Combining sell-out data with shopper behaviour data for category performance measurement: The role of category conversion power

Retailers need to manage a series of complex decisions relating to numerous products. To reduce this complexity, they have introduced category management practices, which consider groups of similar products (categories) that can be managed separately as single business units (SBUs). Although the concept that the store offer should be organised as a category mix and that this strategy allows for better overall store management is already consolidated, retailers still struggle to adopt an approach to the store performance measurement starting from a category level perspective. Nowadays, the available methods for measuring categories’ performance are quite limited. The current trend sees the measurement of category performance mainly based on sell-out data that are ill-equipped to fully address category management issues. Retailers should broaden their field of analysis not only by focusing on the product/sales perspective but also by including other methodologies such as shopper behaviour analysis. In this regard, the use of technology offers the retail sector new perspectives for those analysis. Therefore, we intend to contribute to the ongoing debate on the retail analytics topic by presenting a shopper behaviour analytics system for category management performance monitoring. More in detail, we could derive a new key performance indicator, category conversion power (CCP), aimed at analysing and comparing the single categories organised within the store. The research is based on a unique dataset obtained from a real-time locating system (RTLS), which allowed us to collect behavioural data togheter with sell-out data (from POS scanner). We argue that retailers could exploit this new analytical method to gain more understanding at the category level and therefore make data-driven decisions aimed at improving performance at the store level.