Management – A Decade of Disservice
over the application of category management runs deep and it’s
time to find a new approach
is about 10 years since category management first started to be
widely pushed in the
its most basic, the concept is impossible to argue with. The idea
that suppliers and retailers should work together to develop
category profits by better understanding and serving the consumer is
operated in a focused, practical, and flexible way, category
management has great potential to improve profits.
yet 10 years on, progress is disappointing.
of words have been spoken, hundreds of conference presentations
given, and forests of paper printed on the subject. And yet many
manufacturers have yet to be convinced that category management can
work for anyone but the biggest suppliers. Only a minority
understand the process and how to go about it.
the top 2,000 significant suppliers to the UK grocery trade, it
would be hard to identify more than a couple of hundred that have
grasped category management and achieved results. This leaves 90% of
the industry disengaged from the process.
some suppliers have achieved good results from category management,
the experiences of many who have set off down the path have been
disappointing and many are left wondering why little has been
achieved for their bottom line.
how did this sorry state of affairs arise?
major factor has been the growth of a “category management
industry” which has done a great disservice to the idea.
“industry” comprises a number of management consultancies,
conference-organising companies, business journals, and bodies such
as the IGD and ECR Europe/UK.
has inadvertently contributed to the problems that have limited the
spread of category management
the start, jargon-ridden language, impenetrable to hard-pressed
managers wanting to improve the bottom line, was used in explaining
much emphasis was put on rigid processes and far too little on
answering the fundamental questions such as “how does this make us
more money?”, and “how do we get started?”.
consultancies put too much emphasis on detailed process, complexity,
and jargon. Their aim, presumably, was to try to ‘own’ a version
of category management to differentiate themselves from other
consultants. Flow charts, templates, and process diagrams were
continuously churned out and numbers were endlessly crunched. It is
still going on today.
seats have been sold to managers eager to discover the latest wisdom
on category management, but these conferences only hindered the
cause and did much to ensure that category management is seen as a
agendas packed with speakers from sophisticated blue chip
manufacturers do nothing to encourage the average manager to believe
their company can tackle category management. The big boys
inevitably describe a form which involves many people, masses of
data, and levels of cost which are out of reach of a big of
journals have carried many articles by consultants and big-company
players that have added to the overall impression of category
management as inaccessible, jargon-ridden, and for the blue-chips
such as the IGD and ECR Europe/UK have done valuable work in shaping
the theory and spreading best practice among the bigger players. But
they have done little to make it clear how category management can
be used successfully by the majority of companies.
sensible fundamentals of category management and the fact that there
are workable approaches for suppliers of all sizes have been lost.
should be said about the practicalities, and greater emphasis placed
on implementation at the supplier level. Just how do suppliers go
about getting started? How do you get buy-in from the many people
needed for success? What are the tactics for ongoing success? And
just how does the analysis of data turn into action and improved
profits? Few managers move easily from filling in templates of data
to taking action. That’s not how most people naturally work.
of plans at store level has often been patchy and brought
disappointing results. There must be an emphasis on follow-through
to store level and ways of getting store staff to make things
happen. How to review, modify and update category management work
has also been an area of neglect. Complex, bulky processes are a
deterrent to keeping the process going.
major multiple retailers have sometimes failed to make the most of
must address the need for clear and consistent communication to
suppliers on what is expected of them. Smaller suppliers, in
particular, have not been kept properly informed about the process,
and the absence of information has led to suspicion and concern.
also miss out on the specialised knowledge and capabilities of
smaller suppliers if they fail to involve them effectively. Smaller
suppliers will often have far greater expertise in a sub-category or
sector than the larger companies who are typically given the role of
overall “Category Captain”. Furthermore, smaller suppliers are
often much quicker to act and more focused in their innovation
efforts. Retailers fail to tap these rich veins at their peril.
some cases, excessively complex and burdensome methods have been
employed by retailers. The highly structured, data-intensive
approach adopted in the past by Sainsburys was found by many
suppliers to be cumbersome. The emphasis appeared to be on data
analysis at the expense of rapid action. According to one senior
sales manager, the experience was “more than a tad disappointing.
It took a lot of effort and investment from suppliers and nothing
came back in return”.
process at Safeway was also seen to be slow and, according to one
Commercial Director, “bogged down in dogma”.
power of big suppliers to push their cause at a senior level within
a retailer can lead smaller suppliers to suspect that pursuing
category management may be a lost cause. Category management, of
course, means a major change to how retailers and buyers work
together and many retailer
remain unenthusiastic, if not hostile. To the more traditional
buyer, category management means moving to an uncomfortable style of
working and a dilution of their power to make decisions based purely
on their judgement. The relatively low time-in-job of many buyers
can lead to a feeling of dependency on data and suppliers rather
than judgement based on experience.
perceptions about category management have built up over time among
suppliers. Many have wrongly concluded that if they are not
designated “category captain” by the retailer, then they have no
role in category management. The reality is that all suppliers have
a role to play in developing the category. The challenge is to work
out how best to contribute to that development.
management had been seen by many as a death threat to smaller
suppliers. While it is true that a number of smaller suppliers have
suffered, many small suppliers have thrived in a category management
environment. The threat is really to those suppliers who have
nothing special to offer to their category.
believe that category management applies only to branded suppliers.
This is, quite simply, wrong and probably derives from the fact that
it is branded suppliers which have been seen to be involved in
category management and that many own label suppliers do not have
the skills and resources to undertake large-scale category
hardly surprising, then, that the track record of category
management over its first decade in the UK has been poor.
significant number of suppliers, large and small, have achieved
positive results. However, many others have been switched off.
the second decade of category management is to be more successful,
category management will need to get more practical, be stripped of
harmful jargon and complexity, and start being practiced by a wider
range of suppliers.
can be done. Will the ‘category management industry’ help it to
Principle into Practice
suppliers can usefully apply category management principles. Here
are some practical tips on how to go about it.
Forget about “category captain” designation – start
acting to develop the category.
Focus on end results – do not become obsessed with
processes and jargon.
Explain to everyone in your business how category management
makes money - and then keep on explaining.
Go for some quick wins – the clock is ticking, especially
with the sceptics.
Do the minimum amount of analysis necessary to reach
actionable conclusions rather than crunching every number in sight.
Use a mix of numbers analysis, qualitative research, store
observation, and judgement/intuition - actionable insights are what
you want, not books full of charts.
Work with staff at stores to understand the practicalities
and develop plans which can and will be implemented.
Time to Remove
is needed is a return to the basics, the breaking down of jargon and
complexity, and a focus placed on making it happen for a majority of
the benefits of category management are to be spread more widely,
there will need to be an evolution from approaches that have limited
its effective use to the minority of suppliers.
A new form of category management needs to develop.
“new category management” should:
more pragmatic, less process-obsessed, less focused on vast
amounts of data analysis
a more flexible blend of techniques
ways to make it happen both within suppliers and through to
tactics and implementation
that all suppliers in a category have a role in category
development, not only category captains.
account of the role, capabilities and resource limitations of