The Importance of Category Management

Back to our series on ‘Back to Basics’, let’s look at why category management became such an important discipline.
As retailer power increased due to the consolidation of outlets, shopper’s loyalty became even more important. Customers developed loyalty programmes as a way of encouraging loyalty and they looked to suppliers to develop thought leadership, (as a way of creating differentiation in store). This thought leadership was expected in the supply chain, customer development, category management and own brand development, to name a few areas.

Winning manufacturers recognised this need and restructured and invested accordingly.

These winning suppliers were able to demonstrate vision, a category perspective, consistency, insights (driven from analytics) and top quality, appropriately trained people. Also, category management had to move from being a team of people to being a business-wide ethos. Ultimately putting the consumer and shopper at the centre of business initiatives.

Why did category management become important?
Category management uses available data to make better decisions, which are more fact-based, and done well, improves the understanding/alignment between retailer and supplier. Ultimately it is a collaborative process of determining the optimum range, merchandising, price and promotion, based on clear goals, driven by an understanding of trends and shopper behaviour.
However, there is an issue in defining optimum… Here there often are conflicting demands. What is the customer’s objectives? What is happening in the category (growing, declining, sales, volume, loyalty, propensity etc)? What coverage do you want to achieve? What are competitors (customers and suppliers), doing? Impartiality/objectivity is key.

So is category management still a relevant?
• With changing expectations and demands from shoppers and consumers
• More channels available than before
• E-commerce making it even easier to access products and data
• A changing need for fewer mass brands and fewer mass channels, and demand moving to niche brands and digital
…delivering the 4p’s remains as relevant and required as ever.

Why bother with category management?
It can deliver:
• enhanced category sales
• improved return on the stock
• improved shopper engagement
• identification of innovation opportunities, be that product, instore, promotions
to name few benefits, so unless you are not interested in delivering this, category management remains as important as ever.

The world has moved on though. More data is now available. Better technology can help deliver better insights. More channels require managing. Shopper and consumer behaviour is evolving. All of this can be incorporated and correctly used deliver enhanced results.

With effective tools, the correct level of data, analytical capability and clearly identified objectives and goals, will deliver great category management despite market changes.