All the thousand of product items that are for sale in a retail store require designing and developing of a manageable structure – else it would be impossible to manage the store sales. The category management process is the “magic” process and methodology enabling the retail stores to effectively manage their large product portfolio, at same time they can firmly create sustainable long-term profitable growth for their business. The process entails the management and marketing methods, and the tools to execute effective category management practices. New product introductions, effective pricing, advertising, and in-store promotions for example, are an engraved part of category management. Companies that begin introducing category management, as part of their business processes, will uncover the truth through new perspectives, for what product categories are the most important to drive sustainable traffic, revenues and profit for a store. It for example happens, in the slow moving business industries, that one discovers that 30 percent of all the items in particular stores, sell less than one item per month.

Category Management Definition

Group distinct product items and services into categories founded on the consumer shopping mission, to drive sustainable category sales, through development of effective category marketing schemes, to maximize consumer satisfaction and store traffic, revenue and profit. Furthermore, to manage effectively, the value chain cost and quality and product availability in collaboration with the retail business partners.

Establishing effective category management is a challenging, time consuming and a complex process. Category management can involve thousand of product items that must be categorized into sensible structure of categories, with the objective to drive store revenues, traffic and profits and consumer satisfaction. Furthermore, a retailer might source merchandise from hundreds of distributors, manufactures and wholesalers. In general then supermarket food-retailers, for example, cope with more than 80 thousand product articles, that are then allocated into more than 200 product category groups. Moreover, effective category management requires organized structure for replenishment, internal processes, space management and store plan-o-gram and sourcing of goods procedure, for example.