Subscribe To Our Weekly Newsletter

Subscribe Here!

Featured Post

Recent Posts

5 Critical Factors to Consider For Category Planning

Category Planning

For all the talk about how to find retail success, there is really only one way to achieve it. And that's through planning. More specifically, it's through efficient category planning. After all, if you have a category plan to follow, you'll know exactly where you need to end up. And, what steps you need to take to get there.

That said, when it comes to your category planning, and a practical plan at that, there are a handful of factors that you need to consider. Why? Because by focusing on these factors - the finer details that make up your greater plan - then success will take care of itself.

Category Planning and Category Roles

1. You need to know your category definition and roles

When first developing on your category plan, it’s crucial that you begin by defining your category clearly and then understanding the roles that you’ve given each.

Here’s why:

Your category definition sets the foundation of which products you will carry in-store as well as how you will merchandise them on the shelf. There is also the point that what you do at this stage will filter into how your shoppers view your store and shop the category.

When deciding on your definition, it usually comes down to understanding the consumer decision tree (CDT). That's because the CDT depicts, by way of questions, how your customers shop the category.

For example, if they’re buying a cold drink, they’ll run through a few questions and make a decision based on flavour, brand or size. They could also make a decision based on price, depending on whether your target market is price-sensitive or not.

They’ll ask themselves the same, if not similar questions when choosing any other product.

As for the role, it determines the breadth of products that you’d carry for the category. In other words, the number of brands as well as how many variants. The role logically flows into your category strategy, which determines the range focus or how you approach your target market.

Let’s say, for example, that you want to give your category a Destination role. In that case, you’d want to include as wide a variety of products as possible to foster a reputation as the store of choice for that category. You won’t want them to leave your store thinking you can’t offer them what they want.

Category Planning Retail Data

2. You must analyse the relevant retail data

Alongside defining your category and establishing its role, you also need to gather, analyse and understand your retail data.

Now, we’ve mentioned the importance of understanding your retail data before. But that doesn’t mean we shouldn't re-emphasise its role. Because without access to data, any decisions you make around your retail business are guesses at best.

Of course, there all sorts of data to consider. For the sake of understanding your category and how to plan it better, the retail data we’re focusing on has to do with your market, your consumers, and your categories.

If you look at your market data, it provides you with the necessary information to understand how the category in your store performs versus that of your key competitors. Is Category A performing at the same level as at your direct competitor? If yes, you then know that what you’re doing is working. If no, then it’s time to reassess and find out where you can improve.

What’s more, access to this type of data allows you to identify trends as well as any future opportunities or threats so that you can act accordingly.

Turning to your consumer data, this is just as important if not even more so since it provides you with a better understanding of your customers and how they shop in your store. While you’d need to purchase market data to have access to it, you can gather customer data directly from your point of sales area.

Finally, the data around your categories allows you to look for opportunities within the product grouping. These opportunities come from different perspectives, namely, pricing, product assortment, placement and promotion. It also highlights brand and product performance trends, which can drive any merchandising decisions that will influence both product positioning and shelf space.

Category Planning Process

3. You need to consider and implement a process

If you’re interested in organising your categories into independent business units aimed at producing business results, you need a process. And what better method than one that centres around category management?

After all, category management aims to assist you in providing for your customers with the products that they want, where they want it, and when they want it. Implementing such a process also goes a long way to set yourself up as a store that shoppers return to again and again.

Similar to the way in which we set this article up, any category management process includes first defining your categories and determining their roles. There is also the step known as ‘insight generation’, which refers to our above point around retail data.

Beyond that, though, there is the step of strategic and tactical planning, driven by the insight you generate as well as the penultimate stage where you need to assess the cost of your plan against the benefits.

It’s also worth pointing out at this point that each step within the process is interdependent.

How so? Simple: there are a half dozen merchandising strategies that make up the strategic and tactical planning stage that you can use for your categories. The one that you ultimately choose when planning your category comes down to the role you’ve given it.

