By Liz Kennedy


Recently, I’ve been thinking a lot about the subject of product ranges. When a business starts out, its product range (or menu or service offering) is one of the most important factors and one that companies invest a lot of time and energy in it. Rightly so! It will be one of the key ways that a customer decides whether or not you’re relevant to them. Equally important though, is how much attention to range a company gives once they’re up and running..

Consider a restaurant whose menu includes some items that are wildly popular and others that just don’t appeal. Or how about a bookstore that just adds the fiction bestsellers of any given month but actually has a customer base that are more interested in non-fiction and self-help. In apparel and home furnishings, seasonality and trends play a big part but not all customers want the most trendy dress or couch, classics are important too! In each of these cases, the ongoing focus, analysis and maintenance of the range is absolutely critical! Learning about our customers from what they tell us loud and clear each day (through their transactions) is one of our biggest assets and something we would be crazy to ignore!

Grocery (for me at least!) is the most interesting of all. It is estimated there are over 200,000 grocery SKUs available while the average supermarket carries about 35,000. A constant stream of innovation ranging from pack size & format changes to line extensions from existing brands as well as new brands, ingredients and categories make this selection process all the more difficult. How can you optimize your range to meet as many shoppers’ needs as possible; to keep new items coming in and to shift slow-movers out in a smooth, well-thought process? How can you make these decisions not just at a department level but at a category level?

This is where category management comes in, my personal passion!! A good category management structure and category planning process can be a real game-changer and can allow regular, thoughtful range curation, consistent across the business and based on a set of principles that reflect the company purpose and brand. A lack of such a structure and practices can lead – over time – to an inefficient, incoherent range that confuses shoppers and constrains growth.

The set up of this structure will vary by industry and business-size. Here are a few of my top tips though which should be relevant no matter if you’re selling coffee or garden furniture!






































So, in a nutshell, a clear category strategy can act as a benchmark against which to weigh up all decisions on range. It minimizes the opportunity for poor SKU selection and provides a clear set of ‘rules’ for purchasing and other relevant functions to keep everyone on the same page. It needs to be updated regularly through a category planning process that is thorough and looks back on what has happened and forward to the role and goals for the category.

I hope this has been helpful.

Define what your mix should be

Make decisions around SKU Count and Category Importance

What is the role of the category?

Your data insights can only be as strong as your database.

Every category has a specific set of variables that need to be logged to make sure that when you analyse your sales data, you are seeing the full picture of what your customers do and don’t want.

Lets look at an example: the yogurt category. A massive $3bn category (US data), it has a wide consumer base and a number of variables that are considered at point of purchase:

-  Flavor
-  Pack Size (single / multi-pack or sharing size)
-  Amount of sugar
-  Targeted at kids / adults
-  Natural / organic
-  Texture (set / Greek etc)
-  Brand Loyalty
-  Dairy / Non Dairy

If you haven’t categorized each SKU fully in your database, you can only read a part of the story. Yes maybe they chose that SKU because it was strawberry but just as important could be that it’s low sugar / organic.

Once the database is set up correctly, you can read the data in enough detail to see real trends in what your consumers want and use that insight to optimize your range.

Understanding the performance of each group can help you to design a mix that makes sense for the category and reflects customer needs.

To return to our yogurt example, the data may show that our offering should be:

30% kids, 70% adults

75% single serve; 25% sharing size

80% dairy; 20% non dairy etc..

Category Mix can also call out which are the fastest growing segments and where most innovation is coming so that this mix can be adapted through the year if need

Defining this mix on an annual basis can create real efficiency when it comes to decisions about listing of new items and whether they make sense at a category level.
Once the database is set up correctly, you can read the data in enough detail to see real trends in what your consumers want and use that insight to optimize your range

Understanding the relative importance of one category vs. others enables the business then to decide how much importance to attach it and to make decisions around SKU count and where relevant ‘store space’. $ value of the category is not always the only deciding factor, categories can be of a higher strategic importance even if not as profitable so this ranking of categories will be very individual to each business.

