Category Management and Assortment Planning with Geomarketing and GIS

How can product ranges be planned to perfectly suit the location while simultaneously making optimal use of shelf space? Geomarketing provides the necessary data and analyses for informed decisions in category management. Those who understand market potential, target groups, and regional differences can precisely manage their product range, leading to measurable success. We will show you examples of how geomarketing and GIS can optimize your category management. 

An Overview of the Key Points:

• Geomarketing reveals regional differences in target groups, demand, and purchasing power.
• WebGIS software allows data from various sources (e.g., sales by product and category, sociodemographics, the competition) to be analyzed spatially and displayed on a digital map.
• Category managers recognize connections: Which products perform well in which catchment areas and why?
• Product ranges can be adjusted precisely and economically.
• WIGeoWeb is a powerful software solution for data-driven category management and assortment planning.

Category management with GIS software step by step:

1. Geocoding: In the first step, addresses of locations are automatically converted into coordinates via geocoding and displayed on a digital map.
2. Define the catchment area: A catchment area is calculated around the location, either automatically or individually defined. You decide how far this area should extend and how customers typically reach it: on foot, by bicycle, by public transport, or by car, depending on your business model.
3. Integrate your own company data: You upload your internal data into the WebGIS software, e.g., sales by product and product group, and assign it to the respective location.
4. Add external data: You add geospatial market data, such as general or product-specific purchasing power, age structure, or household size in the catchment area.
5. Analysis of the catchment area and a data-driven decision: You analyze the catchment area to precisely define the local target group. In combination with internal sales figures, a more nuanced picture emerges, providing you with data-driven insights and enabling you to make informed decisions.

Geomarketing analyses provide answers to the following questions, among others:

• Why do certain products perform poorly at a particular location? Is it the product itself, or perhaps the packaging size because of the high number of one- or two-person households in the area?
• Which products should I include in my product range because they fit the target group structure in the catchment area?
• In which markets can the product range be streamlined because certain product groups do not generate relevant demand and there is no potential in the catchment area?

With GIS analysis, you can identify untapped potential, reduce misinvestments, and utilize your shelf space more efficiently.

“For example, clear correlations can be identified in data between age structure, housing type, and product affinity. Such insights can be used to precisely tailor product ranges to the customers in the vicinity of each store location. This allows chain stores to meet their customers' needs and demands much better, while simultaneously avoiding expensive overstock, slow-moving items, and misinvestments in the wrong product range.”
Thorsten Lange, Merchandising and Spatial Intelligence 

“Pharmacies usually manage their product range by weeding out slow-moving items and focusing on their regular customers. They neglect the potential of the catchment area. A product range tailored to the needs of the location offers great opportunities: increased sales, optimal stock levels and availability, and cost reduction.”
Wolf Graf, Managing Director, WIGeoGIS

With geomarketing and GIS, pharmacies can...

• Tailor their product range to the needs of the location: Population information such as age and purchasing power, competitors, doctors, and footfall generators like supermarkets and shopping centers provide information about the structure of the location and its surroundings. Is it primarily a residential area or are there many offices? Do more families or single people live in the area? Are my potential customers older or younger? How much do they earn? What is their education level? This allows pharmacies to draw conclusions about the required products, health needs, and self-medication behavior.
• Optimally manage their product range and presentation: The local surroundings are constantly changing. While a few years ago families with children were in the majority, now older couples are more common. Pharmacies should therefore adjust their product range, their placement in the sales area, and their window displays accordingly.
• Offer improved availability of prescription medications: Geomarketing analyses show which medical specialists are located in the vicinity of the pharmacy. This provides pharmacies with information on which medications are frequently prescribed and allows them to stock prescription medications and supplements accordingly. This not only leads to optimized stockroom management, but also to increased customer loyalty, as they appreciate having their medications readily available.

When is it particularly worthwhile for pharmacies to use geomarketing and GIS?

It is particularly worthwhile for pharmacies to use geomarketing during the initial setup or when taking over another pharmacy. Analyses using GIS software also help with continuous optimization. This is necessary because it is becoming increasingly difficult for pharmacies to remain profitable. When pharmacies correctly implement the results of geomarketing analyses, this contributes to strengthening customer loyalty, increasing impulse purchasing power, and boosting sales. Pharmacies have less tied-up capital because they are able to reduce their inventory.

“Many retailers underestimate the potential of a regionally differentiated product range. If you know exactly how people live in the area surrounding your DIY store, you can tailor your product range much more effectively to your customers’ needs. This increases customer satisfaction, reach, and market penetration, because if customers cannot satisfy their needs in their chosen retail outlet, they will go elsewhere, locally or online.”
Thorsten Lange, Merchandising and Spatial Intelligence

With geomarketing and GIS, DIY stores can:

• Adjust product ranges to specific locations: Using geodata and market data such as age, housing type, and purchasing power, category managers are able to recognize what is in demand in urban areas and in the local surroundings, and can also adapt color schemes and wood types that match the tastes of each location.
• Optimize product placement: Retail space is valuable. If you are able to recognize which product groups perform well locally, you can increase sales per square meter and remove unnecessary products from your assortment.
• Unlock sales potential: By overlaying internal sales data with external market information, DIY stores can, for example, determine where higher-priced branded products or cheaper private-label brands should be better positioned based on the socioeconomic characteristics of the local surroundings.

When is it particularly worthwhile for DIY stores to use geomarketing and GIS?

Geomarketing offers decisive advantages, especially when realigning individual markets, launching new product lines, and optimizing inventory. Category managers can make informed, data-driven decisions tailored to regional target groups and market potential. This leads to greater shelf relevance, higher sales per square meter, and noticeably more efficient assortment planning.

* The products of WIGeoGIS are intended for companies and are not suitable for private use. If you need a one-time market analysis, we will gladly make you a service offer.