For example, if you’ve given Category B a Convenience role, it would be better to implement an image enhancing strategy instead of a turf defending strategy. While the former approach focuses on improving your image as a retailer, the latter is best suited to a retail brand looking to protect their market share.

That said, each step builds on each other to the point that by the end of the six-step process, you’ll have a thorough plan that will set up for the results you want to achieve. More than that, as soon as you leave out one of these steps or implement it clumsily, you’ll bear the brunt.

Category Planning Toolset

4. Invest in a robust category management toolset

While the category management process can assist you to lay a foundation to meet the product needs of your customers, its only a process.

And to fully realise such a process, you need to supplement it with the right toolset. In short, category management software. For such software, there are generally three primary category management toolsets that you can use.

One: Planogram software, which should expand to cater for both your micro (space planning) and macro (floor planning) needs. Two: Assortment Planning software. Three: Retail Analytics software.

Content 1-PRO-02-1

Planogram software

As mentioned in a previous article, if you’re interested in maximising your store performance and customer experience, planograms are worth investigating. But more importantly, planogram software is a must.

That’s because of these simple facts: Software is critical for effective stock replenishment. You’ll know what product comes into and what goes out of your store. Software helps you to meet customer expectations. Software will also assist you to monitor the performance of your products so that you can provide each with the shelf space they deserve.

[Video] Learn how to create data-driven planograms with DotActiv’s planogram automation software

As for the consequences of not investing in this particular toolset, we laid out a few possibilities here.

Assortment Planning software

If you’re looking to meet the product needs of your customers, an assortment planning tool is ideal since it allows you the opportunity to create customised product assortment plans.

These customised plans not only ensure your store is more attractive to shoppers since you have the products they want, but they will also improve both the profitability and efficiency of your categories.

[Video] Learn how to data-driven product assortments with DotActiv

Using standard rules, templates and plans built into specialist assortment planning software, you can also customise your strategies for each of the categories in your store. That means you can cater for individual shoppers instead of the general market.

Retail Analytics software

With retail analytics software, you can not only connect and report on multiple data sources but also build customised dashboards and share these insights with your team.Then there is the point that such software will also allow you to create actionable category reviews that you can customise to your needs.

[Video] Turn your retail data into actionable insights with DotActiv software

Of course, this isn’t only for retailers. If you’re a supplier interested in negotiating for more shelf space for your product, you can use use category analysis and retail data to prove why you deserve more.

Category Planning Supplier Collaboration

5. Don’t underestimate the impact of collaborating with your suppliers

It’s no secret that category management is a resource-intensive exercise. That’s especially true if you are a small to medium retailer with a tight budget.

So, to shoulder the financial responsibility, it’s worth turning to your suppliers to help fund it. Of course, there is more to supplier collaboration than just the financial support you’ll receive.

If you’ve chosen a category captain, for example, you can expect them to help you decide which products should be on the shelf, how much space each product deserves, and even develop planograms on your behalf. If you’ve chosen your category captain wisely, you’ll have a partner who looks after the well-being of the category, which will also positively impact your results.

If you’ve taken a centralised approach to category management, you can still get your suppliers involved. Here, it’s instead a case of calling on your suppliers to provide input where needed. Since your supplier has a unique perspective and access to information that you might not have, it’s always a good idea to keep them involved.

A third approach is to go the category partner route. It is the most collaborative, and less biased, approach to category management as everyone has an equal say in how you present and merchandise your category in-store.

That said, this is all about the factors that you need to consider when category planning. By their nature, your suppliers will want to help you. Because if they can provide valuable information that will see growth within the category, that places them in prime position as a reliable partner.


DotActiv Lite, Pro, and Enterprise are all different versions of our category management software that allows you to drive category performance. You can visit our online store here or click below to find out more. 

Darren Gilbert

Content Manager at DotActiv

Covid cta blog


Activ8 Sign Up page



From Facebook