---
title: "Farewell to 'Shelf Hegemony': Category Management Steps Down, Single-Item Driving Takes the Lead"
description: "Recently, more newly opened and renovated community supermarkets have added the letters 'NB' to their signs, standing for 'Neighbor Business'. These stores share a common feature: reduced product counts and increased display space per item, with managers citing Aldi's 'minimalist SKU' approach. Meanwhile, at the start of this year, Walmart China CEO Zhu Xiaojing advocated for 'curated SKUs, single-item driven, not category driven' at Sam's Club, providing a successful theoretical basis for product selection in physical supermarkets. This raises the question: has the 20-plus-year category-driven management philosophy completed its historical mission, and will single-item driving become the dominant direction for product development and sales?"
author: "零售荆言"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2025-09-28"
categories: "Consumer & Categories, Management & Methods, Retail Formats"
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original_source: "https://mp.weixin.qq.com/s/Q5KJKCR3HSuc6C1Kzlioig"
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citation: "零售荆言. “Farewell to 'Shelf Hegemony': Category Management Steps Down, Single-Item Driving Takes the Lead.” New Distribution, 2025-09-28. https://xinjignxiao.com/en/articles/farewell-to-shelf-hegemony-category-management-steps-down-single-item-dr-f8d36b68/"
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---

# Farewell to 'Shelf Hegemony': Category Management Steps Down, Single-Item Driving Takes the Lead

> Recently, more newly opened and renovated community supermarkets have added the letters 'NB' to their signs, standing for 'Neighbor Business'. These stores share a common feature: reduced product counts and increased display space per item, with managers citing Aldi's 'minimalist SKU' approach. Meanwhile, at the start of this year, Walmart China CEO Zhu Xiaojing advocated for 'curated SKUs, single-item driven, not category driven' at Sam's Club, providing a successful theoretical basis for product selection in physical supermarkets. This raises the question: has the 20-plus-year category-driven management philosophy completed its historical mission, and will single-item driving become the dominant direction for product development and sales?

### **Source** | Retail Circle **ID** | retailsphere Author | Retail Jingyan
Recently, more and more newly opened and renovated community supermarkets have added the letters NB to their signs. According to reports, NB stands for 'Neighbor Business', meaning 'neighborhood commerce', though many have other interpretations. Upon entering these stores, a common feature emerges: the number of products has decreased, while the display area per item has increased. When asked, managers say they are learning from Aldi, pursuing 'minimalist SKUs'.

At the same time, early this year, Walmart China CEO Zhu Xiaojing, in a speech at a conference, backed by the endorsement of annual sales of 100 billion, articulated Sam's Club's product strategy as 'curated SKUs, single-item driven, rather than category driven', providing a successful theoretical basis for product selection logic in physical supermarkets.

So, **has the category-driven approach, which has guided merchandise management in supermarkets for over 20 years, completed its historical mission and should be shelved, with the single-item driven concept becoming the dominant direction for product development and sales in the next phase?**

**Category Management: Most Companies Have Done It Wrong**
Category management originated in the 1980s and, starting in the 1990s, with the rapid development of information technology and continuous innovation in retail formats, it gained broader application and development.

Category management entered the retail industry through the cooperation and negotiation between Procter & Gamble and Walmart. In China, international giants represented by P&G, such as Coca-Cola and Colgate, used this pioneering merchandise management method to open the door to efficiency for retail merchandise management.

Since the birth of category management, the debate over who benefits more has never ceased, but **from the perspective of practice and development trends, category management is a revolutionary creation that improves merchandise management in retail enterprises.**

P&G leveraged its first-mover advantage in category management, promoting the huge results achieved in cooperation with US retailers on various occasions. At the same time, using first-tier brands like Rejoice, Head & Shoulders, Pantene, VS Sassoon, Herbal Essences, Safeguard, Crest, and Tide, it demanded over 50% of display resources in categories. Seeing that enlightening domestic retailers could maximize benefits for their own brands, international brands like Coca-Cola, Pepsi, and Nestlé joined the ranks of using advanced concepts to capture the minds of domestic retailers. Their interpretation of category management was entirely in service of their own brand exposure and market share. **At this stage, category management was alienated into big brand management.**

During the embryonic stage of domestic brands, professional managers from these international brands became the first pioneers of domestic brands. For a long time, this category management, which maximized brand benefits, dominated domestic retail enterprises. Even now, **many retail enterprises still display first-tier brands in the best positions without prioritizing comprehensive contribution rates.**

For a long time, first-tier brands imposed requirements on stores regarding the number of SKUs to distribute, refused new products, and cut off supply for bestsellers. Such language frequently appeared in procurement negotiations. Obtaining good resources led to better output. The financial policies backed by first-tier brands meant that category management in most supermarkets was merely a slogan. Wanting so-called resource support from first-tier brands and wanting fees completely contradicted proper category management.

