Not Stone Dead, Evolving

The food retailing industry is in the midst of a cataclysmic shift fueled by changing shopper demands, competitive challenges, and emerging omnichannel options. Disruptors from AmazonFresh to Whole Foods are at the center of this upheaval, having significantly upped the stakes in a battle for fresh produce shoppers’ wallets.

Industry pundits point to the changing environment and sound the death knell for category management and other traditional retail strategies. In a recent white paper, Mark Hardy, CEO for Incontext Solutions, states: “To put it bluntly, category management as we know it, and practice it, has become irrelevant.” Category management incorrectly focuses on products rather than customers, Hardy says, leading to ubiquitous product availability and an unengaging customer experience.

Category management advocates, however, are not giving up—reminiscent of the famous Monty Python movie scene, they’re responding “I’m not dead” and “I’m getting better” to the naysayers who claim “you’ll be stone dead in a moment.” And it is not an unsubstantiated proclamation. Category management proponents are updating strategies and processes to address Hardy’s concerns and to better serve the twenty-first century food shopper.

To gain a better understanding of category management, its current evolution, and relevance to the fresh produce industry, we turn to two experts. Their experiences in fresh produce distribution and category management provide great insights for companies seeking to leverage the strategy.

Definition and Evolution
Category management is a strategy that lacks perfect clarity; depending on your historical perspective, it was created in the 1980s or 1990s by various individuals or organizations. Multiple definitions exist that are rooted in retailing, marketing, and/or logistics. And, execution methods range from simple directives to detailed multistep processes.

The Efficient Consumer Response Category Management Report of 1997 defined category management as “a retailer-supplier process of managing categories as strategic business units, producing enhanced business results by focusing on delivering consumer value.” Products are placed in discrete groups of related products called categories (e.g., soft drinks, snack foods, dairy products) and managed as business units with customized strategies, planograms (visual depictions of a store’s products), and key performance indicators for on-shelf availability, turnover, and profitability.

Category management success is facilitated by retailer-supplier trading partnerships. They engage in a continuous collaborative process to understand customer needs and respond accordingly. This involves creating a combination of assortment, price, shelf presentation, and promotion that provides an appropriate customer solution and optimizes the category over time, according to the Category Management Association.