Retail Category Management Basics

05/03/23

Amit Kumar –Business Development Partner

PROMOTING

PRODUCTS

PRICING

PLACEMENT

CATEGORY MANAGEMENTINVOLVES BUILDING A BUSINESS PLAN AROUND THE 4 P’S

Objectives Review Objectives & Agenda Category Management Overview

Why Category Management? What is Category Management?

Implementing Category Management Core Components

StrategyBusiness Process

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Agenda -- Continued Enabling Components

Organizational CapabilityInformation TechnologyCollaborative RelationshipsScorecard

Benefits of Category Management

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Agenda -- Continued The Strategic Category Business

Process Corporate Strategy Category Definition Category Role Category Assessment

Assessment Worksheets Category Profitability

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Agenda -- ContinuedCategory Management Strategies

Category Management Tactics Assortment Tactics

Assortment ChoicesCategory Role LinkageAssortment AnalysisAssortment Assessment Worksheets

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Agenda -- Continued Pricing Tactics

Pricing Choices Category Role Linkage Pricing Analysis Pricing Assessment Worksheets

Promotion Tactics Promotion Choices Category Role Linkage Promotion Analysis Promotion Assessment Worksheets

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Agenda -- Continued Shelf Presentation Tactics

Shelf Presentation ChoicesCategory Role LinkageShelf Presentation AnalysisShelf Presentation Assessment Worksheets

Integration Into Strategic Category Plan Strategic Category Planning

Worksheets05/03/23

Why Category Management? Consumer Trends

Complex consumer demographics Population growth rates have declined

Competitive Pressure New store formats

Warehouse clubs & mass merchandisers New product introductions

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Why Category Management? -- Continued Economic Considerations

Slow growth economy & low interest rates Companies pressured to improve financial

performance Industry Capability

Shared business goals -- Focus on Consumer Shifting from internal optimization to maximizing

consumer value Trading Partner Alliances

Leveraging of resources between trading partners

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Why Category Management? -- Continued Empowerment

Authority & accountability to front-line managersPricingProcurementPromotion

Information Technology Distributors & Suppliers share data

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Category Management & ECR ECR (Efficient Consumer Response)

creates an environment and tools which enable the distributor & supplier trading partners to work collaboratively to deliver superior value on the products and services they offer consumers

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Category Management & ECR -- Continued

Category Management key component of ECR Provides strategic framework, business

process and organizational framework within which collaboration takes place

Profound impact on each of the four ECR strategies Efficient promotion Efficient Replenishment Efficient Product Introductions Efficient Store Assortments

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Definition Category Management is a

distributor/supplier process of managing categories as strategic business units, producing enhanced business results by focusing on delivering consumer value.

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Basic Principles of Category Management Categories are managed as strategic

business units Categories are managed strategically

through category plans and strategic roles

Category Managers control their share of company assets

Asset Returns measure performance and establish priorities

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Basic Principles of Category Management -- Continued Responsibility for category

performance/ownership is clearly defined and not fragmented across organization

Category Management leverages distributor and supplier expertise for mutual benefit … neither party can do the job alone

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Six Components of Category Management

Core Components (essential) Strategy Business Process

Enabling Components (assisting) Scorecard Organization

Capability Information

Technology Collaborative

Relationships05/03/23

Strategy Categories are strategic business units Overall company strategies provide a

infrastructure for category level strategies

Strategies must be clearly understood throughout the Retailer’s organization

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Business Process A formal, disciplined set of activities

designed to produce a specified output Development and implementation of

Written Category Business Plans

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Scorecard A tools that defines, measures and

monitors the progress of Category Business Plans

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Organizational Capability Development of the organization’s core

competency Through organizational structure Roles/Responsibilities Skill/Knowledge development Reward Systems

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Information Technology Critical elements of the Category

Business Planning Process Need data-driven, fact-based analysis and

performance measurement

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Collaborative Relationships Relationships with suppliers who acquire

unique perspectives, resources and skills Common objective -- delivering superior

consumer value more profitability

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Distributor vs. Supplier (Overlap & Differentiation)

Supplier (Manufacturers & Brokers) STRATEGY INFO TECH ORG. CAP. SCORECARD

Distributor (Wholesalers & Retailers) STRATEGY INFO TECH ORG. CAP. SCORECARD

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Category Definition

Category Role

Category Assessment

Category Scorecard

Category Strategies

Category Tactical Plans

Implementation Plan

Cat

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The Strategic Planning Process

CATEGORY MANAGEMENT PROCESS

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Category Definition The trading partners need to define the

new category with a name What is it? What are the sub-categories?

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Category Role The distributor (with supplier input)

would define the overall role the selected category is going to play in the distributor’s total business How important is the category? How to leverage the importance?

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Category Role -- Components Destination

To be the primary category provider and help define the retailer as the store of choice by delivering consistent, superior target consumer value

Routine To be one of the preferred category

providers and help develop the retailer as the store of choice by delivering consistent, competitive target consumer value

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Category Role -- Components Continued Occasional/Seasonal

To be a major category provider, help reinforce the retailer as the store of choice by delivering frequent, competitive target consumer value

Convenience To be a category provider and help

reinforce the retailer as the store of choice by delivering good target consumer value

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Category Assessment Comprised of accumulation of all

appropriate consumer, distributor, supplier and competitor data for analysis relative to opportunities represented for the category chosen How is the category doing? Versus Potential? Versus Goals?

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Scorecard Establishment of the performance

measures by which the category manager will measure the quality of the execution of the plan What are the goals & objectives? How is the progress?

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Category Strategies Assignment of specific strategies to key

elements of the overall category What is the business plan? How will it achieve the role & scorecard?

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Category Strategy - Components Traffic Building

Consumer Draw Transaction Building

Increase the Register Ring Profit Generating

Improve Category Gross Margin Turf Protecting

Defend Sales and Share (other formats)

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Category Strategy -- Components Continued Cash Generating

Increase Category Cash Flow Excitement Creating

Generate Sense of Urgency & Opportunity Image Enhancing

Reinforce Retailer’s Desired Image

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Category Tactics Specific activities supporting the

category strategies which would include item variety, everyday and feature price targets, shelf presentation, etc. What do we do to achieve the strategy? Who does what?

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Category Tactics -- Components Assortment Pricing Promotion Shelf Presentation Product Supply

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Plan Implementation Key Components of Plan Implementation

Approval Process Strategic Fit Scorecard Impact Resource Allocation Impact on Other Areas

Assigning Responsibilities Scheduling

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Category Review Ongoing review and measurement of the

progress of the plan toward the category role and scorecard, and modification of the plan when appropriate

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Conclusion The Staples & Grocery Retail industry is

in a major state of transition. This change is a function of a complex mix of consumer, technological and market factors.

Category Management represents a business oriented approach to achieving business results -- both for distributors and suppliers

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Thank You

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Grow with Growing Industry

05/03/23