By Liz Kennedy


Recently, I’ve been thinking a lot about the subject of product ranges. When a business starts out, its product range (or menu or service offering) is one of the most important factors and one that companies invest a lot of time and energy in it. Rightly so! It will be one of the key ways that a customer decides whether or not you’re relevant to them. Equally important though, is how much attention to range a company gives once they’re up and running..

Consider a restaurant whose menu includes some items that are wildly popular and others that just don’t appeal. Or how about a bookstore that just adds the fiction bestsellers of any given month but actually has a customer base that are more interested in non-fiction and self-help. In apparel and home furnishings, seasonality and trends play a big part but not all customers want the most trendy dress or couch, classics are important too! In each of these cases, the ongoing focus, analysis and maintenance of the range is absolutely critical! Learning about our customers from what they tell us loud and clear each day (through their transactions) is one of our biggest assets and something we would be crazy to ignore!

Grocery (for me at least!) is the most interesting of all. It is estimated there are over 200,000 grocery SKUs available while the average supermarket carries about 35,000. A constant stream of innovation ranging from pack size & format changes to line extensions from existing brands as well as new brands, ingredients and categories make this selection process all the more difficult. How can you optimize your range to meet as many shoppers’ needs as possible; to keep new items coming in and to shift slow-movers out in a smooth, well-thought process? How can you make these decisions not just at a department level but at a category level?

This is where category management comes in, my personal passion!! A good category management structure and category planning process can be a real game-changer and can allow regular, thoughtful range curation, consistent across the business and based on a set of principles that reflect the company purpose and brand. A lack of such a structure and practices can lead – over time – to an inefficient, incoherent range that confuses shoppers and constrains growth.

The set up of this structure will vary by industry and business-size. Here are a few of my top tips though which should be relevant no matter if you’re selling coffee or garden furniture!


































So, in a nutshell, a clear category strategy can act as a benchmark against which to weigh up all decisions on range. It minimizes the opportunity for poor SKU selection and provides a clear set of ‘rules’ for purchasing and other relevant functions to keep everyone on the same page. It needs to be updated regularly through a category planning process that is thorough and looks back on what has happened and forward to the role and goals for the category.

I hope this has been helpful.

Define what your mix should be

Make decisions around SKU Count and Category Importance

What is the role of the category?

Your data insights can only be as strong as your database.

Every category has a specific set of variables that need to be logged to make sure that when you analyse your sales data, you are seeing the full picture of what your customers do and don’t want.

Lets look at an example: the yogurt category. A massive $3bn category (US data), it has a wide consumer base and a number of variables that are considered at point of purchase:

-  Flavor
-  Pack Size (single / multi-pack or sharing size)
-  Amount of sugar
-  Targeted at kids / adults
-  Natural / organic
-  Texture (set / Greek etc)
-  Brand Loyalty
-  Dairy / Non Dairy

If you haven’t categorized each SKU fully in your database, you can only read a part of the story. Yes maybe they chose that SKU because it was strawberry but just as important could be that it’s low sugar / organic.

Once the database is set up correctly, you can read the data in enough detail to see real trends in what your consumers want and use that insight to optimize your range.

Understanding the performance of each group can help you to design a mix that makes sense for the category and reflects customer needs.

To return to our yogurt example, the data may show that our offering should be:

30% kids, 70% adults

75% single serve; 25% sharing size

80% dairy; 20% non dairy etc..

Category Mix can also call out which are the fastest growing segments and where most innovation is coming so that this mix can be adapted through the year if need

Defining this mix on an annual basis can create real efficiency when it comes to decisions about listing of new items and whether they make sense at a category level.
Once the database is set up correctly, you can read the data in enough detail to see real trends in what your consumers want and use that insight to optimize your range

Understanding the relative importance of one category vs. others enables the business then to decide how much importance to attach it and to make decisions around SKU count and where relevant ‘store space’. $ value of the category is not always the only deciding factor, categories can be of a higher strategic importance even if not as profitable so this ranking of categories will be very individual to each business.

