Empowering category managers to exemplary outcomes

Sept. 22, 2017
Poor internal alignment, limited collaboration and weak data optimization are three common failings in category management strategies with retailers that can hinder the best-laid plans in building a profitable product assortment.

What can hinder the best-laid plans in building a profitable product assortment and gratifying customers? Poor internal alignment, limited collaboration and weak data optimization are three common failings in category management strategies with retailers, says Sue Nicholls, president of Category Management Knowledge Group.

My own experience resonates with Nicholls’, as we recently discussed — along with how these principles apply to the auto care industry — at the July 2017 NACE Automechanika trade show with a Bosch USA Automotive senior category product executive. Here’s a summary of our conversation.

Internal alignment. “A problem well stated is a problem half solved,” quipped Charles Kettering, the innovator behind AC-Delco’s automotive aftermarket business. Ask yourself, “Have senior management and their multifunctional teams agreed on setting goals for the product categories?” That conversation is the shining opening when expectations are clarified and when growth metrics are sealed.

The worst interaction, which any merchant should avoid, is when the boss spouts out assumptions saying, “Just get it done and make me some money!” Internal ambiguity is a recipe for company misalignment, an indirect impact to shopper disconnect.

Collaboration. Once product leaders and their direct reports have defined the parameters for the way forward, vet a supplier partner who is capable of collaboration. Collaboration, Nicholls explains, is really not about two people getting along. Nor does it mean when vendors force distribution of their products onto their accounts’ shelves.

By contrast, a two-way dialogue considers store format, banners, competition, tactics, and above all, the shopper, an approach that Nicholls calls “shopper-centricity.” Do-it-yourselfers and the commercial repair technicians buy hard parts, chemicals and supplies for different reasons. Given the blurring sales channels, parts stores and their vendors should work jointly to best understand the path to purchase of building a shopper-centric relationship.

Data optimization. Finally, big-data comes into play. Treat this dynamic as an organizational think tank that performs the research to deliver actionable insights about what the repair shop and what the shopper values. Big-data shared with the retailer and the vendor can produce meaningful discoveries in terms of what both consumer segments are willing to pay for. That’s why Nicholls stresses using multiple data sources from this described partnership, or even more from third parties.

Objective vendors attune with their accounts are clear-eyed to evaluate both the brand and the category. Repair shops and DIYers will first purchase a replacement for something that has failed, suggesting that in a buyers’ environment of substitutes, category coverage trumps brands, especially in the event when the vehicle needs to get back on the road. When disparate data reports exist between the vendor and retailer, the pairing of evidence-based findings produces a valuable goldmine for shaping shopper relationships.

To illustrate how these paths intermingle, consider this fictional symbiotic relationship between Al, the category manager, and his vendor, Jan.

Jan: Big Al! When we last spoke about the funnel category, I remember your desire to improve profit revenues by 5 percent and top it off at a year-end 45-percent gross margin.

Al: That’s correct. My product solutions director thought that the company was missing out on an opportunity on bringing some new funnels to market.

Jan: Okay. It sounds like you, me and your boss are onto something.

Al: I evaluated our point-of-sale reports, lost sales sheets, and the vehicle-in-operation updates.

Jan: Have you considered the 13-inch flex-fit funnel? Our analyst looked at your data, and she suggested that it aligns with what the shop techs were asking about when we attended the NACE Automechanika trade show.

Al: It fits commercial-grade pickup trucks and some of those dual-overhead engines tilted downward at 45 degrees?

Jan: Yes. And the serious DIYer will benefit too. I crunched the numbers. I estimate that 20 percent of your customers would switch from the stiff-neck funnel to the flex-fit, and I would value it roughly 15 percent higher. In other words, that funnel can rake in an additional $45,000 and a $23,000 profit.

Al: Jan, you’re the bomb! Let me run this by my boss. Wait! I’ll cut the initial purchase order. My boss will be giddy.

Jan: Great to know, Al. It’s been a win-win for our teams.

As an evolving category manager, you too can enrich the auto care industry. Collaboration requires an engaged meeting of diversified teams rather than a salesperson just taking orders. It requires a mind shift in internal strategy, process and approach. Regardless of company size or its wealth, you can connect to the customer by using critical thinking on the job — especially when you can seize the opportunity to act on fact-based data about what repair shops and DIYers look for in their parts stores.

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