CPGmatters: Makers of General Merchandise Need to Gain CM Expertise
Through a special arrangement, what follows is an excerpt of a current article from CPGmatters, a monthly e-zine, presented here for discussion.
Which CPG manufacturers offer retailers the most expertise in category management? Hint: None are makers of general merchandise. In fact, those companies are considered far behind food and beverage firms when it comes to best-of-class and even routine expertise.
A study by Cannondale Associates showed that 86 percent of supermarket retailers consider category management important. That's apparently enough to motivate such companies as P&G, Kraft, General Mills, Pepsico, Nestle and others to become leaders offering best practices to their trading partners. And what of makers of general merchandise?
"They know they're behind," says Eric. Togneri, principal, CPG CatNet, a trade association for category management practitioners, who spoke recently in Phoenix at the General Merchandise Marketing Conference sponsored by GMDC.
He attributes the head start by food and beverage giants to sheer scale and ample resources to devote to category management in its formative years. "Retailers focused on them and they became the incubator for category management."
From his industry contacts, Mr. Togneri says general merchandise companies are now embracing category management and want to catch up on expertise. "The recognition is there among GM companies. They need to do category management because retailers are pushing them for data and insights," he told CPGmatters in an interview after his presentation.
Meanwhile, he said GM suppliers have been trying to get the attention of top retail management. "That's the biggest battle -- convincing senior non-category management executives to embrace category management."
During his presentation, Mr. Togneri underscored how category management is no longer just templates and figuring out ways to present data.
"It's really about understanding what a retailer is trying to accomplish, digging into the data to see what either supports or negates the company's ability to meet the objectives of the retailer, and coming up with a program based on the data and analysis that creates an alignment between retailer and supplier objectives. From there, it's just measurement and refinement. The process is continuous."
Mr. Togneri says the emerging category management process today combines collaboration, behind-the-scenes work, and retail execution to achieve results.
"A true partnership is the confluence of objectives leading ultimately to true collaboration," said Mr. Togneri.
Discussion Question: Do you agree that category management isn't as advanced in general merchandise categories as food and beverage categories? Why do you think this is so? Does category management work differently in GM? What lessons could GM suppliers learn from how category management is practiced elsewhere?