Customise for profits

The objective of category management is to ensure better product plan on shelf, so that it can increase profitability by giving customised service. A study by Points de Vente, published by Liaisons et Convergence SA, says that category management is now a major tool of achieving profit.

Employing and implementing strategies

Category Management (CM) as a strategy to improve customer satisfaction works best if it can really implement best practices into reality. The more theoretical the strategies, the more difficulties are faced in applying them. According to Ms Manjula Tiwari, COO, Esprit, “Category Management leads to a focused approach towards pricing, distribution, promotion and growth for maximising the profit of a particular category. Thus, each category contributes as a building block to the growth of the entire business.” Mr Vikas Bagga, President, M& B Footwear says, “The success of category management depends on how quickly products are replenished and placed so that one can give the best customised service.” 

However, a retailer can adopt the following strategies of category management:   

• Collaboration in terms of strategies, systems, processes and staff as this would reduce the cost of conducting business while better serving the consumer, forming a robust CM strategy.  
• Emphasis should be given to customer satisfaction. For enhancing customer satisfaction, inventory rotation and replenishment of products should be done uniformly.
• An efficient CM strategy must include consumer research and upgradation of marketing competencies. Also, retailers can routinely analyse the composition of the market basket and incorporate consumer loyalty program data into the category planning process.
• A retailer should spend adequate time, money and energy on store execution. Consequently, planning and execution of new item speed to market plans, planograms, promotions and other initiatives should be executed well.
• The biggest malpractices in retail CM is that, it has never been presented to most store managers, so they do not know its value relative to their specific stores or the company, and they are not aware of the plans for priority categories. Store managers should be trained and involved in the entire function of CM.

Few challenges

Despite the fact that CM strategy holds immense potential, retailers and suppliers are not able to implement the strategy effectively in their business execution. Retailers are concerned about the exhaustive resources required to implement the textbook version of the concept. However, a small and mid-sized retailer can use technology in his business, and further a retailer can deploy radio frequency identification (RFID), biometric technology and barcode technologies in stores to ensure better managed category.