April 20, 2022

A Dying Category

There's so much going on in this Category Buyer Analysis. Here we go.

Let's look at sales by year ... it's a negative trend, from $1.8 million to $1.6 million to $1.5 million to $1.4 million. The category is dying.

How about those who bought from the category in the past year? Their rebuy rates are consistent over time (19.2% then 17.8% then 19.4% then 18.9% last year). Existing buyers are going back to this category. If they buy? Their spend improved over time ... $74.08 three years ago, then $78.19, then $85.32, and $92.16 in the past year.
  • Rebuy Rates are mostly steady.
  • Spend per Repurchaser Improved Significantly.
Existing buyers are not the reason why this category is dying.

How about all of the other 12-month buyers ... those who have not purchased from this category in the past year?
  • Rebuy Rates are dying ... from 3.9% to 3.6% to 3.3% to 2.9% last year. The rest of the customer file (i.e. the majority of customers) are walking away from this category.
  • Spend per Repurchaser increases ... $58.02 to $58.25 to $62.70 to $67.74 last year.
  • The multi-year rebuy trend (-27%) does not offset the multi-year spend increase (+17%).
New/Reactivated buyers?
  • 26,555 three years ago to 22,547 to 20,532 to just 16,743 last year.
  • Oh boy.
  • The multi-year trend is -37%.
What is the multi-year rebuy/buyer trend by customer type?
  • -2% for existing buyers (but +2% for all other products).
  • -27% for 12-month buyers without purchase in the category in the past year.
  • -37% for new/reactivated customers.
This is what dying categories look like. Prior buyers are the last to fold - those with no attachment to the category walk away first.

You also have to wonder if the marketing team is causing part of this problem? You have to ask the question. For instance, if the marketing team won't spend money on keywords tied to this category because margins are low (they are low for this category compared to other categories), then the marketing team is contributing to the problem, albeit with profitable intentions.

A few additional tidbits.
  • Gross Margins were 41% three years ago, they are now 37%.
  • Price per Item Purchased was $31.24 three years ago, now is $41.88.
  • Somebody raised prices over time, achieved unfavorable results, then started discounting to bring customers back.
This category had 74,246 customers three years ago. It has 54,017 today. The category is dying. This is where Merchandise Forensics work comes into play - you perform a deep dive into this category to understand why the category is performing so poorly.

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