How YOUR Brand can drive total Category growth

Buyers want to drive total category growth, as this is what their targets (& usually their bonus) are based on.
So the Brands that can prove HOW they will help the buyers unlock this growth are the ones that they will naturally back (all other things being equal) - and there are only 5 ways that this can be done. 

​This article explains what these are, what growth strategies should be considered as a result, and how brands can explain to the Buyer why they should back their brand.

​What drives total category sales?
Total category value sales in any retailer are broken down by the total number of Shoppers buying the category eg per year, multiplied by the Average annual spend of each shopper.

As you can see in the chart below, both the number of Shoppers and their Average Spend can then be broken down themselves into 2 further metrics:- 

All the Shoppers in any major retailer do not shop every single category, so we need to look at what proportion of a retailer's shoppers shop the category in question i.e. what % of the total retailer's shoppers are converted to purchase in a particular category e.g. Instant Coffee each year?

So if the retailer has 20m shoppers in total, and eg 50% buy into the coffee category, then there are 10m shoppers in the coffee category in that retailer.

On the other side of the chart is Average annual spend per shopper in the category, and again this can be broken down - this time by the total number of units purchased multiplied by the average price of each unit sold.
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The total Units purchased can then also be broken down to one further level - by how often the Shopper shops the category (frequency of purchase) and how many units they buy on average each time they shop (their weight of purchase).

So, an increase in any one of these 5 metrics will then naturally multiply out to an increase in total category sales.
If the category average price increases by +10% from £3.00 to £3.30, for example because some Shoppers start buying more premium jars of coffee, then £3.30 x 6 gives a new Average spend per Shopper of £19.80.  Completing the calculation, a £19.80 average spend per shopper, multiplied by the same 10M shoppers we had before gives a new total category sales of £198m (+10%).​

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Growing the category therefore requires a strategy which targets an increase in one or more of the 5 category metrics, or potential Growth Drivers, shown above.  

The first growth driver, Increasing Traffic to the Retailer, is coloured amber as it is very difficult for an individual brand to impact (though still possible in some cases, for example offering a first to market exclusive listing for a major new product launch), and so is often normally best left to the retailers.

However, each of the remaining growth drivers can be viable routes for brands to target, and here are some examples of each:-

​2. Attract New Shoppers
​Persuading NEW Shoppers to purchase your Brand (& therefore the category) by either taking the product out of the aisle, for example through secondary display, or attracting new Shoppers into the aisle - for example via a major advertising campaign or through new product development.  Coffee Pods are example of this, where some Shoppers did not previously drink coffee at home, but now do - because Pods offer a new, convenient and high quality experience that was only accessible in coffee shops of by those who had expensive expresso machines at home.

3. Trade Shoppers up
​In its purest sense this is mostly about premiumisation - persuading EXISTING Shoppers to buy a higher priced item, eg a higher quality product compared to what they previously bought, or one which offers additional benefits compared to other products.  Sticking with the coffee category, Nescafe Azera is a good example of this - creating a new segment of 'microground instant coffee' in premium packaging which traded some Shoppers up from more standard blends. 

[Note: it is also possible to drive trade up by selling larger packs which naturally come at a higher price.  This can work in some categories, but the strategy can also bring some risks - first that larger packs may need a discount eg per KG to prove their 'value', & second that if a larger packs don't increase consumption they may start to reduce frequency instead, with no net impact on total sales.  Another way to increase total consumption is to prompt new or increased occasions to use the product &  this is covered in the next 2 growth drivers below.]

4. Increase Weight of Purchase
This is about selling an additional item to EXISTING Shoppers.  A '3 for 2' deal across various items is a promotional example of this - where Shoppers are incentivised to buy additional items in the same shopping trip to receive the discount.  This may not lead to very much increased consumption, however, if all Shoppers do is put the additional product in their cupboard and delay any future purchase, so brands need to be able to counter any Buyer challenges that this may happen.  A better example might be found in the ready meal category, if new range or promotional activation persuaded Shoppers to buy side dishes to go with their main course - as these items are much more likely to lead to increased total consumption (as well as being eaten straight away).

5. Increase Frequency of Visits
The key here is to persuade EXISTING Shoppers to buy more frequently, for instance every 3 weeks, instead of every 4 and maintain the amount they buy each time they visit.   It is about trying to increase total consumption of the category amongst the target Shopper, rather than simply buying the same total amount across the time period in question.  An example of this is in the cereal category, where marketing campaigns encourage Consumers to eat cereal at other times of the day - at lunch or as a late night snack, rather than just at breakfast time.  Increasing the occasions when a product can be used is therefore likely to directly increase total consumption - which will then drive up the frequency of purchase.
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As a final point, its worth also saying that some initiatives can target more than one of these growth drivers.  Arguably the evolution of the Coffee Pods category segment has driven growth in at least 3, if not 4 of the above!

​​Summary
If you are serious about engaging with Buyers in a conversation about driving total category growth, rather than limiting the conversation to just your Brand, then you need to be able to make a connection between your brand strategy and the growth it will drive at total category level.

Talk & listen to your customers, and follow the insight that you have.  Each category and brand will have different solutions and strategic choices, but if you can articulate the opportunities in a compelling way, as well as including a credible size of prize - the incremental value sales that the Buyer can target at a total category level - then you have the basis for a strong category story and you should have a much more engaged Buyer as a result.

How we can help
Optima Retail are experts in Category Management.  Using our Buying experience we offer a strategic perspective on what retailers want, and work with our Clients to leverage the right consumer, shopper and category insights to prove to Buyers that their brands will deliver the category growth they are targeting.

We specialise in high impact projects where you need someone to start quickly and hit the ground running from day 1, and offer focused support where you need it – whether it is a short expert consultation, full project management or ongoing retained support.

If you'd like to find out more then please get in touch here to organise a free introductory call.