Category Management is, by its nature, an expensive process to undertake. There is no getting around that fact. And especially so if you want to get it done right. It doesn’t help then, that on top of that, there is a perception that it doesn’t offer significant value. That is a lie.
Anyone who argues that it doesn’t offer value clearly hasn’t used it extensively or efficiently enough.
So is it worth doing? The answer is undoubtedly yes. As we’ve pointed out in a previous article, it allows you to move forward and stay competitive. Then there is the fact that it drives customer loyalty and can even solve the frustrations of your shoppers.
That said, there is a better question to ask. And it’s this: how should you go about category management. Our advice? It needs to be a collaborative effort between both the retailer and the supplier.
Suppliers can persuade retailers to increase shelf space for their products
From the suppliers’ perspective, one of the main reasons for collaborating is down to the fact that they can persuade retailers to increase shelf space for their products. More shelf space for them means that they’ll make more money. The opposite is obviously true if they fail to persuade them.
That makes it sound like a one-way relationship where the supplier is the main benefactor. But that’s not the case at all. This persuasion is based on data rather than anything else. And it can’t be done any other way. Why? Because any suggestion that a supplier makes needs to make sense to the whole category.
Plus, imagine attempting to persuade a retailer to give you more shelf space when you can’t actually show them why you deserve it. That’s just not going to happen. As mentioned in a previous article, the retailer isn’t interested in just promoting your products. They need to get something out of it.
Thus, when a supplier suggests more shelf space, it’s actually done with the retailer in mind. Besides that, there is another reason to allow them more space: they can help you to prevent out of stocks.
How? A supplier will naturally ensure that the days of supply for their products are in order to prevent out of stocks. But they won’t simply stop there. If you choose them as category captain, they’ll ensure that the rest of the category is well looked after. They know that what is good for them is good for the overall category.
Retailers benefit from supplier expertise
We’ve already mentioned the benefits that a supplier can expect to receive in going the category management collaboration route. When it comes to the benefits for the retailer, there are just as many.
For example, one such benefit is that they can make use of a suppliers’ category knowledge. This is the type of knowledge that can result in planograms that are not only built better (based on data) but planograms that will perform better too. We only touched on it briefly in the previous section but having a category captain can boost not only a category but an entire store too.
A glance at the characteristics of a good category captain should confirm that: they are category specialists and thus have extensive knowledge to the point that they can help develop a retail strategy. Considering the number of categories a store has, there is no way that a retailer can do this properly on their own. But with a supplier at their side, it’s a much easier process.
They also know the shopper inside and out, sometimes even better than the retailer, having studied their shopping behaviour as well as their wants and needs. Since category management is all about providing customers with what they want, where they want it, and when they want it, having access to that information is invaluable.
Retailers and suppliers can improve and strengthen their relationship
There is a lot that can be gained from collaborating on category management plans. As mentioned in an article on BizCommunity, merging the collective knowledge of both a retailer and supplier results in both parties winning.
While the above article is in reference to winning from a financial point of view by pleasing customers, it is far more than that. In collaborating, the overall interpersonal relationship between a retailer and supplier is strengthened.
That should only make sense, though, if you consider that in going this route, the line of communication between the two is always open. Of course, that doesn’t mean that all collaborative efforts will work well.
To ensure it works out the way you want it to, you need to ensure that the process is simple, robust and well-documented.
It’s also worth noting that the strategic intent of both the retailer and supplier needs to complement each other. For example, a supplier might not be a good fit if they are attempting to capture a particular section of the market while the retailer is going for a completely different section.
