Categorizing your products to appeal to your target customer

by Natalie Tan

I cannot recall the number of times I have been asked by retailers the best way they can display their products so customers will be inclined to buy.  For some, this is a straight forward question that pertains to display. However, for me, this is one question that is comprised of 3 elements, the last of which is display.

Equally important to display style are the following:

1. Product categorization

2. Sequence of category presentation or merchandise adjacency plan

This article will discuss Product Categorization while the second installment next month will show you how to sequence your category presentation.


I always ask retailers what their shop stands for. What is their brand DNA? Their beliefs, values and how they convey this to their target customers. It is vital to know who your target customers are. Why is this important? Different market segments have differing preferences on how they shop.

CUSTOMER TYPE 1: Time and value conscious shoppers look for an easy layout to find the items they are looking for, thus, products are categorized by end use. A souvenir or gift shop may wish to group like product together, such as home accessories, bath and body, clothing and accessories, kitchen, gourmet and outdoor living. From there, subcategory classifications can be organized by brand, design style or colour.


Main category: Bathroom accessories

Subcategories: Sink accessories, shower accessories, toilet accessories, towel rails and hooks, storage and organizers

Possible subcategory classifications:

Grouped by brand

Grouped by colour

Grouped by design style: Modern, minimalist, baroque, rococo, Asian inspired, natural wood, country, fun and funky

PRODUCTS GROUPED BY STORY: Contemporary Asian inspired group

PRODUCTS GROUPED BY COLOUR STORY: Grouping of all earth tones

PRODUCTS GROUPED BY END USE: Outdoor gardening products are grouped together then classification is by design

CUSTOMER TYPE 2: Leisure customers who prefer more experiential shopping will want to see product stories. Using the same souvenir-gift shop example above, the story may be exotic Far East, cozy country, natural living, industrial and steampunk. Natural living products will be home accessories that are made of environmentally friendly materials, bath and body products that are free of harsh chemicals, gluten free/organic gourmet foods, etc. From here, subcategory classifications can then be by colour group, end use or brand.


Main category: Natural living story

Subcategories: Home accessories, bath and body, kitchen and dining, gourmet foods, outdoor living and clothing

Possible subcategory classifications for gourmet foods: Sauces and dips, specialty salt and condiments, snacks, chocolate, biscuits and crackers

Can you see how product selection may vary depending on how your merchandise is categorized? While the ‘end use’ categorization may purchase any inventory as long as they fall within the groups, the product selection for ‘story group’ categorization is a bit more discriminating as products need to fall within a specific story.

Natalie Tan has over 25 years in specialty retailing, offering her expertise to malls, retail shops and airport operators. She teaches Merchandising and Display Strategies at the BCIT School of Business and has served as a member of Retail BC's Board of Directors, as well as on the board of the BC Shopping Centres Association.

She is the author of "Ready, Set, Sell", an easy-to-implement guide to small business owners and a book currently used by her students. Natalie has been featured in several publications and is often called by the CBC for her expert perspective on current retail issues.

Natalie will be a Retail Solutions Seminars speaker at the Fall 2017 Alberta Gift Fair.

Effective Retail Strategies Designed to Move Your Merchandise
In this regular column, we explore retail strategies that are not only easy to implement but also aim to sell the merchandise. This will provide you with opportunities to view your own store in a different light and discover new ways to present your merchandise. Ultimately, our goal is to increase your sales. So let us know when you have applied one of the strategies featured here and yielded desirable results in your store — we’d love to hear success stories.

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