When your computer isn’t working properly, oftentimes the best thing to do is restart it. The same goes for retail categories. If you’re not seeing the performance you expect, sometimes a good reset is all you need to get things going.
Even if performance isn’t an issue, category resets can follow a natural cycle based on category seasonality or changing consumer tastes. Either way, if you aren’t constantly refreshing your categories based on consumer behavior and sales data, you will fall behind.
This short guide will explain what exactly a category reset is, when you should do them, and a few important points to keep in mind as you undertake a category reset.
What is a Category Reset?
A category reset, sometimes known as a merchandising reset, is the process of rearranging the products in a given category to optimize product placement on shelves. It’s an important part of the category management process, as resets are all about improving the performance of a category.
Category resets have some overlap with assortment planning, which is determining the best products and quantities to meet consumer demand. This includes choosing the products’ sizes, colors, prices, and other characteristics. A category reset can include this sort of analysis, but will also include everything from restocking and rearranging shelves and changing out signage to completely remodeling your stores to better position the category in question.
The main idea behind a category reset is to optimize the performance of a category by changing around relevant in-store elements, installing better signage with the proper SKUs, and setting up displays to better match the needs of the category. This should encourage shoppers to explore the category more and ultimately increase sales volume across the product assortment.
A category reset is the process of rearranging the products in a given category to optimize product placement on shelves.
When Should You Do a Category Reset?
You should be regularly auditing your retail presence to verify the health of your categories and determine if your product assortment is the best it can be. If you notice sales are slumping in a particular category, or that too few products are making up the bulk of sales, it may be worth considering a reset to see how things change.
It’s not always the case that a reset comes on the heels of bad performance. New product launches can also be a reason for a category reset. If the goal is to get maximum exposure of a new product in-store, the planogram should reflect that. That means rearranging the category to promote the new product.
Depending on your vertical, category resets can happen regularly or infrequently due to seasonality. For example, in the grocery and apparel sectors, resets usually happen quarterly to ensure new seasonal products get greater prominence on shelves. Electronics and appliances may happen at a much lower frequency, as those products tend to have less seasonality outside of holiday promotions.
Regardless of the reason for a reset, the overarching fact is that retail space is expensive to maintain. You can’t afford to keep underperformers on the shelf or let your shelves be stagnant. To ensure you’re getting the best returns on your retail space and maximizing SKU productivity, periodic audits and resets are essential.
How to Do an Effective Category Reset
In this section, we’ll look at some things every retailer should keep in mind as they prepare for a category reset.
Start with Accurate Shelf-Level and Pricing Data
A reset starts with understanding what’s going on at the SKU and category level. What’s selling and what’s not? Can you understand sales velocity across different stores and regions, and break that down at the brand, product, and category level? What do your retail audits tell you about shelf-level performance of the category? Useful shelf data is the meets-minimum for preparing an impactful category reset.
Another important data requirement is that of price. You should have deep price intelligence on your competitors’ prices for similar categories and products. This will give you insight into how price impacts category performance. Consumers have more ability to research and compare prices than ever. If your prices are too low, you’re sacrificing profitability in the category. If they’re too high, you’re likely losing sales to competitors.
Emphasize Visual Merchandising
Visual merchandising is the process of designing store layouts and displaying merchandise on shelves with the goal of engaging shoppers and boosting sales. This is achieved by displaying products in a way that accentuates their appearance, features, benefits, and uses in an eye-catching way.
If a category is underperforming, or you just want to optimize it to increase in-store sales, think about how you can reset the category to combine the value propositions of the products and the overall brand aesthetic in a way that more clearly communicates why people should buy the products.
Also, consider how you can incorporate the different types of visual merchandising into a category reset. Smart execution of interactive displays, window displays, signage, and even augmented reality applications can breathe new life into a category and boost sales.
Prepare for Seasonal Resets
Seasonal resets are common in many retail verticals. Grocery and apparel are well-known for quarterly seasonal resets, but other verticals have to consider the time of year as well.
For example, holiday shopping calls for specialized displays that feature the hottest items in prominent places. By understanding what consumers are looking for, you can present the most desired items so they’re impossible to miss, with cross-merchandising and bundles to make them more appealing.
Start planning for these resets as soon as possible so you can transform your store in a way that best matches the season.
Consider Cross-Merchandising Opportunities
When planning a category reset, think about how other categories intersect with the one you’re about to reset and where cross-merchandising opportunities may exist. This can help you increase sales in other categories, as customers will be more likely to buy products together if they are displayed the right way.
For example, fashion retailers that are planning category resets for winter would consider how the visual styles of all of their winter clothes work together. A shopper looking at a winter coat should see scarves, boots, gloves, and hats nearby to complete the look.
Promote the items as a whole outfit, or at least as a combination. Regardless of your vertical, applying this thinking across your assortment is crucial in helping customers find the best combinations of products. Cross-sells are a proven strategy for increasing basket sizes.
Determine if Product Depth or Breadth Would Improve Performance
Product breadth refers to how many different products and brands you carry. Product depth refers to a strategy in which you carry fewer product lines, but higher quantities of each product.
As you do a category reset, it’s worth thinking in terms of breadth and depth to see if one or the other can improve category performance. For example, if just a few SKUs in a category make up the bulk of sales volume, it may be worth resetting to have greater depth of those successful ones. Likewise, if the category is seeing considerable success, adding more breadth could open new opportunities to serve customers what they want.
Of course, agreements with suppliers will impact your ability to remove items from your shelves or bring in new suppliers. Don’t forget to take that into account if you’re looking to trim or expand a category.
Category resets can be a powerful way to kickstart a stagnant category. Regardless of why you’re planning a reset, don’t go into it unless you’re equipped with shelf-level data from retail audits and strong price intelligence.