Category management is a retailing and purchasing concept in which the range of products sold by a retailer is broken down into discrete groups of similar or related products; these groups are known as product categories (examples of grocery categories might be: washing detergent, oral care, dairy products etc.). It is a systematic, disciplined approach to managing a product category as a strategic business unit.
Retailers and manufacturers have a different focus when approaching category management:
- Retailers are looking to optimise the efficiency of the category as a whole by stocking the best range of products that maximise sales, profitability and operational efficiency. Therefore, they want to stock the best-selling SKUs as well as maximise margins through negotiations with suppliers.
- Manufacturers are looking to maximise the share of their brand(s) within the category in any given retail channel. They are therefore focused on ensuring they have the best range of products, the right price and negotiating deals with the retailer on shelf/website space allocation and visibility, trade margins and promotional deals. However, manufacturers need to sell a “category” view to the retailer when looking to implement activations or changes in store that potentially benefit their brand.
The term “category captain” is often used, this is usually awarded to the dominant manufacturer within the category. Being category captain allows a manufacturer to collaborate closely with the retailer so it gives them the best opportunity to define tactics that suite their brand (s), but the retailer will also look to the category captain for shopper insights as well as ensuring they are focused on growing the category and not just their own brands.
Black Friday: Shifting its Centre of Gravity
Ahead of Black Friday 2018, Tim Denison traces the history of a retail event that has evolved into a global phenomenon. But what is different now to previous years, what can retailers learn, and what shape can we expect Black Friday to take in the future?