Category Management Leads to Sameness
By George Anderson
A Business 2.0 article, Who’s Minding the Store?, says category
management may limit the ability of retailers to differentiate themselves from
competitors.
Andrew Raskin, the author of the article, writes, the use of category management “is growing because it works — at least from a dollars-and-cents standpoint. According to a recent survey by retail consultancy Cannondale Associates, retailers attribute 14 percent sales growth to category management; manufacturers report an 8 percent jump.”
Category management may lead to greater efficiencies, say critics, but it also “is the driving force behind a cookie-cutter marketplace in which Safeway, ShopRite, and Save Mart all carry the same stuff. In their view, category management is retail’s Faustian bargain: Lured by the savings and convenience of getting manufacturers to mind the store, retailers have ceded not only responsibility for their shelves but also any hope of differentiating themselves.”
Moderator’s Comment: Are the critics correct? Is category
management “the driving force behind a cookie-cutter marketplace in which Safeway,
ShopRite, and Save Mart all carry the same stuff?” [George
Anderson – Moderator]
It’s amazing to observe so many intellectual and invigorating comments on the pros and cons of Category Management (CM).
Being associated with one of India’s leading retailers, I had this opportunity to work with many companies who not only preached but also practiced CM.
It is important for the Category Manager to lay down his goals first as to how best he can derive benefits out of CM. Once the path is set, then it becomes easy for the manufacturer to go down this path and ensure that he innovates on his way to the goal.
Innovation could be in the form of category specific promotions or activities that would increase customer recall and benefit the overall category. The onus is on the Category Captain to push for innovation with active involvement of the Category Manager. For example, Procter & Gamble had run an in-store activity wherein they had installed a television and a hand held device to gauge the quality of hair of the customer and then suggesting him the brand or type of shampoo suitable for her hair. This activity was a huge success, and this increased the excitement factor towards the Shampoo category.
CM is sometimes the victim of the agreements which the retailer has with the CPG companies. Assortment rationalization is done keeping in mind the mutual benefits and relationship building objectives in mind. This ends up including non-performing SKUs which otherwise would not have found space in the assortment planning.
CM goes in sync with effective promotion and in store activity planning and creates excitement through innovation within the category.