should include at a minimum a review of:
- Category and sub-category trends in dollars and units—what’s growing and declining by sub-category;
- Retailer share trends by sub-category—where is the retailer strong or weak;
- Comparisons to key competitors on assortment, pricing, merchandising and promotion patterns in areas where the retailer is underperforming;
- Conclusions about causes of weak/strong performance.
Step 4: Insights Summary
Once you have developed a robust, standardized Voice of the Shopper document, you’ll want to provide your team with updates throughout the year. This is your Insights Summary—it should be written in a consistent way and distributed companywide.
Having an Insights Summary ensures that the team member who owns this step is collecting fresh data on a regular basis. As with the Voice of the Shopper, resources should include supplier data, third-party firms and the retailer’s own proprietary insights. Summaries should be prepared for each major category.