Understanding Category Management is Key to Retail Success

Source: © 123rf 123 RF Bernhardt van der Merwe, Head of Category Management at DataOrbis, says understanding retail category management is crucial to planning your business

It is widely acknowledged that category management – ​​even at a basic level – can improve performance and enhance profitability.

Planning map, i.e. spatial planning

One of the most common and frequently used strategies in the category management process is space planning, and more specifically, floorplanning.

This is a detailed visual representation of how a product is selling, based on a combination of category, financial, shopper and market insights.

It is a schematic diagram showing how and where to place a specific product on a retail shelf, or in a display to increase customer purchases – that’s the name of the game.

Planner or Category Analyst

Effective mapping can only be done by experts who are well versed in the subject, often called “mappers” or category analysts.

The “skillfulness” here does not just refer to the ability to effectively use mapping software or construct mappings based on predetermined marketing principles, but also to a deep understanding and appreciation of category management theory in a broader context.

Advantages of planning map

By analyzing past and current sales, shoppers, market and category insights, planners can make successful recommendations on the best categories and adjacency flows that are likely to stimulate cart penetration, frequency and weight.

The main benefits of floorplans include increased efficiency, maximization of retail store space, improved customer satisfaction, visual appeal, and increased revenue.

Bernhardt van der Merwe, Head of Category Management, DataOrbis

What does category management cover?

In my experience, category management theory is not usually a key area of ​​study for planners.

This is unfortunate because it would help these technologists understand how the various parts of category management fit together and impact each other.

It covers the following:

• Basic ideas, such as the 8-step category management process and why it’s important to align category strategy and tactics with overall business goals.

  li>A model that explains how the various parts of category management interconnect, such as the relationship between category roles, scope selection, and space allocation.

• Research from academia and industry reveals the best ways to manage different categories.
• Review a range of category management approaches to understand their strengths, weaknesses, and how they work in different situations or categories.

A more beneficial approach

A few years ago, I was working with a retailer who was establishing category management as a new function in their business.

As part of the implementation process, they trained employees at all levels, including supervisors, on the principles of category management theory.

This was bought-in at all levels and resulted in stronger support for the project across the company and increased teamwork among stakeholders.

The result of this approach is that teaching planners the theory of category management first, then moving on to software training and the basics of how to build a plan map, is more beneficial than focusing solely on the software and building.

Clearly, this provided them with a more solid foundation to guide their thinking as they constructed their roadmap.

The broader context and deeper understanding allow them to confidently suggest changes to the status quo and even challenge rules that may no longer be effective in selling goods.

For example, understanding how shoppers’ tasks and basket penetration relate to each other helps them find better ways to position and arrange products on shelves.

Cross-functional understanding

Planners who understand category management theory can explain the reasons behind their decisions and collaborate more smoothly with colleagues in different areas.

This cross-functional understanding improves teamwork and ensures that the roadmap supports the company’s overall strategy, making it more effective and cohesive.

Once plan mappers understand the theory behind their work, they will tend to use plan map software solutions more effectively.

Rather than building a roadmap in a “do it” manner, this approach helps them explore and fully leverage the software’s capabilities to test and measure different marketing approaches designed to achieve specific roadmap goals faster and more effectively.

For example, they use analytics to measure key performance indicators to help position products optimally to align with strategic goals.

Good at shelf strategy

It is helpful for mappers to learn the theory behind category management before or while learning to use the software and map building.

This approach can lead to a deeper understanding of goals and principles while improving critical thinking and sharpening critical thinking skills.

All of this makes it easier to collaborate and communicate with others and drives optimal use of technology tools.

This holistic approach ensures planners are not only adept at using the software, but also at racking strategies, thereby extending their value within the organization.