This article is Part 1 of an excerpt of the presentation prepared for Slovenian annual Sales on Shelves (Prodaja na policah) retail conference.
The original title from 2011 was: How can a supplier persuade a retailer to become a category captain?
The purpose of the presentation was to share the experience, gained on category management projects both on retailer’s and supplier’s side. Expect a balanced view – no superlatives, sorry! Some of them were highly successful category management collaborations and the others just didn’t live up to the expectations.
So what can we learn?
Only 3 out of many became real category management partners
Petrol convenience stores sell more than 50 product categories. In each product category there are many different suppliers. Some of them can easily be called category captains as their market share is definitely by far exceeding other competitors.
But in 10 years only 3 of the suppliers became Petrol’s category management partners which means that they entered the process of regular data sharing, building the planograms and giving category proposals etc.
But sure there were others that wanted to become category captains. Why didn’t they succeed?
- misunderstanding of the core of category management, usually not being able to overcome the narrow, selfish view on the category, also only expecting quick gains for own brand
- retailer’s private label was an obstacle too high for a national brand supplier
- (too) complicated relations
- shortage of category management experience
- lack of credible initial proposal
Ok, we’d like to share data and contribute to the category success. Where should a supplier begin?
- build on category management capabilities, consider outsourcing
- assign a dedicated person to the project
- start at own assortment, arrange it and prepare channel standards
- prepare test project proposal
What are the elements of the supplier’s success?
- Knowing the retailer well
- organisational structure, tradition, culture
- what does retailer really need? what are his challenges?
- point-of-sale expertise
- technology and cat man level
- Cat Man credibility
- Commercial performance
- market share
- Cat Man capabilities
- references, past projects
- knowledgeable staff, especially the responsible person on account of a supplier
- management of data flow
- software or reliable outside partner for planograms
- Unique Selling Proposition
- Posing Cat Man as a solution not another problem for a retailer
- test project
- transparent game-plan – clear, simple and time-bound goals
- Commercial performance
OK, we have started but how do we sustain the partnership and assure it to last?
- Maintain balance between the partners
- Assure Management Board support
- Process transparency
- Clearly assigned project leaders on both sides
- Project development -> best practices
- Leverage results -> some quick wins add fuel, as in each relationship solving challenges together strenghtens the bond