CATEGORY MANAGEMENT: THE JOURNEY TO SUCCESSFUL MERCHANDISING
Did you know Agrinet offers category management services to our clients across South Africa? Carlo Bezuidenhout, Category Management Manager at Agrinet, put together informative points relating to the importance of Category management, merchandising and other in-store disciplines, that will help maximise sales off the retail floor.
What is category management and what can it do for your business?
The playing field in the retail business is becoming more and more extreme and in order to survive in the current economic climate of doing business, retailers need to more tightly manage their inventory levels whilst still meeting their customers wants and needs.
Category Management is the management of product categories as strategic business units, were an assortment, pricing, inventory, shelf – space allocation, promotions and buying are all managed as a whole. This approach is taken in order to maximise the profitability per product category.
The definition of merchandising:
- In retail, merchandising is the “Practice of making products in stores available to consumers”, primarily by stocking shelves and displays in a functional and appealing way.
- “Shelf presentation” is critical because it either drives purchases or drives people away
- Good merchandising creates an “effective consistency” workflow.
How does category management affect merchandising?
The critical aspect of merchandising is the determination of shelf space, and how to maximise shelf space in terms of sales. Having the right space allocation for products and categories plays a critical role for retail success. Category planning encompasses selecting the right categories and the items within them. The selection of the appropriate items for a store refers to the breadth and depth of the assortment, quality levels and brand portfolio.
In many cases, merchandising planning is integrated into a category management process, which supports the strategic retail positioning by assigning defined roles to a category and systematically deriving the subsequent marketing decisions from the role.
Retailers and suppliers need to collaborate strategically to ensure consumer needs are satisfied. Product assortment in any retail business will determine the behaviour of suppliers of maintaining the inventory levels to satisfy the consumer needs at the:
• Right place
• Right time
• Right price
• Right quantity
• Right quality
Category management is the process of decision making and the implementation throughout the visual merchandising process.
• Data Analysis
• Product assortment
• Merchandise principles
• Planogram designs
• Product display requirements
• Market share
The question has always been asked, what does effective merchandising look like? The critical assessment criteria of effective merchandising practices look as follows:
• Visual merchandising is the presentation of all strategic decisions been made.
• Empty shelves don’t sell products.
• Incomplete product ranges are not the ultimate solution for the product offering and to meet consumer needs.
• Category continuity throughout the business helps the effectiveness of the implementation of product clusters.
• The gap analysis – to close the gap between stores of the product offering.
• Housekeeping is critical to informing the perceptions of customers on whether to support your business or not.
Opportunities presented by utilizing gap analysis reports:
• Effectively manage your prospects.
• Take an opportunity gap in the market.
• Increase consistency in the execution of your sales process.
• Inform an effective business plan.
• Ensure product range continuity across your business
• Help with proactive time management.
• The measurable result through sales reports.
• If you can measure it you can improve it!
Merchandising principles will ensure the continuity of other standards throughout the business as well, such as:
• Brand merchandising
• Category merchandising
• Product displays
Brand merchandising creates a relationship between the product and the consumer’s preferences. Suppliers invest a lot of money to secure their brand in the market and the relationship with the retailer. Product branding is essential to utilize shelf space in the market and to generate profitable sales.
Merchandising by subcategory helps to group products with similar attributes together. For example, in the insecticides and pesticides categories, colour-blocking is used to show the differences of subcategories in an easier visual way. In this case, effective planogram designs are used to tell category stories that make sense to end-users through suppliers and retailers collaborating.
Let’s close the gap between suppliers and retailers:
“Partnerships” should be formed between retailers and suppliers to do “Co designs” of product layouts – planogram, as well as store designs to ensure the best practice were done to attracted consumers to their stores. This collaborative thinking of strategic planning could be the advantage of a “sustainable and profitable business” coupled with agile and strategic implementations rollout plans.
Agrinet supports our clients with Category Management services and data to help our clients get the most out of their shelf displays with tools such as:
• Store flow designs
• New store openings assistance
• Gap analysis reports
• Shelf agreements
For more information on Category management services from Agrinet, please contact the category management team;
Carlo Bezuidenhout (Category Manager)
Tel: 012 657 2093