Buying vs. Category Management. The easy way to look at it…
Buying vs. Category Management.
What’s the difference and why should you care?
It can make all the difference in the world for retailers when the big guys come to town!
They may sound subtle to many, but I would say they are in fact very different concepts. Buying is the act of acquiring goods and services that you will offer your consumers to purchase in your store or office. Category Management is the way in which you decide what to buy, when to buy, and why to buy those goods and services that you are offering.
When I am out of the office and I am wearing my consumer hat, and walking through retailers of both goods and services, I am always trying to figure out, why they are doing, what they are doing. What motivated them, or what was the thought process behind the offering in front of me? What is, or was the “vision”? How does that fit into what I think they are trying to do as an overall business? Does it make long term sense, or maybe any sense at all?
In more and more cases, I am wondering if any of the decisions make sense.
I even take this approach when looking at the decisions that we are making as a family. What are you trying to do?
Retail buying is not rocket science (trust me, if I can do it…) However, retail category management is a little more like a science (I know, not science like nuclear physics, but…). Category management is more of a discipline and requires more thought and the ability to have a vision, understand how to communicate that vision, and finally having the abilities to execute that vision. It requires one to have the ability to change, own a mistake and fix it and to own a wind and run with the next one. I really requires a lot of flexibility in thinking, be creative.
So how do you do it?
I tried to explain it to a group of colleagues a couple of weeks ago. I tried to go through the process of what “I” think is good retail category management. It’s really just a couple of steps…
Pretty simple; pick the category you are trying to manage, understand the market you are in (who are the players), define and understand what it means to compete, be different, and to be a non-conformist, define you customer, set a direction, execute, and finally monitor, and don’t be scared to evaluate and revaluate. At every single stage you start at a very high level and then get granular, that’s it. At every single stage, you may have to go back up and down your checklist and check, and recheck, to make sure you are always staying on strategy, or if strategy needs to change, then change it!
Category: Coffee. Coffee would be the highest level and then you can bust down to ground, bean, pods, instant, flavoured etc… Then you would get down to roasts etc…
Market: Start at the highest level, where is coffee in Canada, then by region and then by province and then maybe down to city. Who are the key players at each of those levels? This is important as the key players may change as you get more granular. Ask vendors for insights, read trade magazines, ask store staff and ask your friends. All opinions have some merit. Your job is to weigh them out.
Definitions: What does it mean to compete, to be different and to be a conformist or non-conformist? Why does that matter and why spend any time here? This is where you ground yourself again. Why are you doing this? Are you buying and managing a category to be like your competitors? Do you want to be the same? Seriously!?!? This is about winning. It’s about offering cool and maybe different, if not truly different in offerings, at least different in approach, or maybe it is both. It’s about thinking why you are doing this. If you are not trying to win customers away from your competitors, stop now and see if there is something else to do in your building.
Demographics: Who is your consumer and how and why do the buy and what do they want from you? You may be able to find this out by asking your marketing department, observing your consumers in action in your stores, watching consumers in other stores, asking your store staff (underutilized group for sure), ask your vendors (another underutilized group), ask for basket analysis if that is possible, and read trade magazines that may be able to assist you.
Tactics and Strategies: Remember tactics are short term moves you use and strategies are the longer term moves. How is the planogram going to look, what are you going to carry, how are you going to price every day and on feature, how are you going to go to market, are you going to use a category captain or do this on your own? All important issues to discuss and think about. What subsets within the category do you “have to” have, and what are the ones that you would just love to have and own? Where are you going to excel and what are the potholes and or roadblocks on the path you are on?
Execution and Monitoring: Light it up (Remember, I am from the Kootenay’s)! Let’s go, build it and start to watch the sales and margins come in; you hope. There may be tweaks and retweaks that need to happen. You are never really done. Categories move and change all of time. They really do “breathe” and grow and even get sick, just like your families. They need constant car and attention and sometime fixing up. You may have to go back to the beginning and start from the top. Recheck and revalidate!
The real trick is to not view any step in isolation. You follow the steps in order, but you are always checking and validating what you are doing.
Have fun my friends! Retail category management can be really quite fun and if take seriously, very rewarding!
Ciao for now @kootenayborn