Why category management is important

Top retailers use store promotion planning to improve supplier involvement and in-store promotions. This helps you create a strategic plan to earn additional revenue from suppliers. From a category perspective, this can help you better align your procurement methods with your promotional plans to squeeze the best margins out of your products. Knowledge is king. With retail analytics software, you can get an idea of how your categories and product segments are performing at the store level.

This is what elevates the top retailers as they use data to understand consumer trends and needs. Get a curated collection of the latest trends, insights and happenings from Surefront delivered to your inbox. Surefront, U. Patent No. Our solution bridges ERPs, PLMs, PIMs and other enterprise systems with a streamlined solution that keeps all of your work in one place so you can save time better spent on growing sales and increasing margin. All Rights Reserved. Updated August - New Bonus Section: 4 Ps of Category Management Category management is critical to optimizing the way your retail organization accesses products, understands product relationships, and executes the procurement process with increased efficiency.

Why was Category Management Created? How has Category Management Evolved? How do they navigate the category? This will help inform product selection, segmentation and more. What is its overall importance and impact? You can think of this from a sales perspective as well as from a volume standpoint.

Step 3: Track Performance — Assess how the category is performing from different angles. Performance at the retailer, within the market, compared to other categories, etc. This multi-lensed approach will provide balanced information for the next few steps. Step 4: Set Benchmarks and Objectives — Any business initiative should have clear goals outlined to drive success. Your merchandising plan is no exception. Sales, volume, market share, and assortment are good places to start.

Step 5: Plan Strategies — Based on your defined goals, gather your thought leaders and devise your strategies. Consider what marketing angles your organization can take and what the in-store presence will be like for the category. You should continue to keep your eye on how you can: grow market share, increase sales, boost foot traffic and other specialized goals for your industry. Step 6: Designate Category Tactics — This is where you should get into the nuts and bolts of how you can put your strategies into motion.

Set clear and repeatable actions to improve category strategies. Consider how to improve products, placement, promotions and supply methods. Create a written plan to solidify tactics, category role, strategies and objectives. In this final step, measure your results and modify the process where you can as you cycle back through the steps. Why Was Category Management Created?

With these challenges in mind, Brian Harris created category management to address the following seven key areas: Force consumer focus when making retail decisions. Think of a department store. When you look up, the signs you see for their departments can give you insight to their category management hierarchy.

These should be strategically placed and organized for the average consumer. Develop a strategy for differentiation and competition. The better organized your categories are, the more you can control your price when sourcing. Provide a model for collaboration.

Organizing by category will inform your team on how to collaborate internally and externally with suppliers. Learn more about how your team can engage 3rd party partners in our supplier management article.

Promote information sharing to improve decision making. When you break away from a siloed procurement model, information should be open and accessible for all involved across the category.

Provide greater strategic logic when making tactical decisions. Clarify decisions about asset and resource allocation. Further clarify employee responsibilities. After organizing your procurement plan into categories, you can easily group personnel into those categories and better define their roles to achieve your goals. How Has Category Management Evolved?

Ask yourself the following to get started: How can I group and organize my similar products into defined categories? How would I organize my categories into a hierarchical structure? For example, if the corporate vision is to support local business to develop the local economy, the buyers need to create a vision to use suppliers within close proximity.

Prioritise - Objectives need to be set as part of the process to achieve the vision. Define - The strategies that should be set as the next part of the process need to reflect the objectives. A strategy for this example could be to contact all suppliers within a 50 mile radius and invite them to tender for all indirect cost related contracts.

Implement - Once the strategies are agreed and approved by senior management, the category manager needs to work with the stakeholders to gain buy in. The strategies need to be supported by everyone to ensure their effectiveness. Maintain - To help ensure that the strategies are implemented and the objectives are achieved, the category manager can set Key Performance Indicators KPI or Service Level Agreements SLA which can then be monitored to evaluate performance.

A KPI could be to sign three strategic product or service contracts with local suppliers within one year. Improve - At regular intervals, and the timing of such intervals depends on the nature of the industry, the categories should be reviewed. Procurement is a constantly evolving function so it may be that a category that was relevant at the start of a period becomes obsolete, non-critical or moves from direct to indirect.

The reviewing process is important to ensure that categories are always relevant and in keeping with the overall corporate vision. This may take up to 30 seconds. Destination: Category which comes under the role of destination contains products with which the retailer wants to profile himself.

It aims to position a retailer as a primary category provider and helps to define him as the store of choice by delivering consistent as well as superior customer experience. It aims to position retailer as one of the preferred category providers.

Seasonal: Category containing products which are purchased occasionally, is considered as seasonal category. It plays secondary role in delivering profits. Seasonal category can be used by a retailer to differentiate himself from competition during a certain period of the year. Convenience: Category which contains products that are not found usually on routine shopping list comes under the role of convenience.