Category management: What is it and why do customers need it?

By Janine de Wolf, retail manager, ACT

As consumers of technology, we have all no doubt frequented the halls of a mass retail store, looking to replenish our supply of printer consumables, get our hands on some photo paper for a child`s school project or compile an album of family memories.

It`s generally quite a daunting task, searching for the correct consumable in amongst a myriad of choices, only to find that the ink cartridge your printer requires is out of stock and the brand of photo-paper required is on back-order.

Chances are, however, we`ve also been pleasantly surprised by how easy it is to locate our consumable of choice in some retail stores, with all of the products logically laid out with easy to read compatibility charts, showing us what the correct cartridge is for our printer, on each shelf.

Looking at these two scenarios, the positive experience is no doubt a result of successful category management, the one practice that will quickly become a vital differentiator for retailers across the country.

Category management is best explained as the process of identifying the best mix of products (in this case in the consumables market) and the volumes of those products a retailer should stock in order to ensure maximum sell-through of their stock, while at the same time ensuring that the vast majority of customers will find what they are looking for.

Beyond managing stock to perfection, category management also covers the layout of the shelves themselves, ensuring consumers can easily find what they`re looking for.

Because this is generally not an easy task, category management has often been described as a `dark art` and one that takes strong dedication, attention to detail, as well as the inclusion of all possible influencing factors. It`s also quite an arduous and time-consuming task, consequently one that few retailers currently undertake.

The good news for both the retailer and the consumer is that more consumables shelves are being designed using this practice and that resellers are indirectly employing category management in deciding on what volumes of which stock items to replenish their supplies with.

Advanced Channel Technologies (ACT) is taking advantage of the strong relationship it has built with its vendor partners in the consumables space and will offer this service free of charge to selected retailers. This service furthers the vast value-adds ACT already brings to the table for its retail customers.

That said, however, in order to benefit from this value-add, retailers are required to provide input into the equation. This input takes the form of the sharing of sales and marketing information. In order to accurately gauge what the stock orders should look like and more appropriately, what the layout of that stock should be on the shelves, ACT requires the actual sales history of each retailer`s branch over a two-year period. This needs to be broken down according to the stock ordered by each store and which of those stock items were the fastest movers.

This information is then incorporated with the combined sales figures for the South African market, namely, what the respective market shares of each brand are as well as the geographical spread of what type of stock is being sold in which regions.

In addition to this, the printer lifecycles are taken into account, which printer brands and model numbers are undergoing the best sales growth and lastly, what the average consumables usage is for each of these printers.

As a final result, the retailer is given an accurate idea of what categories of consumables will fare well in each of their stores and looking forward, which stock is destined to fare well as a result of current market conditions.

This then enables the retailer to stock the correct consumables. The next challenge lies in merchandising and laying the stock out so that the consumer`s preference is best met.

This is where internationally developed best practices come into play. Using various software packages a planagram, or physical shelf layout for each retailer`s store is provided.

Interestingly enough, the software may also urge the retailer to provide for more (or in some cases less) floor space for consumables, since this can directly influence their total sales and sell-through rate of all consumables.

What will assist ACT in rolling this value-add out into the market is the fact that it represents all of the consumables brands available in South Africa and as such, is an equitable solution for the market.

And the results will and do speak for themselves - the retailers who take advantage of this service can expect a healthy increase in sales and less redundant stock on their shelves. The real winners, however, are the consumers, since they benefit from easy to negotiate aisles and an almost 100% guarantee that what they`re looking for is in stock.