Implementing Category Strategy
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Our client is the leading health retailer in the U.K. who saw exponential growth throughout the pandemic due to increased awareness of maintaining health and the role it can have in protecting the body against disease. They wanted to invest in ensuring they maintained market dominance and their long-term position. We were brought in to define and implement a Category Strategy for Range and Pricing.
Health and wellness are at the forefront of consumer interest with the market growing 5-10% each year. The rate of growth creates challenges for retailers to stay ahead of the trend, offer the newest products and remain relevant in a crowded market. These challenges are particularly difficult when operating over 800 stores in the UK and Ireland and an expansive online proposition. The market is also seeing increased competition from Direct-to-Consumer (D2C) players that are cornering specialist ranges and dominating market share by expanding their proposition. For example, Bulk Powders and MyProtein (owned by The Hut Group) who initially started in sports nutrition and have continued to expand successfully into vitamins, health, minerals, and supplements (VHMS) alongside health focused food.
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Identify the root cause – through engagement with senior leadership, we identified that some categories were getting more consumer attention than others. This coupled with increased competition meant that structure and control were needed to create consistency and category freshness.
Define the framework and processes – we worked with category directors to create a detailed process, range review calendar and plan, to ensure that all product sections were thoroughly reviewed and refreshed at an appropriate cadence. This involved engaging with all commercial functions for successful identification, procurement, and launch (supply chain, finance, store operations, digital, buying and merchandising). This work considered the importance of each category (using a weighted system), seasonality and the differences in demand between physical and online (ready-to-go drinks as an example). We also worked with macro and micro space planning to identify shelf space allocation and website placement.
Implement across the company – this calendar and framework is now the bible used by all category teams to plan their annual review process.
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By successfully engaging teams across the business, we were able to create a process that had central and functional alignment. This process has now been adopted by their international partners and gives consistent alignment and structure across countries.
Our client continues to effectively launch new products and our work ensures that they maintain their position as market leaders.
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As consumer habits shift towards improving health, the market continues to see some of the highest frequency of new products launched. Established retailers and grocers currently enjoying market dominance should act quickly to counter the disruption of new, predominantly online focused, D2C players by focusing on regular development of their key expansion categories.
