The mechanism of selling merchandise in small quantities from a fixed location directly to the individuals for their end use is called as retailing. The fixed location can be anything like super market, hyper market, department stores and so on.
Merchandise - Merchandise refers to the various products available at the store for sale to the end-users. It is the display of the merchandise which actually attracts the customers into the store.
Let us suppose all the products available at the store are stocked at one place only. Would such a display impress the customers ?
The answer is NO. Presentation of products is essential.
As a solution to the above problem, the retailers came out with the concept of category management.
The concept of segregating similar products into separate groups is called as category management. The complete range of merchandise available at the retail store is divided into separate product categories consisting of related products.
Categories in a retail store refer to the various groups which consist of products belonging to a similar family. The retailer smartly displays all the related products together as distinct categories for his as well as the end-userâ€™s convenience.
Toothpaste, Tooth Brush, Mouth wash, Tongue cleaner, soap, shampoo, body wash, cosmetics etc, can be displayed together under a single category called personal care section.
Vegetables, Fruits, Tinned Food, Juice, meat, dairy products form a single category.
Certain retail stores also classify their merchandise into women, men as well as kids category.
Department stores also have separate categories like:
Apparels, Footwear, Jewellery, Electronic appliances, Mobiles, Watches, Home furnishings, house hold appliances and so on.
The complete range of merchandise at the store is divided into separate groups consisting of related products. Such groups are called as categories.
Each category is treated as a separate business entity.
The retailer calculates the profit and loss of each category separately.
Each category contributes in its own way to the profitability of the store.
The retailer does not promote a single brand but the complete category.
The concept of categories has gone a long way in developing a strong bond between the retailer and the supplier.
Why Separate Categories ?
The classification of products into separate category benefits the customers and makes their shopping a pleasurable experience.
The customers as per their interest, pocket and need can walk up to the respective categories, check out the various options and decide what to buy and what not to buy.
Eight Step Process of category management
Define the Category
The retailer must sort out the similar products which can be included in a single category. He must make sure that the products bear a strong connection with each other.
Role of the Formed Category
Evaluate the current Performance of the category
Decide targets for the category.
Devise an overall Strategy to promote the category.
Formulate specific steps to increase the sales of the category.
Implementation of the above steps.
Review and feedback.
However some retailers find the above process cumbersome and only follow the below five steps:
Form and Review the category.
Decide the target consumers of the particular category.
Planning and formulating strategies for the category.
Implementation of the above strategies
The retailer generally appoints one individual who supplies all the products of a single category. This individual also called as supplier is known as a category captain.
The suppliers are equally responsible for the category and contribute their level best to maximize the revenue of the particular category. He works in close coordination with the retailer and is responsible for the profit and loss of his assigned category.