Who Manages Your Categories, And More Importantly, How Do They Do It?
Originally Posted February 2014.
Category management. What is it, who does it and why is it important in today’s retail. I have been in numerous conversations with others in the industry and I am amazed at the way many view the idea and practice of category management.
Most times conversations start with the usual small talk and then work into the “So what do you do?” Most buyers and merchandise managers will inevitably say that one of the key functions of their job is category management. When pressed, I find it very interesting as to how they define that particular concept or part of their duties; category management.
What I generally find out, more times than not, is that most of the self-proclaimed category managers are really just buyers, or as I facetiously say, shoppers. They really do not perform the duties of a category manager at all, at least in my most humble of opinions.
I’m not in the world of academia, but my best business definition of what category management would be to me, is something like this; “Having an individual (merchandise manager or a buyer) oversee the procurement, marketing, and merchandising strategies that span entire product lines, made up of single items and brands, and determining the “global” direction these will take within his/her company based on his/her knowledge as to what his/her consumer wants, as opposed to managing just those individual items or brands on a granular level with little continuity or respect to, the whole; the latter being what I would say is a “typical buyer.”
To use an analogy from the military: It’s the Admiral, General or Marshall that determines the direction of the offense and defense within a conflict, from a higher level and broader perspective, they are given the responsibility to manage the many moving parts of war; the soldiers and equipment be they on the water, ground, or air. They are the “category managers” in their world.
From an artistic angle, a good category manager is like the author of a great book or the artist of a great painting – they are a story teller if you will. A good category manager will take you on a shopping journey. You won’t be bored and time will move quickly and effortlessly. You will walk out of the store with a feeling of be fulfilled and satiated, emotionally, physically and hopefully monetarily. Just like a great book or a great painting can make you feel.
So what? Why the distinctions and does it really matter in today’s retail?
The challenge for a retailer, when your business is being built around a buyers vision and direction vs a category managers, is that you may buy and execute well, and the buys may be tactically brilliant, but you may end up with just the latest and greatest items or opportunity buys, but you will not be telling a great story. You will have a very disjointed feel and thus a lackluster shopping experience for your customer, albeit there will be some kool buys and decent deals.
When you look at the items you buy as a collective, and when you put all the pieces into a box (the physical store or your online store) and line them up on your shelves in their respective planograms, you start to tell your story. I can see what you are trying to show me, I can see what you are trying to get me to buy and why. I just get it and I will appreciate it because you made it easy and entertaining.
I’ll give you my example in an unrelated field, but retail nonetheless, and I think you will get the gist of it.
I call a real estate agent and I inform him/her that I am in the market for a condo in Vancouver, want to be on the East Side (like it would build a story without East Van in it).
Typical questions would follow. How much do we want to budget, how big we thinking, and probably ask if there is any urgency. Our lovely agent would then get us places within their arsenal of listings that would match what we had talked about.
If you have done this exercise before, you can probably visualize the results. You see places all in the same price range and maybe within a kilometre radius and all feeling quite blah (not a great word – but it describes it well).
It’s typically due to the fact that most agents just want to sell something very fast and easy and make some easy money. Hopefully a listing from their own pool also, as commissions are better. It’s not a wrong approach per se, it’s just a bit easy, little lazy and typically not a good long term strategy. It’s going to work on many occasions, but more times than not it’s going to be a one hit wonder as the experience is going to be “ok’, but nothing great. No great story so as the reader, why read another from the same author.
Now what happens when the same agent spends a little more time getting to know and understand their customer? Maybe sit a discuss lifestyle and family aspects. Ask about work and hobbies and interests. Really get to know the customer and their true likes and dislikes from a broader perspective.
The listing of houses probably becomes a little more diverse and much less homogeneous. The radius may now extend out to 5 to 10 kilometres. Probably going to have a wider variety of price points, still understanding budgets, but not making that the show stopper. The “basket” of offerings is going to be very different and much more enjoyable for both parties in this case – seller and buyer – as the story presented is more intimate and intriguing. More personal and genuine. Just more fun for both.
For sure, more work for the agent (the store or category manager/buyer), more work for the customer (offerings are different and more diverse), may take a little more time commitment for both parties in terms of info gathering and actual sightseeing. All true.
What is also true is the some of the following. We get a more rewarding and enjoyable process for the customer as the effort put in by the agent will be seen in the offerings. There is a more rewarding and long term serving play for the agent, although the process is a bit longer and more intensive in the short haul, it’s done, and the agent probably has a much greater bass of listings to show the next person and should be assured of glowing recommendations and thus should make more money as the chances of upselling or just regular selling will increase exponentially. The above scenario of offering a more diverse, and yet well focused and strategic selling method is just good category management.
By not looking at listings as individual selling units, rather focusing on a collective of offerings that are different, and yet complementing, while still being interesting, the agent is making his service and offerings very unique in a market where agents are mostly viewed as a homogeneous group of commission hungry beasts with limited concerns for what is best for me.
That is the same thing that good category management does in retail when most people view shopping for clothes and food etc. as a chore and boring, as everyone really just sells the same stuff. Box of crackers here is the same as a box of crackers anywhere…
What changes that mentality and attitude is when your buyers and your so called category managers actually start looking at their categories like the second agent. Don’t look at just the cracker box in front of you as a single entity. Look at how that box sits within all of your cracker set. How it fits within your snacking and entertaining product mix. How does is fit within your deli and or cheese set. When you are getting ready to make that listing decision, ask yourself, what else will our customers look at when they are buying that box of crackers. What is the greater basket look like and how does this item fit or not fit within that basket. That simple box of crackers is part of a much greater picture, are your category managers seeing that?
By getting to know your customer, by stepping away from the task of just buying items to buying the entire category, by looking at a bigger picture and writing a cool shopping story around it; that is how you grow customer loyalty and grow your baskets and ultimately your profitability.
We like to call is “Shopping made easy….”
Proper category management is crucial to the long term success of any retail business today. Step back and see what your buyers and category managers are actually doing and ask if what they are doing is really best for the long term success of your retail establishment?
Ciao for now @kootenayborn