CATEGORY MANAGEMENT

MEANING:
Category management is a retailing and purchasing concept in which the range of
products purchased by a business organization or sold by a retailer is broken down into
discrete groups of similar or related products; these groups are known as product
categories (examples of grocery categories might be: tinned fish, washing detergent,
toothpastes). It is a systematic, disciplined approach to managing a product category as
a strategic business unit. The phrase "category management" was coined by Brian F.
Harris.

IN RETAIL CONTEXT:
Each category is run as a "mini business" (business unit) in its own right, with its own
set of turnover and/or profitability targets and strategies. Introduction of Category
Management in a business tends to alter the relationship between retailer and supplier:
instead of the traditional adversarial relationship, the relationship moves to one of
collaboration, with exchange of information, sharing of data and joint business building.
The focus of all supplier negotiations is the effect on turnover of the category as whole,
not just the sales of individual products. Suppliers are expected, indeed in many cases
mandated, to only suggest new product introductions, a new planogram or promotional
activity if it is expected to have a beneficial effect on the turnover or profit of the total
category and be beneficial to the shoppers of that category.
The concept originated in grocery (mass merchandising) retailing, and has since
expanded to other retail sectors such as DIY, cash and carry, pharmacy, and book
retailing.

DEFINITION OF CATEGORY MANAGEMENT:

Category management is a process that involves managing product categories as
business units and customizing them [on a store by store basis] to satisfy customer
needs.
Category Management is, when retail has placed all products into defined categories.
The categories are (should be) defined by the customers, making it easier for the
customers to get an overview of the products available. Each category has a certain
number of products. The categories are combined in groups and groups can be merged.
The groups are then placed in a product hierarchy.

8-STEP PROCESS IN CATEGORY MANAGEMENT:

The industry standard model for category management in retail is the 8-step process, or
8-step cycle developed by the Partnering Group.[9] The eight steps are shown in the
diagram on the right; they are :
1.
2.
3.
4.
5.
6.
7.
8.

Define the category (i.e. what products are included/excluded).

Define the role of the category within the retailer.
Assess the current performance.
Set objectives and targets for the category.
Devise an overall Strategy.
Devise specific tactics.
Implementation.
The eighth step is one of review which takes us back to step 1.

8 Principles Of Our Category

1. Category Defining:- women casual wear, party wear, formal wear
2. Role of Category for Go West:- The role of Category for Go West is that it should
constantly attract the consumers. It aims at satisfying the value perception created by
Go West through positioning, i.e., providing the apparels that display chic, elegant and
simple offerings inspired by modernity in todays woman
3. Current Performance: - The current Cash Flow in the Business is positive. Since its a
new start-up the company hasnt yet achieved the Break-Even. Although, Go-West has
come close to break-even. It has been 8 months now that the firm has entered the
market now and we are expecting to achieve the break-even in two-months time. The
major selling items are Womens accessories and casual wear. In short, the stock
turnover of these categories is higher than the formal wear.
4. Setting objectives and targets for the category: - The objectives for the category in
our firms is :- Higher turnovers for the seasonal offerings, working towards increasing
the sales of formal wear category by creating more awareness, managing category in
such a way that it increases the cash-flow, aiming at knowing the needs of our current
target market, improving the overall product performance.
Targets for the category in terms of customers are the working, social, upper middle
class, modern Indian Women living in urban areas. The target of category management
would be to create an appropriate range that fits the value perception of a consumer
that will in return increase the sales and profit of our firm. Since, the formal wear isnt
working too well currently mark-downs will be put in place to achieve the necessary
target.
5. Devising an overall strategy:- The best fixtures are used in different categories to
ensure that there is maximum visibility o our offerings. The colour scheme is followed
aptly and also the offerings are placed according o their sizes. The strategies for
individual categories are given in the document followed. Also Mark-ups and Markdowns are planned according to the performance of each category. Products are
changed according to the season to create a sense of excitement. Also, faster moving
inventory of casual wear, party wear and accessories are allocated more space than the
formal wear currently.
6. Specific Tactics:

Exciting displays of mass merchandise by using quantity and colour is used.

Fixtures that work well for sale items include tub tables, round racks and
rectangular racks
Well highlight , especially bright, cheerful colors and patterns, by using natural
fluorescents blended with tungsten-halogen.

7. Implementation:- Implementing the above strategies has been done efficiently. This has
been done in a way that excludes the monotony created by similar placement of items. Focus
has been made on creatively changing the categories at display seasonally. Also, their
displays have been done effectively and efficiently making the best use of place available.

