Category management How to identify and replace slow-selling categories

When it comes to specific products that aren’t working, the journey from identifying the problem and taking the product off the shelves usually takes about as long as it lasts for the final item to be sold. When it comes to an entire category, a larger overhaul is required, as well as greater understanding of one’s customers. 

“Look through your EPoS data,” says Joe Williams, from The Village Shop in Hook Norton, Oxfordshire. “Also look closely at the space you’re allocating to that category against its profitability.” 

It is important to analyse your own offer, the local competition and also wider, national trends. Some categories might be seeing a widespread decline in interest, which will affect your store’s sales no matter how inventively you promote it. Other product categories might be offered by the local competition better than you, so you can re-evaluate how you sell them or look for another category altogether where you can gain an advantage. 

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“Is there someone doing an offer that’s better than you in one specific category, and is there something else you can do better than them?” asks Williams. “It’s not about always competing, it’s seeing what your competition aren’t doing right that you can do right.” 

When thinking of what to replace a failing category with, talk to customers about what’s missing from your offer, examine what the local competition is doing and what they could do better, and also think about the margin opportunity. 

“We used to do coffee pre-lockdown, but the Co-op next door got a Costa machine and I didn’t want to keep coffee until we could compete on their level,” says David Lomas, from Lomas News in Bury, Lancashire, who is now replacing parts of his magazine offer with a coffee machine. “Now we’re getting a Lavazza machine that should blow them out of the water.” 

Are the seasons working for you? 

Joe Williams of The Village Shop in Hook Norton, Oxfordshire

Joe Williams is currently expanding The Village Shop in Hook Norton, Oxfordshire, which is bringing in changes across the board, with some categories getting double the space. He decided to remove his in-store florist before the redevelopment following a reduction in sales. 

“The pandemic saw everyone cancelling their Mother’s Day orders, but sales were diminishing before then,” he says. “The space has now been taken up by more profitable lines that will sell all year round. We’re expanding our fresh products and our chilled section.” 

A major reason for the decision was that flowers didn’t bring in sales all year round – selling well at Easter, Mother’s Day and Christmas, but driving no interest in the summer. He will continue to sell flowers, but he will buy them from other suppliers at the times of year when they are guaranteed to sell. 

Follow the data 

Justin Whittaker
Justin Whittaker of MJ’s Premier Store in Royton, Greater Manchester

Justin Whittaker, of MJ’s Premier Store in Royton, Greater Manchester, uses his EPoS data to identify slow sellers and delist them. 

His next step is to replace them with extra facings of popular lines in the affected category, rather than gambling on new lines. 

“We give space to products that normally sell well rather than bringing in another new item,” he says. 

“We tend to keep launches on promotional ends. Everything sells well at the beginning, it’s just whether or not it will keep selling.” 

Whittaker also thinks it’s important for retailers to consider the place of categories that aren’t particularly strong, but which serve select customers repeatedly. In his store, it’s the tinned section. “I wonder why we keep selling tins of peas when we already do fantastically well on frozen peas,” he says. “You can keep them around because they have a long shelf life.” 

From standard to specialised 

Ketul Desai stores London Suffolk
Ketul Desai

Ketul Desai runs stores in London and Suffolk and has been looking at delisting tinned food in all of them. He takes a three-pronged approach to identifying categories that aren’t working. 

“If it’s selling, then you can see it from your EPoS data,” he says. “If it’s not selling, you can put it on promotion. And if it’s not selling even when it’s on promotion, then look at your competition and see what they’re doing. If no one’s doing it except you and it’s not selling, then the demand’s not there and you can decide to ditch it completely.” 

He has been replacing his tinned goods with niche products that bring in better margins. “We’re trying to attract niche customer bases with things like US food and confectionery. That’s where people are spending money. You can also create different spaces so you’re keeping the store changing and keeping people moving around.” 

David Lomas owner of Lomas News in Bury, Lancashire

Look for the margins 

David Lomas, owner of Lomas News in Bury, Lancashire, had been noticing a decline in his magazine sales. Not only was money not coming in, he was getting large bills from wholesalers and sitting on lots of valuable stock. 

As a result, he has reduced the space allocated to magazines by two-thirds over time from an eight-metre run with seven shelves to nine shelves of two metres. 

Each time he has reduced the space allocated to magazines, he has put in more popular or higher-margin products. Lomas now has a Monster Energy fridge, a Coca-Cola fridge and a vape cabinet in the area, with plans to install takeaway coffee and pastries. 

“You’ve got to look at what’s turning over at the moment. The mags just weren’t selling for us. We’re getting a branded coffee machine and offering pastries, croissants and fresh bread. There are big margins in that,” he says.

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