Shelf Success

Thoughts on category management depend on what function you serve and which side of the consumer goods (CG) street you live on -- manufacturer or retailer. Since category management generally includes multiple facets such as pricing, assortment, new product development and promotions, in an attempt to address channel erosion and the battle for shelf space, trying to focus in on one thing that makes it successful can be like looking through a kaleidoscope.

 

Last year CGT's supplement, "Managing the Shelf," detailed this dichotomy and revealed other category management quandaries. Some key findings include:

• 54 percent of respondents use a formal software tool to help with category management
• Both retailers (51 percent) and manufacturers (39 percent) rate assortment planning as the most important priority
• Who should perform category management work: Manufacturers answered 36 percent sales people/brokers, 32 percent marketing and 30 percent trade, while retailers overwhelmingly (71 percent) named retail category managers and supporting planners/analysts
• Who should perform category management work: Manufacturers answered 36 percent sales people/brokers, 32 percent marketing and 30 percent trade, while retailers overwhelmingly (71 percent) named retail category managers and supporting planners/analysts

 

This last point may especially ring true according to the Feb. 8, 2006, report, "Own the Shelf Replenishment Problem," by AMR Research Analyst Lora Cecere. She explains that there is a changing dynamic with retail relationships. "Retailers are consolidating. There are fewer relationships, and they are more selective. The retailer wants to be important only to a few suppliers that want to be important to them."

 

According to Canondale's "2007 Category Management Benchmarking Study," more retail channels are putting greater emphasis on category management. For example, 100 percent of drug store respondents and 92 percent of club/dollar stores rate it as "very important."

 

So while everyone has to walk down the same aforementioned CG street, the road ends at the shelf or as named in AMR Research Analysts Martin White and Alexandria Rumble's alert of Dec. 6, 2006 -- "Retail Space-The Final Frontier." They identified three levels in which retailers and suppliers work in: Macro space, category space and micro space (see chart).

 

 

 

What this means to CG companies, they explain, is that as retailers move through this model to maturity, they will "strengthen their understanding of assortment and space optimization," availing CG companies of some influence. Manufacturers, they say, "must move the subject onto new opportunities." CG