Category management is a common term familiar to players in the retail industry. In fact, it is an essential factor for retailers to not only manage clusters of items within a shop environment but also a way for companies to buy more efficiently and save significant sums of money during procurement. At a basic level, category management deals with bundling items. Buyers examine items purchased across the company and consolidate different agreements into a single contract and price. A category primarily refers to any group of similar products, which the company wishes to buy under a single deal. The management part here is all about applying procurement methodologies to ensure that the company reduces cost and maximizes savings. We disclose
eight crucial steps that will help businesses in the retail industry to become masters in category management:
1: Define the category
It is vital for retailers to have a clear understanding of their business, their customers and the consumers who buy your brand. The business’s ability to gain in-depth knowledge of how customers shop the category helps them to define the category. The consumer decision tree identifies the choices and the order of decisions customers make when they shop a particular category of products. Understanding the role of complementary goods in influencing buyer decisions will also prove to be useful.
2: Category role
Role identifies the value of a particular category to the retailer. It defines the function the retailer wants the category to play in their store. For instance, a category can be used to attract customers to the store, increase store traffic, support routine shopping needs, be a destination for seasonal/occasional purchases, a one-stop-shop or convenience. Retailers may assign different roles to categories within their stores depending on the segment of customers they want to attract.
3: Performance appraisal
The next step in category management is to understand how a category performs across different outlets in the market, also in comparison to the competition. The parameters include pricing, promotion, placement, and product assortment assessment.
4: Preparing a category scorecard
In category management, a scorecard refers to the strategic allocation of activities to be performed to attain the category goals and objectives. It summarizes various observations and analysis to help develop goals and targets for the category. It also assesses the consumers’ buying habits.
5: Build category strategies
Strategies help to fine-tune the category to meet the objectives of the scorecard. Strategies are designed to help businesses in the retail industry grow market share, increase sales, increase foot traffic, improve gross margin, increase ROI, increase the basket size and ensure customer satisfaction.
6: Implementing tactics
Tactics are activities that are implemented to ensure that the category strategy is achieved. It is essential for retailers to have a thorough understanding of their brands and correctly predict the tactics that would work well for each category.
7: Implement the plan
This is the step in category management that gives life to the strategies and tactics of retail industry players. The degree to which companies can implement the plan successfully decided the success rate of the business.
8: Performance review and assessment
The final step to be successful in category management is to measure, analyze, and review the results. This will help companies to measure the deviations and take timely corrective action.
