Let’s talk about Category Management
Gilles Dallest
As any professional from the FMCG world can tell you, 25 years after Category Management crossed the Atlantic, it still hasn’t become the standard for collaboration between retailers and suppliers that it promised to be.
It’s true that Trade Marketing, Category Management or Shopper Marketing functions are no longer the exclusive territory of the most important multinationals, as was the case in the 90s. Regardless of what we call them, the reality of what happens is often very different from their initial expectations. If the retailer pays greater attention to each supplier’s specifications and the channel in their development plans, their hands become tied by the trade concentration and therefore their negotiating power. As a result, too little emphasis is placed on the shop’s philosophy and putting shopper satisfaction at the center of its strategy.
“To grow categories together in a profitable way by satisfying shoppers‘ expectations in the best possible way.”
This could be another definition of the Category Management process and, at conferences, lectures and on the web, most retailers and suppliers seem to agree that there’s a common interest in working together in this way. If this is the case: why is it still not a standard process?
- Category definition
- Category role
- Category assessment
- Category targets
- Category strategy
- Category tactics
- Plan implementation
- Process review
Apart from these established eight steps, here at POS Potential we believe that there are three essential factors that need to be present to effectively carry out a Category Management process. They are:
- Openness
- Trust
- Information
Openness from both parties involves agreeing to leave confrontation to one side and accepting that, even for the retailer, the brand isn’t always the be all and end all. They must also appreciate that the supplier may not be an expert in each of the hundreds of categories present in its shops. What’s more, they must accept that sometimes a category’s function and importance may not overlap for both parties: products that are fundamental for the retailer may be ‘routine’ or ‘occasional’ for a supplier, depending on the positioning of its chain.
Trust involves listening, understanding, sharing, admitting doubts – and perhaps even weaknesses – and accepting that collaboration should benefit to both parties.
If we have an open and trusting attitude, we can share the essential element that is so often missing in these projects: information. How many initiatives fall by the wayside or are reduced to a classic planogram exercise which, let’s face it, is more a tactic than a goal?
Because, in the end, without quantitative information like sell out data or loyalty card data (with 90% of this info coming from the supplier), there is no Category Management process. Even if the data is available, the technical challenges involved in converting the raw numbers into actionable insights and growth-drivers may exceed the capabilities and resources of even some of the most prominent companies. This could be due to lack of time, personnel or techniques, or simply because their priorities are more focused on producing, distributing, inventing and negotiating/selling rather than ‘chewing over’ the data.
That is why – in addition to openness, trust and availability of raw data – it’s important to be able to count on a partner that can speed up the process to implementation. A partner who obviously possesses a high level of data-processing abilities, but also provides quick analysis, has extensive sector experience and who is able to understand all your needs – helping you identify insights and opportunities, while guaranteeing trust, transparency and honesty. Ready to kick-start your Category Management processes? At POS Potential, we’re sure we can help!
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