CATEGORY: WOMENS CASUAL WEAR

Category

Sub category

Segments
(brands)

Sub Segments

Sizes

Womens wear

Casual wear

109 F

Tee shirts

XS

Bossini

tops

Forever 21

shirts

remanika

Short dresses

AND

tracks

XL

Levis

Spaghetti tops

XXL

Fame Forever

Three Fourth
Lowers

Step 1 - Category Definition

The category sees the highest volume of sales..
This section occupies approx 500 sqft of space.
Ginger & Fame forever are the 2 store brands in this category.
Step 2 - Category Role
This category sees high volume of sales and margins in this category are medium.This
category fulfills occasional, exclusive requirements and the prices for this category
range from Rs 299 Rs 2000.
Step 3 - Category Assessment
Sleepers

Winners

Scarves

Tee Shirts
Tops
Shorts
Skirts
Dresses
Full Lowers
Spaghetti Tops

Questionable

Opportunities

Socks

Short dresses (seasonal)

Sweaters (Seasonal)

Ginger(store brand) has the highest space allocation.

Fame forever, Remanika, 109 F and AND all have 3-4 shevles and display units
allocatedto them.Benetton, Bossini and Levis have a separate shop-in-shop space
allocation.
Within each brand, every category is divided on the basis of its sub segments, viz, tops,
teeshirts ,socks etc
Sizes are placed from XS to XL in ascending order.
Every item is displayed on a waterfall in a medium size and its other size variants are
placed on a shelf.
Medium is the size placed most on shelves.
Step 4 Performance Measures
Tee shirts and tops have the highest shelf space.Sweaters ,during season, are fast selling
and their growth is rapidly moving.
Step 5 -Category Strategies
The strategies adopted by the womens casual wear line are Every item is displayed on
a waterfall in a medium size and its other size variants are placed on a shelf.Medium is
the size placed most on shelves.
Step 6 Category review
This is the most popular category at Lifestyle, it is on the ground floor. Its volumes
arevery high and it generates highest turnover.

CATEGORY: WOMENS PARTY WEAR

Step I - Defining The Category Role
Category : Apparel
Sub Category : Womens Wear
Segments : Party Wear
Sub- Segments : Blouses, Tops, Tunics, Shrugs, Jackets, Leggings , Dresses, Stoles.
Step Ii Defining The Category Role Occasional/ Seasonal Categoryare those that are purchased infrequently or follow cynical patterns. It helps to reinforce the target customers image of the retailer with the aim of frequent, competitive
value to the target customer. Around 15- 20 % of Lifestyles categories are managed
with this role.This category is of medium importance to the target customer as it is
occasionally purchased. Lifestyle also gives this category medium importance as they
stock a limitedamount of Party wear. When it comes to Lifestyles competitors (shoppers
Stop,Pantaloons) this category is not given much importance as Party wear is an
occasional.
Step Iii - Category Assessmentthe current performance of the category isevaluated with respect to turnover, profits
and return on assets in this category.
Key factors which influence Consumer Assessment :
The consumers buy Party wear because it fulfils their need to dress well for occasions
. Occasion wear requires a person to dress in a more stylish and specialmanner.
Consumers are influenced by the need to dress in a special and stylish manner.Parties
are a special occasions where people put in more effort to look their best. A persons
social cycle plays a key role in influencing what he or she wears.
While selecting party wear, a consumer scans through the entire range. He/she isvery
fussy about the colour, fit and style. As it a special occasion, the consumer isfussy about
buying party wear and party wear is also priced higher so the consumer puts in a lot of
effort into selecting party wear.
Key factors which influence the assessment of the market are :
Competitors of party wear (Shoppers Stop, Pantaloons) offer a similar pricerange as
Lifestyle
In terms of consumption and sales, this segment has low sales but at higher prices per
unit. Party wear is infrequently purchased.
Lifestyle under its private labels (code,Fame Forever, Remanika & AND)stocks a low
range of party wear.

Step Iv Category Performance Measures

This step involves setting measurable targets in terms of sales, Margins, GM Return On
Investment. These need to be established for measuring category performance.The sales
for Party wear when compared to the other departments is comparatively more, hence
the space allocated to party wear is maximum.
Step V Category Strategies
It is the step in the category business planning process when strategies are developed to
deliver the category role and category performance targets.The strategies used here
are:
Transaction strategy : these maybe subject to impulse purchase and increase the
average transaction in the basket or category
Cash generating Strategy : - uses parts of the category to generate cash flow, haslow
inventory turnover.
Excitement Creating Strategy : frequent change in products and seasonal
productswhere a sense of urgency is created.
Step Vi - Category Tactics
Work towards determining optimal category pricing, promotion, assortment and shelf
management which are necessary to achieve the agreed-on role, scorecard and
strategies.Since the consumers needs are more in this segment, the variety in has high
penetration ,the prices are moderately high , assortments are complete and all sizes are
available.

CATEGORY: WOMENS FORMAL WEAR