The technical foundation of category management is the merchandise organization structure table. Generally, the horizontal axis of a physical retailer's merchandise organization table has multiple categories; the more categories, the wider the product coverage. The vertical axis has three to four levels. The more SKUs at the smallest level, the broader the functionality covered and the wider the price band, meaning the deeper the product assortment.

Typically, the number of SKUs at the smallest level ranges from 2 to 20. Buyers classify products by function based on their characteristics. The rigor of this classification is decisive for later data analysis and product decisions. **Only when the merchandise organization is comprehensive in terms of functionality and price band distribution, based on the customer base at the store location, and guided by relevant data for product introduction, display, and replacement, can it be said that the category management system is on the right track.**

The author once saw a retail enterprise where the subcategory with the highest sales within a mid-category was the 'Other' subcategory. In such retail enterprises, talking about category management is just a concept that cannot be implemented or bring benefits to operations. Although category management techniques have been promoted for over 20 years, **in many retail enterprises with rough management, many have not even done the basics well.** Building 'wide categories, narrow products' on such a foundation is not just a legend; it's like 'a blind man riding a blind horse at night approaching a pond.'

**Wide Categories, Narrow Products: More Deadly Than Revolution**
Sam's Club has 9 million members willing to pay 260 yuan or more in annual membership fees, relying on only 4,000 SKUs. These products support an average annual performance of over 3 billion yuan per store. The reason lies in continuous and gradual improvement under complete category management. Most people psychologically believe that doing more and covering everything is safe, and not putting all eggs in one basket is safe. But Sam's has long insisted that **'doing less is the real skill,' and this is the soul of 'wide categories, narrow products.'**

The definition by Dr. Zhu, director of the Retail Circle FMCG Research Center, seems quite appropriate: **Product categories (wide categories) meet customers' one-stop shopping needs, but under each specific category, only a few of the most representative, cost-effective, or distinctive products (narrow products) are selected for sale.** Behind this strategy is the inevitable path for retailers to improve product efficiency after reflection under the 'involution' pressure of the stock era.

The prerequisite for implementing 'wide categories, narrow products' is that the retail enterprise has already completed a merchandise organization structure that meets the needs of surrounding customers, based on self-determined and complete structures, and has selected products that maximize customer satisfaction. Because the market does not lack products; it lacks good products. Users do not need 100 products scoring 50; they need one product scoring 100. Knowing which products in each category are the 100-point ones, introducing 100-point products we lack, and then subtracting after the basic product preparation is complete can achieve the effect of 'wide categories, narrow products.'

**If, within your own information cocoon, you only rely on your system data for screening and treat reducing SKUs as a mandatory task or KPI, then blindly cutting products from an already flawed product mix is无异于挥刀自残 (无异于 cutting oneself with a knife).**

Of course, after the 'wide categories, narrow products' revolution is completed, the advantages are also obvious: scientifically selecting high-frequency core SKUs reduces customers' 'choice fatigue' and improves shopping efficiency; system operational efficiency improves, inventory pressure is optimized and reduced, shelf management costs are lowered, and space is freed for experiential scenes (such as tasting areas, interactive zones); differentiated product layout avoids direct competition with competitors in SKU richness, instead establishing one's own operational logic with a 'curated model.' This shift from **'shelf display' to 'demand capture'** has achieved a first-mover advantage in the efficiency revolution.

**Minimalist SKU + Single-Item Driven**
**The Highest Realm of Product Understanding**
In today's world of extreme material abundance, consumers face not a lack of choice but an excess of choice. There are too many similar products on the market. If the positioning is 'also acceptable,' it will soon be forgotten. Only by becoming 'indispensable' for a specific group can one survive this competition.

Do not try to meet all needs; instead, choose one point and do it to the extreme. There is a famous saying in the fashion world: **The end of fashion is the 'minimalist style' after washing away the makeup**, neither flattering nor artificial. 'Extreme' itself is an adjective that cannot be quantified; it is just a feeling. The commonly mentioned 'minimalist SKU' now benchmarks against Aldi's 1,000-square-meter store with 2,000 SKUs and Sam's 10,000-square-meter store with 4,000 SKUs. But neither Aldi nor Sam's reached their current heights overnight.

