Can Collaborative Category Management Drive Sustainable Like-for-Like Growth in Retail?

Collaborative category management

If there is one reason as to why retail companies can have a healthy bottom line, it is because of their ‘like-for-like’ (LFL) growth. But sustaining growth in the LFL stores is a challenge faced across geographies and retailers. When a retailer or brand opens a new store, it creates excitement in the locality & encourages curiosity in shoppers to visit. Hence we see a big surge in walk-in traffic into the store & even if conversion rates aren’t very high, the store manages to generate a boost in revenues. But as the store ages, competition catches up, and there are new entrants into the marketplace. Shoppers get pampered with too many choices & shift their loyalties to retailers who offer special services & perks. This results in higher retailer spending for marketing & operations expenses, in order to improve the shopping experience. With top-line erosion due to competition & increase in spend to retain shopper loyalty, retailers end up in loss or decreased top and bottom lines. There are multiple ways to overcome this challenge & remain profitable. One of them is driving healthy competition among your suppliers by providing relevant insights about category share, product attribute trends etc. A category in retail can have multiple product lines and in each product line is served by multiple suppliers. There are suppliers who are category leaders across product lines & on the other side, there are suppliers whose presence is minuscule. Every supplier aspires to be a category leader or grab as much market/store share as they can. Retailers need to leverage this competition among suppliers to expand their reach & fill the gap in their assortment. They need to provide suppliers the opportunity to scale in existing product lines by giving access to category insights & collaborating with them to launch new products in complementary or supplementary product lines. For the retailer, these initiatives will result in better products on shelves, better-targeted promotions and lead to increased shopper engagement and loyalty. At the end suppliers will be happy to see spikes in their category share, shoppers will be happy to get new & relevant choices & ultimately as a retailer you will increase your share of the overall market pie. A few questions that retailers need to find answers to & share with suppliers to help them grow their business:          
  • Attribute analysis (like flavor, color, pack size, cuisine, gluten free etc) :       
    • Which are your top selling products, & which the product attributes make items fly off the shelves?
    • What’s the right packaging size for your retail format? For e.g- smaller pack sizes sell more in convenience stores than hypermarkets.
    • Which attributes of your products directly impact customer purchasing decisions in various categories?
    • Is there a marked difference in product attribute preferences across geographies & demographic profiles?
    • Does the channel of sale determine the attributes of potential top selling products? For e.g. products where touch & feel does not play an important decision making factor sell more on e-Commerce channels.
  • Price band analysis (>$5, $5-$10, $10>$15 etc) :       
    • Are your shoppers price-sensitive?
    • Do they behave uniformly while purchasing across categories?
    • Do you have gaps at different price band levels?
  • Seasonal trends (Halloween, party supplies, decorations etc)       
    • Do you have seasonal spikes in sales of specific categories?
    • Do you forecast for these seasonal items & collaborate with suppliers to get these on time in full?
    • Do you stock up in the store before the sale season?
  • EDLP(Everyday Low Pricing) product analysis (list of products & volume share)       
    • Do you have product offerings in the ELDP category?
    • Do you forecast volume of these products & share insights with your suppliers?
    • Do you optimize prices for ELDP products?
  • Product affinity analysis (which products are bought together)       
    • Do you share insights on shopper basket with your suppliers?
    • Do you encourage bundling & cross selling across suppliers?
  • Shoppers’ unfulfilled needs (New product opportunity)       
    • Do you have a system to identify unfulfilled needs of shoppers in your stores?
    • How fast can you collaborate with suppliers & bring these new products onto the shop floor?
These actionable category insights will equip suppliers to cater to the unfulfilled need of your shoppers. New product launches to fill price gaps etc will recruit new customers in the category. Bundling & cross-promotion of products will increase shopper basket sizes. Last but not least, these insights will also help suppliers to channel their marketing budget into targeted campaigns which will give them better ROI. Join the Retail Collaboration Network on LinkedIn, and connect with experts and users interested in Supplier Collaboration.        

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