The scope of Category Management in the future

1. The scope of Category Management in the future In this era of intense competition, retailers have to find different methods to entice customers. Managing inventory in the right manner is also a challenge. The bottom line of any business enterprise depends on how the company maintains its inventory and controls it. A retail store can sell several brands of the same product, for example, toothpaste. It has to study which of the brands is a best-seller and which are not. It helps them in managing their inventory and thereby increases the profit margin. This field of management is category management. Category Management – The Concept Category Management is a unique retailing and purchasing concept where the retailer breaks down the products into discrete groups or categories depending on the nature of the product. For example, the retailer separates all kinds of soaps into one category and detergents into another. The company ends up marketing each product category as a strategic business unit. Category Management is a systematic approach whereby it becomes easy for the business to manage inventory. Category Management concept can differ from one business or retailer to another. Let us now understand the rationale behind Category Management before discussing the scope of category management solutions in the future. Category Management – Rationale • The principal reason for introducing category management solutions is to enable the retailer to add value to their business rather than the supplier’s interest. For example, a retailer might have brand A and B of the same product on display. Usually, the promotion of brand A can result in an increase in its sales thereby affecting the sales of brand B. Category Management enables the retailer to even out things in such a way that such promotion does not have any effect in its retail business. • The second rationale is that it allows the business to milk a finite amount of profit from price negotiations.

2. • Category Management encourages active collaboration between the supplier and the retailer. It allows the retailer to draw benefit from the supplier’s expertise on the subject and ensures that the supplier accepts a considerable workload in developing the category. Advantages of Category Management • Category management solutions help retailers to collaborate and work effectively with the suppliers of the products. It helps to hasten the process and reduces the time between its initiation and completion. • An effective category management process is helpful to the retailers as it helps them identify the fast-moving and dead stock. You get better insights into which of the product brands fetch a higher volume of sales. It helps the retailers to deliver value-based services to its customers. • Category management allows the retailer to establish better contacts with the suppliers. Ordering a particular brand becomes easy for the retailer instead of letting the supplier force a specific brand on your store. Stacking up additional inventory is a drain on the business. Category management solutions help in keeping a slim inventory thereby improving the overall profitability. The scope of category management Today, most of the businesses are online. Hence, there is not much need for retailers to stock up inventory. An effective category management process ensures that the retailer identifies the fast-moving inventory and stacks up adequate products in this category. At the same time, it also allows you to offload the slow-moving stock by offering discounts and rebates. There is tremendous scope for category management in the future because there is a shift in the customer’s perceptions. The customer of today prefers to purchase online. It becomes easy to target the potential customer based on his/her purchasing history. A good category manager will account for these aspects while ordering the requisite inventory.

3. Category management allows the retailers to concentrate on a particular brand thereby ensuring it earns a decent profit for the business. It also provides insights on aspects such as local preferences. Customers in a specific locality might go for a particular brand whereas those in a different part of the town might opt for a different one. It helps the big retailers having representation in both these regions to shift their inventory from one place to the other to satisfy the demands of the customer. Category management solutions have come to stay in this extremely competitive retailing business today.