Since I only use a single checking account and single credit card for all of my purchases, I sort the purchases by vendor type: grocery stores, retail shops, etc. These essentially become my major categories and I then break them down further if necessary.

Purchases may get lumped together if a single store has crossover between product types (think of grocery stores selling food items and personal/grooming items, etc). I won't itemize receipts in these cases. It really comes down to how diligent you want to be with the data, and as you said it can become tedious.