Multisite Site Categories Menu

I will be opening up the site soon for store holders to register their website. I am looking for a way to sort all the stores into categories. Some stores have stationary, others clothing some have hardware etc... I am looking for a way to create a menu of store categories on the parent site sidebar so that public can filter the types of stores they want to visit.

Is there a plugin I should use to achieve this?

Regards,

Ciaran