When people marvel at Aldi's daily sales of 100,000, many do not know that Aldi also took detours. In its early days in China, Aldi positioned itself as a premium supermarket, shaping an image of 'community supermarket + kitchen' and adhering to the brand concept of 'international quality, community price.' In subsequent operations, Aldi gradually discovered that Chinese consumers value cost-effectiveness more than a mere international brand label. Therefore, they quickly adjusted their brand positioning, changing the slogan to 'Good Quality, Low Price' to highlight the high cost-performance of products, sparking a 'discount revolution.'

According to official Walmart data, as of the end of July 2025, Walmart China had 335 stores, including 56 Sam's Club stores and 279 traditional hypermarkets, a decrease of 133 from the peak number of traditional hypermarkets in 2020. The impact of consumption changes affects every retail enterprise; even the world's largest retailer cannot escape. The only constant for maintaining longevity is 'change.' **Aldi and Walmart are at the forefront of this transformation, most importantly because they did not hold onto their leading positions and were willing to recognize and adapt to change.**

Aldi's 'minimalist' product gene comes from 110 years of corporate heritage and accumulation: smaller stores, fewer products, lower costs, ultimately translating into more affordable prices. Sam's 'minimalism' stems from learning, imitating, and locally adapting Costco's model. **Whether it's minimalism or the single-item driven concept, it all ultimately lands on tangible products.**

In traditional supermarkets, the toothbrush category is a relatively large subcategory within oral care, with 10 SKUs being minimal. Aldi has only 1 SKU. Laundry soap and bath soap, under typical configurations, 20 SKUs is definitely not excessive, but Aldi has 1 SKU each, yet the selling price is less than half of branded products.

The logic behind minimalist SKUs is also simple: fewer product types, but the procurement scale per item expands, allowing retailers to purchase at lower prices while also reducing inventory management difficulty.

Products like 9.9 yuan/500ml strong-flavored liquor, 9.9 yuan facial cleanser, 8.5 yuan 950ml fresh milk, and 3.9 yuan sanitary pads are basically at market-low prices. **Under extreme low prices, many non-core functions of similar products can be replaced by price, and this single item can substitute for other items. The premise of minimalist SKUs in a subcategory is having ultra-high cost-performance products in the category, making customers give up choice for price, so your performance does not decline.**

Core products occupy an important position in Sam's product system, accounting for 60% of GMV. Taking the freshly made products from the bakery workshop as an example, core items like 'Mochi Bread' and 'Durian Thousand-Layer Cake' strengthen the 'freshly made' experience through 'transparent kitchens' displaying the production process, successfully attracting repeat purchases. The bakery category achieves an average annual repurchase frequency of 12 times, with gross margins stable at 28%.

Sam's success with core products benefits from a high proportion of private brands. For example, Member's Mark nut buckets reduce costs through exclusive formulas, with gross margins 10% higher than similar products. Taking the 'folding table and chair set' for camping season as an example, through the DTC data platform, they monitored a 200% year-on-year increase in 'camping' searches. Sam's quickly collaborated with a Zhejiang factory to develop lightweight folding tables and chairs, priced at 399 yuan, while the average price of similar products on the market was 600 yuan. Before launch, they conducted small-batch trial sales in 20 stores, deciding on national distribution based on sell-through rates (>90%). Simultaneously, they invited camping bloggers to livestream 'Sam's Set Unboxing' on Douyin, with video views exceeding 50 million, selling over 100,000 sets in the first month, driving an 80% GMV growth in the outdoor category.

Whether it's minimalist SKUs, single-item driven, or private brand driven, all are built on keen perception of consumption changes, in-depth research on category products, thorough understanding of production and processing links, and a common understanding across the entire system. **In China, only a handful of retail enterprises can achieve this. Aldi and Sam's are industry role models, while Pangdonglai and Taoxiaopang are already on the right path.**

**Final Thoughts**
In retail merchandise management, **category management, wide categories narrow products, minimalist SKUs, single-item driven, and private brands** are all gradual processes. Being eager for quick success and pulling up seedlings to help them grow will bring immeasurable losses to enterprises.

After the trials of recent years, those still at the table are already excellent enterprises. **Whether it's category management or single-item driven, both are tools for improving efficiency. The key is which tool to use at which stage.**


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## Citation metadata

- Publisher: New Distribution
- Author: 零售荆言
- Published: 2025-09-28
- Canonical: https://xinjignxiao.com/en/articles/farewell-to-shelf-hegemony-category-management-steps-down-single-item-dr-f8d36b68/
- Original source: https://mp.weixin.qq.com/s/Q5KJKCR3HSuc6C1Kzlioig

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