Category managers are your key point of contact

Last week we talked about buyers and the role they play for retailers. We discussed buyers first because it is probably the term I hear most often used in the wrong context with retailers. Often when people say ‘buyer’ they really mean category manager. We are sharing insights into industry terms each week to ensure people understand the right language to use to help build prosperous relationships with their customers.

Category managers work in the merchandising department and they are responsible for delivering sales, margin, control label penetration and incremental revenue for a select group of items. The group of items is called the category. Each retailer has their own definition of what goes into a category. This can be impacted by the size of the retailer and their outlook on sales.

Category managers are the key point of contact for every supplier with regional and/or national listings. Some retailers split the category role into procurement and merchandising. The procurement category manager is responsible for the negotiations with suppliers regarding product specs and standards, every day cost and promotion costing. The merchandising category manager does the pricing, ad planning, listing base and over and above displays.

Category managers can make or break items

Like it or not these people do control what product gets to the shelf and how often these items get opportunities. Someone has to do it!

Overall, they are tasked with taking a space in the store and maximizing the sales, gross profit and revenue the section delivers. Sounds simple but it is a very complicated job. They are pulled in a number of directions and the turn-over rate in this position is high.

Suppliers need to get category managers to list items. It all starts with the listing. Often that can mean negotiating listing fees and other promotion activity to get the item on the shelf. Remember, they only have so many linear feet to work with and only a fixed number of slots in the warehouse. If your item deserves to be there, chances are something else has to come out.

Once the listing is approved, items need to generate sales. Retail price, promotion activity and other factors like over and above displays impact volume. Category managers have impact over all of these things. These people and their teams determine retail prices and select the ad items.

The role of a category manager

The primary role of a category manager is to deliver:

1) Overall sales dollars for the category

2) Total margin dollars for the category

3) Private label penetration for the category

4) Over and above dollars for the category

They are not responsible for listing as many new items as possible, meeting with suppliers 4 times per year or filling displays with items that are shorted.

They also manage thousands of SKUS with most retailers. Some suppliers can represent 15-20% of their sales and over and above dollars. Some suppliers are also regional items that represent less than 5% of volume in the region. They will not all get equal time and attention from the category manager and their team.

Retailers will set targets for sales growth in a category. Most expect the entire category to grow and that is a key metric your category managers are looking at. Are they growing the category to meet the target set for them. If you can grow your item sales faster than the total category you will get more attention and more opportunities.

Building relationships with category managers

Suppliers need to work 52 weeks of the year to build relationships with category managers. Thinking it is only when you meet in person is a mistake.

The first thing is to understand what they expect. Go back to what they are responsible for:

• Sales
• Margin
• Over and Above dollars
• Then add in other factors they will measure you on:
• Service level
• Participating in their programs
• Response in a negative situation like a recall

I like to start with a number as opposed to just asking them what they want. Put a sales projection, a product cost, service level and a promotion plan in front of them. Negotiate to get what you want and something they are willing to accept.

Then meet or exceed expectations.

Measure your performance and report on it to them regularly. Not every week but perhaps quarterly. Measure and report within your business and to your customer. They tend to focus on the problems so if you are doing a good job there is nothing wrong with letting them know.

A great product will not guarantee a great relationship.

Get to know your category managers

Once you start to meet or exceed expectations get to know them as a person. They are all unique. Figure out what they are interested in and develop a good working relationship. Remember the price of entry to get to the relationship building is to deliver results.

Category managers change, it is a reality. Don’t complain, think of the new one as a new opportunity. The good ones are promoted and you never know when they might be the next category director. When they change go back to the beginning and do not assume the previous one shared too much about your specific items.

If you have any questions or require help working with category managers, you can always send me an email peter@skufood.com or call me at (902) 489-2900.

Peter

Loblaw launches ad campaign with PC and NN in same ads

Loblaw ads have focused on communicating the value of President’s Choice and Optimum. With the recent onslaught of food inflation, they have changed the ads to include No Name as well. No doubt consumers are looking for lower priced options and No Name delivers the lowest price in many categories.

It does seem strange to see both brands in the same ad. During my Loblaw time we would have said they appeal to different consumers. People were either PC or NN shoppers. Now perhaps some PC shoppers are switching to NN for the savings. Regardless, they have to go to Loblaw stores for the products.

FCC economist looks at 4 factors impacting our industry

I have really enjoyed the opportunity to hear J.P. Gervais speak at industry events. He is the chief economist for FCC and he has the ability to explain economic factors impacting our industry in a way I can understand. Prior to the pandemic we spoke to audiences in Edmonton and Calgary. His focus on economics and mine on retailers was an interesting combination. I know I learned a lot.

He has some great insights here into inflation, likelihood of a recession, profitability and crypto currencies.

Where is Peter Speaking?

Learnsphere Supply chain 123 Sept 28th

Alberta Consumers & Customers – Satisfying Both

Learnsphere Supply chain 123 Oct. 12th

Alberta Trade marketing

Learnsphere Supply chain 123 Oct. 26th

Alberta Getting off the Shelf: Consumer Marketing

Learnsphere Supply chain 123 Nov 1st

Alberta/Manitoba Consumers & Customers – Satisfying Both

Learnsphere Supply chain 123 Nov 2nd

Alberta Consumers & Customers – Satisfying Both

Learnsphere Supply chain 123 Nov 15th

Alberta/Manitoba Trade marketing

Learnsphere Supply chain 123 Nov 16th

Alberta Trade marketing

Food Island Partnership Nov 18th

Go to market strategy

Foodpreneur Ontario Nov 22nd

Getting your products on the shelf

Learnsphere Supply chain 123 Nov. 29th

Alberta/Manitoba Getting off the Shelf: Consumer Marketing

Learnsphere Supply chain 123 Nov 30th

Alberta Getting off the Shelf: Consumer Marketing

FCC Peer groups in fall of 2022

It has been a real privilege to work with FCC in 2021/22 to launch the pilot program for their food and beverage industry peer groups. We had some incredible discussions with processors about our industry and they really did learn some very valuable insights from each other. We discussed so many topics from customers to ecommerce to distributors to co-packers and so much more.