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The outcomes of the updated category management capabilities have been positive. Large retailers like Kroger, Target, and Walmart are reportedly achieving 2 to 4 percent sales increases and a rise of 10 to 15 percent in inventory productivity. The combination of revenue growth and cost reduction are then producing 2 to 3 percent of margin growth.
Implications for Fresh Produce
The first generation of category management focused on consumer packaged goods manufacturers, and the second generation produces strong benefits for customers and large retailers. But what opportunities can category management generate for fresh produce supply chain participants?
As grocery retailers face increased competition from discounters and e-commerce companies, their focus must turn to customer service and satisfaction.
Because customers want to see, smell, and touch fruits and vegetables before purchase, the fresh produce categories can be the competitive differentiator grocers need. Hence, fresh produce can be a destination category that draws buyers and their shopping baskets into the store.
“Winning on fresh has been a mantra for a long time now, but retailers are trying to up their game in the produce area,” notes White. “There’s a big push to create a more exciting space like a farmers’ market rather than boring old chill cases. Retailers are setting higher quality standards for fresh—getting a wider variety of product, sourcing locally, and adding organic produce.”
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