Since being introduced to the convenience channel nearly two decades ago, the category management approach has certainly evolved, especially in the areas of data—both its availability and the capability to analyze it—and consumer/shopper behavior research.
While we all experience “shiny new object” syndrome from time to time, I have never seen any organization struggle with category management because they didn’t have the latest technology, shopper insights, or ultimate analytics.
Convenience store chains struggle because they:
- Skipped the basic principles of category management. Whether they view them as unimportant or believe they were already proficient in those areas, neglecting the basics leads to inefficiencies or failure.
- Lost focus over time when the latest technology appeared.
Whether you’re just starting your career in category management or your organization could use a refresher, a review of the basics is equally beneficial.
Foundations of Category Management
At its core, category management is a systematic, disciplined approach to managing categories as strategic business units, while focusing on consumer expectations.
An effective category management process helps retailers and suppliers work together to:
- Analyze business performance
- Better serve consumer needs
- Grow sales & profits
Using these precepts as our foundation we can identify the essential elements—the basics—to successful category management implementation and maintenance.
Start Where You’re At!
Never before has the industry had as much data as well as the capability to analyze it as exists today. However, that does not always apply equally across all retailers. Two key success factors for all retailers in this area are:
- Use the data you have (while planning for enhancements)
- Work with trusted supply partners to fill gaps and supplement data
The real key is to turn that data into actionable insights that you can use to better serve your targeted consumers’ needs.
Be Honest with Yourself!
An objective internal assessment of organizational strengths and weaknesses will:
- Help the retailer determine their key categories and the optimal role each plays in the total store offering
- Provide the basis for developing strategies and tactics to implement and support store execution across the organization
This implementation and maintenance can only succeed with effective and efficient communication.
Measure, Report, Adjust!
As with the first precept of data analysis, there is a likelihood you may not be able to measure everything you would like to, at least initially. Again “start where you’re at” by identifying two or three key metrics for each category’s performance that you can measure.
When you obtain those results, share them with key departments within your organization. Knowledge in and of itself self is never as powerful as knowledge shared. Use that knowledge to make course corrections as needed and repeat the process.
Each time you repeat the cycle it should become more efficient and better supported by advances in data, analytics and consumer information.
Various technologies can make your category management more efficient and more profitable. Sticking to the core principles of category management will enable the technology to maximize your return on investment.
One last admonition: Get started!