Single Store Owner

APR 2016

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44 / Convenience Store News for the Single Store Owner / APRIL 2016 FROM THE EXPERTS How to Make More Proftable Decisions Moving to a category management approach will have a positive impact on your income statement 1. DEFINE & SEGMENT YOUR CATEGORIES A great starting point for an improved category management approach is to define your categories and the subcategories within each of them based on shopper insights. Strong category definitions avoid confusion for shoppers when they are shopping in your store by placing the right products together. This is an important first step that may only require a few tweaks to your category definitions, or you may find some new approaches to "category" that you want to adopt for your store. NACS, the Association for Convenience & Fuel Retailing, has developed some standards to help you get started, but you need to tailor them to meet your specific store's needs. How you define your catego- ries is directly affected by your store size, as smaller stores will have broader definitions (e.g., a "Total Snacks" category), while larger stores will have more defined definitions (e.g., separate "Salty Snacks" and "Alternative Snacks" categories). After you define the categories for your store, you want to assign the items you carry into the right category. Next, the items assigned to a category should be segmented based on the subcategories defined by NACS, as well as based on other segments that may be appropriate for the category. See the diagram at left for an example of what this would look like. Once you've assigned the subcategories, you can link your item-level point-of-sale data to these seg- ments, allowing you to look at your business at both a category and subcategory level. This will allow you to get much better insights into your business to make better decisions. 2. ASSIGN CATEGORY ROLES & STRATEGIES Another important step you should take when applying category management to your store is to assign category roles. Realize that not all catego- ries are created equal, nor should they be treated equally. Your larger categories (which are usually most important to your target shopper) should be allocated more time and resources in your store than your smaller categories. M anaging your convenience store should not be about bring- ing in new items because you negotiated a hot price on them, bringing in extra inventory to get that special offer from a supplier, or blindly hoping the choices you are mak- ing are the best for your store (but with no strategic information to help back up your decisions). The opportunity? Move to a more strategic and fact-based approach that focuses on your shopper, which creates foundations for your store that will help you manage your categories using a consistent approach. That will help you to build sales and profit for your store(s). And who doesn't want that? By implementing the foundations of category management (catman) in your store, you can achieve all of these opportunities. It's not a dif- ficult thing to do — you just need to change your perspective and be open to moving to a new way of managing your business. Get started with these three areas to set your cat- man foundations: An example of segmenting items in the "snack" category. CATEGORY SUBCATEGORY 1 SUBCATEGORY 2 PRODUCT Snacks Salty Snacks Potato Chips Item 1 Snacks Salty Snacks Crackers Item 2 Snacks Salty Snacks Potato Chips Item 3 Snacks Alternative Snacks Meat Snacks Item 4 Snacks Salty Snacks Crackers Item 5 Snacks Salty Snacks Nuts Item 6 Snacks Alternative Snacks Granola/Fruit Snacks Item 7 Snacks Salty Snacks Potato Chips Item 8 Snacks Alternative Snacks Health/Energy Bars Item 9 Snacks Salty Snacks Crackers Item 10 Snacks Salty Snacks Nuts Item 11 Snacks Salty Snacks Potato Chips Item 12 Snacks Salty Snacks Pretzels Item 13 Snacks Salty Snacks Crackers Item 14 Snacks Alternative Snacks Health/Energy Bars Item 15 Snacks Salty Snacks Nuts Item 16 Snacks Salty Snacks Nuts Item 17 Snacks Salty Snacks Tortilla Chips Item 18 Snacks Salty Snacks Potato Chips Item 19 Snacks Salty Snacks Crackers Item 20 Snacks Alternative Snacks Granola/Fruit Snacks Item 21 By Sue NIchoLLS, cAtegoRy MANAgeMeNt KNowLedge gRouP

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