By Liz Kennedy

Ideally your pricing model should not be based on a single fixed margin across your range and through the year, rather it should be based on a set of thoughtful decisions which bring to life through pricing what your brand stands for; what is important to your customers and how you differentiate yourself vs your competition.

Let’s consider first a real life example: a drugstore chain with 4 main departments: prescription medicines; OTC medicines; Vitamins & Supplements and general Health & Beauty products (HABC). For prescription & OTC medicines, their strategy is to charge a fair margin that reflects all of the costs associated with offering these products: product cost; freight; labor; utilities; licensing & waste-factor. The aim though is to keep this margin tight as it is important to them as a company to offer these products to their customers at a reasonable price, similar to their competitors. This drives loyalty in the part of their business that can benefit most from it. For Vits & Supps and HABC though, they use a tiered margin structure. Firstly, they take a healthy margin on their everyday value / generic brand items, low enough to be competitive and to offer a range that suits their ‘value-seeking’ customers. On their mid-tier range of well-known brands, they take a slightly higher margin but use some of these funds to run big quarterly promotions with deep deals which help to drive traffic into the store and deliver sales uplift during these periods. On the higher end items like cosmetics and skin-care they take their highest margins. They work hard to bring brands that are different from their competition / exclusive to their store; they use premium merchandising stands; offer samples of the items and bring seasonal ranges to keep their customers excited. Though not the biggest part of their business, with the higher margin this section plays an important role and the additional margin enables the business to invest in sourcing new brands and marketing these products.

We can see from this example that this pharmacy chain has given some thought to its pricing structure and how to use it as a tool to meet customer needs and to drive certain areas of the business in different ways.

To create a pricing strategy, it’s important to ask the following questions of your business:


































Once you are clear on each of these elements, it becomes much simpler to create a margin strategy and model a couple of different margin ranges to test the weights and reach a final weighted margin position you’re happy with.

So there you have it, pricing can be so much more than just a flat percentage onto your first cost. It can shape your business; ensure you’re competitive and that you’re optimizing your range while meeting your customers’ needs.

Having a clear pricing strategy means when any of these factors change or if the performance of any one business area shifts, you can easily take a step back and review what needs to change to adapt to a changing environment. Data is just as important in reviewing and maintaining your pricing strategy as it is in the development stage.

Thanks for reading! 

What are the true costs of my products?

What is important to my customers and why do they come to my store?

Who are your competitors and do you want to compete with them on price?

What role do promotions play and how can I build this in?

What is the role of each department and should your pricing strategy differ between them?

The invoiced cost of an item will not include all of the associated costs like freight & taxes/duties as well as product-specific factors like insurance / yield or waste-factor / secure or temperature controlled storage. In industries like foodservice, the true cost will also include the preparation of the menu-item and everything that comes with that. This true cost needs to be established first before margin is applied to make sure every item covers itself

You likely have different customer groups with different needs and values. Their perception of your store and your pricing is important: for some it will dictate whether they shop with you regularly or for a treat; for others they may only buy specific categories in your store but not others. Bear in mind too that new shoppers will use it as an indicator of ‘value’ with a combination of other factors like customer experience to decide whether or not to return at all.

Depending on what your product range is, how you price vs your competition may be of critical importance or not matter too much. Understanding your competition and how your customers choose where to shop is the key and should help to shape your pricing strategy too.

Some price promotions are funded by suppliers and others by retailers themselves. Building a buffer into your everyday margin to create a promotional fund can be a smart way to use discounts to drive new shoppers into store; to reward existing shoppers and to move any slow-movers or end-of-lines. Understanding whether you want to offer everyday low prices or have a high-low strategy will clarify the role of promotions and how you use them to drive sales. I’ll have a separate blog post on promotional strategy since it can be such an important sales driver so watch out for that!

As with the drugstore example above, pricing can play different roles for different departments. Even within one single department, pricing can serve as a tool to encourage your customers to consider different brands / product-tiers and can help you to drive trial with a ‘category-entry’ strategy. Equally, if one department is more labour intensive and has a higher operating cost, ideally the pricing for that department should take these into account and not dilute margin elsewhere.

