Home' The Channel Magazine : The Channel October 2016 Contents 52 | The Channel
Core Categories 70% Innovation Categories 20% Complimentary
Stock Code Product
percentage of sales in core, innovation and complimentary
In the analysis, a select group of categories made on
average 70% of sales. These categories were selected based
on the week-on-week impact they made to the overall store’s
sales (or group of stores). This figure can fluctuate between
businesses (some core categories making up 50% of sales,
others 85%), but the underlying pattern was the impact these
categories made to trading performance.
Recently introduced categories are defined as “innovation”
and generally makes up 20% of the business. This category of
new or emerging products are brought in to help grow sales
and ensure that the retailer does not become stale in the eyes
of the market. These are trial and error products. If successful,
these products could become a bonanza, but if they don’t
work, it should not make a major impact to the business.
Where a lot of retailers come unstuck is that they focus
on too much attention on the innovation category, because
it is fun, new and exciting. One minute a suit retailer is selling
surf wear because it wants to capture the discretionary youth
income. Then the suit retailer has a crazy mix of double blazer
jackets and board shorts. This only confuses the market and
also downgrades the suit merchant’s reputation.
There are countless examples in the newsagency channel
where new innovation categories have taken over large areas
of floor space, yet don’t provide the return of traditional
newsagent categories. This is not to say that this won’t change
in time, but there seems to be a lack of planned, rational
purchasing decisions being made.
The final category is complimentary lines or added-value
items. This would be confectionery products on the counter
impulse bar or spinners of gift and telco cards. In the scheme
of things, within category management, these items are
an afterthought until the core products and categories are
producing the desired sales results.
WHERE TO START? CORE PRODUCT LINES
The concern with declining newspaper sales is that it impacts
on two critical areas that drive sales in the business: foot
traffic and frequency of purchase. Newspapers may not be the
most profitable, but they do bring people through the door. If
a newsagent sells 200 newspapers per day, then that could
equate to 150-200 individual customers (or transactions).
Trying to supplement this with slower stock turning, yet much
higher margin product, does expose a newsagent to a risk: less
customers coming into the store, equating to less opportunity
to sell more items per sale (and now an exposure to a third
critical lever that drives sales: decline in average transaction
Core product lines are the “bread and butter” items that
people come in 52 weeks of the year for. Items that turnover
all the time. For a butcher this is mince, sausages and rump
steak. For a baker its dinner and long rolls. For a supermarket it
is bananas and milk (average of 2% of total sales comes from
these two products, which is impressive, when you consider a
supermarket has on average 35,000 plus Stock Keeping Units).
The easiest way to determine what the core lines of your
newsagency are, is to print off a “sales by product line”or
“sales by stock keeping units (SKUs)“ report for the last 12
To get started on the process of trying to increase sales of
Identify the top 25 lines within your store by sales
volume or quantity (this list can grow to 50, 100 or
more, depending on your sales volume).
Use some discretion and list the products customers
could purchase 52 weeks of the year. Select
products you believe you can sell volume in.
Then ask yourself the following questions:
Do you have enough stock of this product in store?
Is the stock displayed in a prominent location?
Are these products featured every time I do a
Do my staff know these are our core products?
Then start on a mission to ensure that you can answer yes
to all of these questions. It is important to measure the
performance of your core lines on a weekly basis.
DETERMINING CORE CATEGORIES
After core lines start bringing in sales, and you have
systemised the process to managing in-stocks and increasing
sales, the next step is to determine what your core business is.
Using a report that list “sales by category”, list your
categories under the relevant heading (based on sales). List
your core categories (see definition in What is Your Retail
Business?), innovation categories (new or trial categories) and
the complimentary categories.
After identifying core categories within your retail business the
next step is to review how they have performed over the last
Links Archive The Channel July 2016 The Channel April 2017 Navigation Previous Page Next Page