The Category Management Playbook

Ten tools every retailer needs to build the best stores

Abbie Westra, Director, Editorial, CSP

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Step 8: Tactical Success Models
This tool in the retailer’s arsenal is meant to identify and map out strategies around assortment, pricing, merchandising and promotion that have proven success.

“There are only five things you can do with a product,” says Wade. “You can put it in or take it out, price it higher or lower, place it here or there in the plan-o-gram, promote it this way or the other way, and you can vary the service level. So the question is: What works?”

This is where one of the most common category-management mistakes can happen: the lack of proper follow-through and analysis. Wade urges manufacturers to develop the metrics to measure the effects of promotions—and retailers to demand such analytics from their vendor partners.

“One of the great sins of modern marketing is that management will spend hundreds of thousands of dollars on an initiative and nothing on measuring its appeal to the shopper,” he says. “Agree in advance what will be measured and how. If you don’t have the data, ask yourself what’s more expensive, the data you need or the continuing ignorance about what is working and not.”

Step 9: Category Profit Report
While the Vendor Line Review is intended for the supplier to present to the retailer, and the Supplier Review is meant for the retailer to analyze the supplier, the Category Profit Report is an internal tool to help the retailer identify what items are generating profits and, based on such performances, the role of that category within the total store.

The Category Profit Report should:

  • Compare categories on a series of metrics based on corporate strategy and category-management objectives;
  • Inform and align management around performance metrics, revealing how the company is delivering against its strategic objectives;
  • Be assigned to an owner who will develop such cross-category reports regularly.

This step reveals the more holistic, total-store view of category management. “While we manage on the basis of a category being a strategic business unit, it is managed as a part of a portfolio,” says Wade. “That is the purpose of the role development step in category management. That is where one looks at a category and says: ‘This is a really important category to me; therefore, I should give it more assets, more space, more inventory and more of my time, because it’s really important.’ ”

Step 10: Competitive Review
Most retailers track their competitors, but how many are doing it in a standardized way? This final step in the CMA’s ROI Improvement Plan has you create a formatted review of principal competitors. It should include:

  • The company’s strategies and tactics around assortment, pricing, merchandising and promotion;
  • Overarching company initiatives;
  • Recent changes to the company as a whole and the category specifically.

Assign one person per category to own this task on an ongoing schedule, sending updates to the entire team on a monthly or bi-monthly basis, says Wade. Lean on suppliers and third-party firms for some real data-driven insights for the reports, and look not just at the c-store channel, but also competitors across the segment.

“A shopper doesn’t think of just c-stores when he’s going to lunch,” Wade says. “He thinks about everything from a Frisch’s here in Cincinnati to a McDonald’s to an Applebee’s, as well as a Hess and a Wawa.”


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