Category Management - Retail

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Every retailer has to make some fundamental choices in terms of the merchandise to be stocked. More than a decade ago, the concept of category management revolutionized retailing and its fundamental approach towards merchandising. Category Management is a way of managing products on the level of a product group, rather than on the level of single product. At the core of the Category management concept is a focus on a better understanding of consumer needs as the basis for retailers and suppliers strategies goals and work processes. The evolution of the concept of category management is closely linked to the development in the field of supply chain management and technology. Technology plays a key role, as information is a key enabler. The idea is to use this information to tailor the product offering to consumer needs. The offering is then measured in terms of sales, cost and returns per square foot. The whole process is aimed at providing customer satisfaction and at the same time, maximizing returns for the organization. This focus causes a re-evaluation of many prevalent business practices, which may have obstructed a greater understanding of consumer needs and opportunities We start this article by understanding the concept of category management and then look at the reasons for the emergence of the concept and finally, at the business process in which it occurs. The Concept of Category Management:

Category management is considered as the new science of retailing for three basic reasons. First, it involves a systematic process that has been shown to be robust in various retail situations across the US, Europe, South Africa, Australia and Latin America. Second, it emphasizes decision making based on complex analyses of consumer data, scanner data and market level syndicated data. Third, category management replaces the brand bias that stems from a supplier’s interest in maximizing market objective view based on the consumer’s desires. Quite simply, category...
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