By James Atkinson

Strong category management is crucial for retailers to capitalise on consumers that may be prepared to trade up, says ALSA Retail Insights project manager, Mal Higgs.

The most recent ALSA Retail Insights module explores category management, which Higgs told TheShout was particularly relevant in the current retail climate, where consumers have indicated they are prepared to pay a bit more in almost all categories.

"It is critical that good category management principles are employed, in order to get the 'right' gross profit margin 'mix' from your business," he said.

"If customers are prepared to 'trade up', as all the evidence is showing that they are – then having your individual categories carefully worked out in order to capitalise on that trend is essential."

Higgs said it is easy for retailers to get too caught up with price in their approach to category management.

"Many retailers, in assuming they need to compete with some of the major chain operators, base their selling prices on what they see their competitors doing, as opposed to assessing what it is their own customers may be looking for from their outlet," he said.

"In that scenario, any thought of ‘category’ goes out the window, with pricing decisions being made in a ‘tactical’ way – in other words without any strategy or category considerations at all."

The Category Management module is the latest of ten now included in the ALSA Retail Insights program. 

It explains the principles behind the discipline, as well as detailing useful processes for retailers to follow to implement a category management plan in their own environment. 

The Shout Team

The leading online news service for Australia's beer, wine, spirits and hospitality industries.

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