The entire process of category management revolves around the partnership between the supplier and the retailer. The success of the partnership is critical to both. Many retailers follow the method of appointing category captains to develop a category and further partnership.
Another useful method, and one often used in the developed markets of UK and USA, is for the retailer to identify and work with a category captain to develop the category. The category captain is a supplier who forms an alliance with the retailer to enable the latter to develop consumer insight, satisfy consumers and improve performance and profit across the category.
The category captain is most often, the leading manufacturer in the category. Yet, the category captain must also be mature and objective enough to look beyond is own products and brands and lo at promoting the entire category, event the products brands of its competitors. The focus of the category captain is the growth of the entire category and thus, a boost to the category captain’s sales too.
The process of category management has been widely implemented by retailers in the mature markets. It also has immense potential for application in the Indian retail sector. However, India is at an evolution stage as compared to the mature markets. Given this scenario, a retailer in India may need to adapt the process to suit an evolving market.
Retailers in India are still determining the kind of formats that they want to operate and the scalability of these formats in smaller towns and cities. Many of retailers continue to operate at a regional level and a significant amount of competition is offered from the traditional formats. Given this scenario, the process of category management needs to be modified. It needs to start with a basic definition of the target audience and the image that the retailer seeks to create in the market.
The process needs to start with a clear identification of the target market and the positioning that is the mind of the customer. The location of the store is a key factor affecting the merchandise mix and the image to be created.
Once this has been determined the retailer needs to develop the initial merchandise /category portfolio. He then needs to assess the potential in the market and review if any additions or reductions need to be made to the merchandise to be offered. A tactical plan then needs to be developed, in line with the retailer’s overall strategy. Performance measures are identified and the plan is implemented. Review of the performance is done at predetermined intervals and aids the assessments of the potential of the category and refinements that can be made, if necessary.
The full scale adoption of category management requires a considerable amount of reorganization on the part of the retailer. Concentrating on efficiency in logistics and merchandising may result in highly efficient retailing; however, there is a risk that the consumer experience is being given lower priority. This could be a dangerous strategy when store based retailing is becoming increasingly threatened by much more efficient (from the customer viewpoint) home based retailing formats. Category managed product ranges are stage and offer the majority of customers in the majority of purchase decisions, efficient selections of market leading products; however these selections may start to appear boring over managed.
Thus, we can say that the process of category management provides the retailer with tools and guidelines for managing and handling products, their promotion, new products introduction and assortment forming. It needs to be remembered at this juncture that people and not the process or computers drive the category management process. Despite the fact that category management in India is still at a nascent stage, most retailers are rather clear that it will gain in importance over the next few years few years. For one, it will evolve into an essential component of business planning by virtually al retailers. It will also be driven by better partnership between retailer and suppliers. And finally there will be greater focus on the consumer.