By Liz Kennedy

Ideally your pricing model should not be based on a single fixed margin across your range and through the year, rather it should be based on a set of thoughtful decisions which bring to life through pricing what your brand stands for; what is important to your customers and how you differentiate yourself vs your competition.

Let’s consider first a real life example: a drugstore chain with 4 main departments: prescription medicines; OTC medicines; Vitamins & Supplements and general Health & Beauty products (HABC). For prescription & OTC medicines, their strategy is to charge a fair margin that reflects all of the costs associated with offering these products: product cost; freight; labor; utilities; licensing & waste-factor. The aim though is to keep this margin tight as it is important to them as a company to offer these products to their customers at a reasonable price, similar to their competitors. This drives loyalty in the part of their business that can benefit most from it. For Vits & Supps and HABC though, they use a tiered margin structure. Firstly, they take a healthy margin on their everyday value / generic brand items, low enough to be competitive and to offer a range that suits their ‘value-seeking’ customers. On their mid-tier range of well-known brands, they take a slightly higher margin but use some of these funds to run big quarterly promotions with deep deals which help to drive traffic into the store and deliver sales uplift during these periods. On the higher end items like cosmetics and skin-care they take their highest margins. They work hard to bring brands that are different from their competition / exclusive to their store; they use premium merchandising stands; offer samples of the items and bring seasonal ranges to keep their customers excited. Though not the biggest part of their business, with the higher margin this section plays an important role and the additional margin enables the business to invest in sourcing new brands and marketing these products.

We can see from this example that this pharmacy chain has given some thought to its pricing structure and how to use it as a tool to meet customer needs and to drive certain areas of the business in different ways.

To create a pricing strategy, it’s important to ask the following questions of your business:

































Once you are clear on each of these elements, it becomes much simpler to create a margin strategy and model a couple of different margin ranges to test the weights and reach a final weighted margin position you’re happy with.

So there you have it, pricing can be so much more than just a flat percentage onto your first cost. It can shape your business; ensure you’re competitive and that you’re optimizing your range while meeting your customers’ needs.

Having a clear pricing strategy means when any of these factors change or if the performance of any one business area shifts, you can easily take a step back and review what needs to change to adapt to a changing environment. Data is just as important in reviewing and maintaining your pricing strategy as it is in the development stage.

Thanks for reading! 

What are the true costs of my products?

What is important to my customers and why do they come to my store?

Who are your competitors and do you want to compete with them on price?

What role do promotions play and how can I build this in?

What is the role of each department and should your pricing strategy differ between them?

The invoiced cost of an item will not include all of the associated costs like freight & taxes/duties as well as product-specific factors like insurance / yield or waste-factor / secure or temperature controlled storage. In industries like foodservice, the true cost will also include the preparation of the menu-item and everything that comes with that. This true cost needs to be established first before margin is applied to make sure every item covers itself

You likely have different customer groups with different needs and values. Their perception of your store and your pricing is important: for some it will dictate whether they shop with you regularly or for a treat; for others they may only buy specific categories in your store but not others. Bear in mind too that new shoppers will use it as an indicator of ‘value’ with a combination of other factors like customer experience to decide whether or not to return at all.

Depending on what your product range is, how you price vs your competition may be of critical importance or not matter too much. Understanding your competition and how your customers choose where to shop is the key and should help to shape your pricing strategy too.

Some price promotions are funded by suppliers and others by retailers themselves. Building a buffer into your everyday margin to create a promotional fund can be a smart way to use discounts to drive new shoppers into store; to reward existing shoppers and to move any slow-movers or end-of-lines. Understanding whether you want to offer everyday low prices or have a high-low strategy will clarify the role of promotions and how you use them to drive sales. I’ll have a separate blog post on promotional strategy since it can be such an important sales driver so watch out for that!

As with the drugstore example above, pricing can play different roles for different departments. Even within one single department, pricing can serve as a tool to encourage your customers to consider different brands / product-tiers and can help you to drive trial with a ‘category-entry’ strategy. Equally, if one department is more labour intensive and has a higher operating cost, ideally the pricing for that department should take these into account and not dilute margin elsewhere.