Having a retail mindset is increasingly critical for vending and micro market operators to find success, and a large part of that is shifting to a category management strategy. An objective, data-driven approach to product selection and planograms can be your north star when it comes to maximizing turns, revenue, profitability.
Tip #1: Use Objective Data
Using syndicated data—for example, data from Nielsen IRI—is imperative because it is hard data on what is actually being sold. Reports with geographic and national data are available that will display what the top selling brands are in any category, from cookies to salty snacks.
Where can you get the right information? Manufacturers, like Mondelēz International, have this data and are willing and able to partner with you and share their expertise as an objective category captain to operators, according to Malcolm McAlpine Business Manager, Branded Snacks and Confections for vending and micro markets at Mondelēz International.
“The important thing is to partner with companies that keep it objective,” said McAlpine in an interview with The Food Group. “Some organizations will try to skew the data in favor of their brands and products, which isn’t true category management. Maintaining 100% objectivity is the most important thing in implementing a data-drive approach.”
Tip #2: Ensure Full Implementation
After you put a planogram together, you have to make sure that planogram is implemented in 100% of your locations. Otherwise, you’re leaving turns, revenue and profitability on the table. Ensure that all of your locations are compliant.
Tip #3: Optimize Regularly
While the most effort is required in the upfront setup of the category management program and planogram build out, optimizing performance is important. McAlpine recommends reviewing your category management program and planograms on a quarterly basis allows you to discover geographic preferences and see what items need to be swapped out based on performance data.
“After your program is well-established, which typically is after 18 months to a couple of years, you can reduce your scheduled review to every six months,” he said.
The important thing to keep in mind as you review is keeping room in your planogram for new items. While these may not initially appear in Nielsen data because they’re new, it’s important to experiment by introducing these products and switch out what’s working and what’s not working as you iterate on your program based on the data.
Tip #4: Dedicate the Resources
Having someone in your organization that will focus on category management and the planograms you have will help ensure it gets implemented correctly and optimized. For large operators, this may even be a team, but at least having one person champion the category management program is key so you can be relentless in the data-driven, iterative approach.
Tip #5: Leverage Your Manufacturers
McAlpine stressed the importance of reaching out to the manufacturing community for support in your category management program. “Large CPG companies, like Mondelēz International, have a wealth of resources and data to share as you build out and finesse your category management programs and planograms,” he said. “If you really want to adopt a retail mindset, reaching out to a manufacturer is the best way to do so.”
Choosing a manufacturer to act as your category captain for the different categories you have also helps you bring in subject matter experts where you need them most. For example, you can pick one manufacturer to be your category captain for salty snacks, and another for prepared foods. It’s not necessary to go overboard — just pulling in experts as necessary to ensure you’re getting the best intel on how to manage all of the product categories you offer.
Adopting a retail mindset — including implementing data-driven category management — will be essential in order to seize the opportunities in the expansion of micro markets.
“Micro markets are the real solution for our industry moving forward, but they need to understand who they’re competing against,” said McAlpine. “They’re competing against everyone outside. So moving forward, you’ll see a better retail mindset—more focus on true category management and planograms. Operators are realizing they’re going to have to expand their micro market offerings.”
For more insights, view our guide to Smart Snacking in Micro Markets.