March 30, 2022

Three Types of Merchandise Categories

There are more, obviously, but we can simplify the story down to three, using our Category Analysis Table.

The first type of category is the dominant category. Customers shop this category as if it "is" the brand. I like to look at rebuy rates within the category vs. across all other categories. Here's an example of three categories and their metrics.

  • Category 09:  Within Category Rebuy Rate = 47%. Other Category Rebuy Rate = 55%.
  • Category 08:  Within Category Rebuy Rate = 23%. Other Category Rebuy Rate = 68%.
  • Category 19:  Within Category Rebuy Rate = 15%. Other Category Rebuy Rate = 64%.
Next, I look at the share of annual sales spent by category purchasers.

  • Category 09:  Share = 34% Within Category 09 Next Year.
  • Category 08:  Share = 12% Within Category 08 Next Year.
  • Category 19:  Share =   5% Within Category 19 Next Year.
Finally, I look at share of annual sales that come from last year's category buyers.
  • Category 09:  $32.6 million of $50.0 million from last year's buyers.
  • Category 08:  $3.2 million of $10.7 million from last year's buyers.
  • Category 19:  $0.8 million of $3.0 million from last year's buyers.
Category 09 is a "dominant" category. Customers are coming to buy from this category, and they'll buy from the category again next year.

Category 08 is a "complimentary" category. Customers have reduced loyalty within the category and spend money outside of the category.

Category 19 is an "auxiliary" category. It is there to provide support for the entire brand, but is not the focus of the customer.




Three types of merchandise categories.

Surely you are measuring how each category you manage impacts the customer, knowing what role the category plays in your assortment, correct?

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