Definition of Category Management
History of Category Management
What is Category Management
Types of Categories in Retailing
Category Management Process
Category management started in North America in the
In 1992, the Category Management process began
slowly to gain momentum across the UK, Europe and
At first, it was limited only to grocery (hypermarket and
supermarket) retailing, but as the advantages became
more clear, it spread into other retailing sectors such as
pharmacy, C&C and DIY.
Manufacturers – Coca – Cola and Philip Morris were the initial companies that made
Category Management popular among Retailers and explained them the importance
of Category management in their businesses.
Category Management then re-gained its drive in the later 1990's embracing more
The retailers that pioneered category management are amongst the largest chains in
the United States - Safeway was one of the original practitioners. Others included
Krogers, Albertson’s, and Publix. Super-valu, was the first wholesaler to practice
category management and introduced the process, to small independent retailers.
A distinct, manageable group of products/services that
consumers perceive to be interrelated and/or substitutable in
meeting a consumer’s needs.
Category Management can be summed up as :
A retailing process in which first of all, all likeminded
products in a retailer's total portfolio are lumped together
into product groups called "Categories". So examples of
Categories would be, for instance : toothpastes, washing-up
liquids, baked beans, dog foods, cosmetics, shoes etc
Each Category is then run like a "mini-business" in its own
right, managed by both the retailer and suppliers, with its
own Category turnover and/or profitability targets.
Category management involves organizing and
managing a distinct group of products or services which the
consumer perceives to be inter - related or substitutes . It
also includes managing promotions, merchandising, visual
merchandising and supply chain, so as to generate and
enhance the customer value and generate return on
investment for the retailer.
Dr. Ram Kishen.Y.
For the store……
Good retailing is about “product performance”. It improves Sales
and Customer Satisfaction.
Improve the return on inventory management and cash flows
Improve your GMROI - combination of stock- turns and gross
For the customers…..
wider choice of selection, better stock availability (no stock-out
Proven results - Higher category sales and stock - turns, can
generate more discounts and increase basket size purchase for the
Impulse Category are categories that people buy on impulse,
i.e., without planning to do so. Retailers commonly place these
items near the checkout counters of supermarkets, filling
stations, and other retail outlets. Products such as chocolates,
snacks, chewing gum, ear buds etc, are some examples.
Footfall drivers are Categories that the retail store
is famous to drive Customers towards the Store.
Footfall drivers are revenue generators for
Retailers. They are placed at strategic locations in
Browse Category is that category wherein the
customer will see these items for the first time,
but may purchase it later. Retailers mostly
display the Browse categories at Window
Displays for excellent visibility / give more
offers and discounts to increase sales.
Destination category are popular products which
don’t require a good display. These items will sell
anyways, because there is a huge demand for
them. These products are mostly called as
Anchor Category are mostly called as Category
killers. These are items that are offered at heavy
discounts and will attract customers to shop for
them. For example, Furniture in IKEA store, or
accessories in a Croma Store.
Within a category, Products will be assigned sub-category roles.
Types of sub-categories are as follows:
Traffic Builders: Categories with high market share.
Transaction Builders: Categories frequently purchased on impulse.
Cash Generators: Categories with high stock turns and margins.
Image Creators: Categories promoted with features that make them
Excitement Creators: Categories with high impulse appeal.
The product line and length offered is typically called
Category management in retailing parlance means to
provide more no of products variety (assortment), range
Category management encapsulates merchandising.
Retailers have to design their category management
strategies according to the store format and layout.
Category killer is a term used in marketing and strategic management to describe a
product, service, brand, or company that has such a distinct
sustainable competitive advantage that competing firms find it almost impossible
to operate profitably in those products.
The definition most often associated with the term is a big-box retail chain (such
as Home Depot, Best Buy or Toys "R" Us) that is focused on one or few categories
of products and offers a wide selection of these items, in these categories at
relatively low prices.
An example of a category killer business is eBay / Alibaba. These online auction
sites have a near-monopoly because buyers and sellers naturally gravitate to the
largest, most liquid market. As a result, the site has almost no competition and has
forced similar auction sites into a very small portion of the market.
Often, a retailer will invite one of his suppliers with
abilities in Category Management to be the
The Category Captain is not always the supplier
with the largest turnover.
The Future of Category Management will be - .
The data explosion ( AI, ML & IOT)
Relationship with other departments
Category management is not enough anymore,Shopper
insights alone don’t tell the whole story.
The real category leadership potential lies in synthesizing
insights around the consumer, the shopper, the category,
key competitors and company capabilities.
Category management is a way of managing products on
the level of a product group, rather than on the level of
Category management not only is about the retailer, but
also the manufacturer is involved in a similar optimization
process with regards to logistics and promotions.