Category Strategy

In many organizations, category management comes down to analyzing SKU turnover and supplier negotiations – but this is only the operational level. Real strategy begins much earlier – with precisely defining the role each category will play within the overall business model.

Before we take action, we need to know:

• Is the category meant to drive traffic to the store?
• Is its primary purpose to generate high margins?
• Is it supposed to build the desired price image in the eyes of the customer?
• Is its role to stabilize turnover throughout the year?

Without clear answers to these questions, pricing policy becomes a series of random decisions and merchandising turns into an aesthetic exercise rather than an economic one.

Category as a business unit

In the CMF360° model, I move away from superficial assortment management. I treat every category as an autonomous business unit. This means it has a clearly defined role in your P&L, its own well-thought-out assortment architecture and pricing logic that supports its strategic objectives. Only this approach creates a solid foundation for building sustainable profit growth.

Each category should have a clearly defined role: traffic-building, standard/routine, or distinctive one. This decision determines:

• assortment breadth,
• category depth (number of brands).
• price segmentation,
• promotion intensity,
• shelf visibility,
• category KPIs.

Lack of systematic category management is the most common cause of growing numbers of non-rotating products. This leads to excess of unnecessary SKUs and a dramatic drop in the productivity of each square meter of selling space.

My experience shows that structuring this process brings immediate, measurable benefits:

• Assortment optimization: The ability to reduce the number of indexes by 10–20% without risking a decline in turnover.
• Increased profitability: Freeing up space for rotating products increases structural margin.

By simplifying the structure, you not only relieve the burden on logistics and staff, but above all, you make your shelf work more efficiently and profitably.

In one of the supermarket chains (120+ stores), the implementation of a category strategy based on CMF360° delivered:

The category ceased to be a field of compromise. It became a profitability engine.