The Key to Category Management Lies in Execution


NATIONAL REPORT — Some product categories are heating up while others are cooling down, but the "right" retail strategy for all categories can mean success for convenience store owners, according to "Category Management in Your C-Store/Small Store," an Oct. 8 webinar conducted by the Category Management Knowledge Group (CMKG) and b2b Solutions LLC.

"The future is something you should create, not something you should let happen to you," said webinar speaker and CMKG President Sue Nicholls. She noted that change is inevitable, and all organizations must change in order to stay alive.

Developing a retail strategy is critical to category management and drives all components of the category management process, including category strategies, category assessment, category tactics and category scorecards, according to the webinar. The retail decision-maker defines the overall strategies and, in turn, all category and business plans must align with these strategies.

This is true for c-stores whether they are part of a large chain or one of the 60 percent-plus of single-store operators that dominate the convenience store industry. Neighborhood stores, commuter stores and interstate stores may utilize differing strategies, but they must all properly execute the strategies that have been decided upon.

Developing a strategy should involve multiple key factors. Service is important, and should include convenience for time-strapped shoppers. "How do you capitalize on the short time shoppers are in your store?" Nicholls posed. Service also involves store location, which affects ease of accessibility and proximity to the target customer, store hours and other factors.

Product assortment is also a key factor, involving categories (Which ones will you offer?) and item selection (What range of items within a category will you offer?). It is especially important to rely on facts and data when making these decisions, rather than gut instinct or intuition.  

Meanwhile, product placement involves considering the store layout, aisle layouts, category adjacencies and category layouts; and making sure products are in stock, accessible, easy to shop and shopper friendly.

Retailers also need to decide on the pricing strategies they will use, such as offering good prices on key destination items for the store, and promotions. This will determine what types of shoppers the store will attract.

Hitting the Targets

Before making most other strategic decisions, however, retailers must decide what target shopper their business is aimed toward. By making this decision first, it helps c-store operators make the right choices that directly affect the target shopper's needs.

Many retailers will describe their target shopper as the average shopper in their area, but even in a small market, there are a wide variety of demographics that come into play, including age, income level, race, gender and more.

"Does the 'average shopper' even exist?" Nicholls asked.

Once a retailer has identified the target customer or customers, key competitors that are trying to attract the same customers should be identified in turn. Despite the channel blurring between fuel, foodservice, tobacco and quick-service outlets, as well as new convenience formats such as Walmart's Neighborhood Markets, it isn't enough to just identify key competitors as all competitors located within a certain proximity of the store

By strategically identifying competitors based on similar target customers, c-stores can serve the customers more effectively and efficiently than the competition. This may involve taking steps to stand out as a beverage destination, a store known for excellent customer service, or a source of unique product offerings, depending on what the retailer wants to be known as.

In the past, retail strategy has often been driven by supplier agenda. Today, CMKG recommends store owners and senior management change that by taking the lead and deciding for themselves what works best. The retail format, target shopper and competitive environment are the three primary factors that should determine the retail strategy.

While the path to proper category management can be long and complex, retailers are advised to keep perspective and remember the shopper at every step. "They have the final say, and they speak with their wallets," Nicholls said.

This ad will auto-close in 10 seconds