Forget the paperwork ­ the real secret to successful category management lies in vision and drive, says Phil Smiley Few industry topics have been hotter news over the past five years than category management. Both retailers and suppliers have invested big money in developing new ways of working, researching consumers, analysing markets, adapting organisational structures, creating new roles and training people. In many categories, though, the results have been at best uninspiring and at worst disappointing. With a few notable exceptions, we have not seen the radical redefining and rebuilding of categories that can inspire shoppers and unlock new avenues of growth. There has been no significant transformation of the point of purchase to make shopping a more stimulating and motivating experience. The hard truth is that shopping, for most categories, is broadly the same today as it was five years ago. Ranges are probably more efficient. Promotions may be better planned. There may even be some instore theatre knocking around. But, in most cases, it's business as usual. So why have all the manhours and research budgets not been translated into positive, consumer-driving change at the point of purchase? Could it be that retail boardrooms are sceptical of the benefits of category management? One could not blame them for being bewildered by supplier rhetoric. As the CEO of one of Europe's leading retailers said recently: "If I add up all our suppliers' potential ECR benefits, the total would exceed our total annual profits." Many of today's most successful retail initiatives, such as expansion into home meal replacement, the development of organics and the move into home shopping, are not the fruits of category management at all. Rather, they are the results of anticipating changing consumer needs and attitudes, and responding with speed and vision. Take the launch of Iceland home shopping. One of the most radical retail initiatives of recent years had little to do with category management and far more to do with the vision of chairman Malcolm Walker. He was amazed by the number of customers queuing for taxis to take their shopping home from stores and decided to create a delivery service. The challenge to which category management within retail has yet to respond is to deliver results which add value to the retailer's proposition and support the ultimate goal ­ differentiation in a highly competitive marketplace. Retailers need strategic vision to make category management work. The danger for those who lack clarity of vision and purpose is that the whole can turn out to be far smaller than the sum of the parts. In the worst cases, category management can lead retailers into project overload, diluting the creativity, vision and effective implementation needed to create new point of purchase solutions. As more and more projects fight for scarcer resources, retailers are running the risk of getting bogged down in formal process and losing the most precious of retail commodities ­ speed to market. One of the problems is that category management remains the preserve of buyers, set in the context of a trading strategy. While its value as an operational tool for the buying department is recognised, senior management are unlikely to put significant investment behind initiatives that fail to support the building of a distinctive proposition. Only once category management programmes deliver rapid and practical change will the perception of senior management change. Currently, there are two distinct approaches to category management emerging: one in which the process is king, and the other in which category thinking supersedes, but does not totally replace, process. Process creates structured ways of working, but there is a danger that people focus on inputs rather than outputs and that template-filling and analysis replace creativity, vision and personal insight. Glendinning believes that developing categories is more art than science, and sometimes the closer science takes us to the answer in a category, the further we get from a groundbreaking solution. Following a structured process, gathering every last drop of data on a category and producing copious charts is no substitute for drive and energy required to create effective change. Neither does it prepare teams for the challenge of turning the data into market-beating insight and then into practical point of purchase solutions. Putting faith purely in a process is a dangerous game, as the experience of the US indicates. At the 1998 FMI convention, senior delegates spoke unofficially of "too many forms, too much analysis and not enough action at the point of purchase". Others complained of an "abundance of data and of a lack of practical solutions". Sound familiar? No surprise, then, that a senior retail executive in the UK recently lamented the "graveyard of sameness" produced by the template-driven approach to category management. A focus on data and analysis should not be allowed to undermine the need to identify the big category-shaping ideas which, when put into action, will deliver performance. Neither should the tightly defined nature of the process lead people to believe that they are divorced from the rest of the business. The fundamental importance of aligning the category project with broader retailer strategy and enrolling key parties such as store operations, supply chain and senior management at the outset should never be underestimated. How many category management projects include people from store operations in the team? Too often they are presented with a fait accompli and it is hardly surprising that implementation can be a painful experience. Effective implementation is not the sexiest part of category management, yet it is fundamental to creating change and turning months of research and analysis into practical solutions and payback. There are success stories from retailers whose clarity of vision and self-confidence permits a less routine, more flexible and creative approach to category management with good effect. Boots' current pilot of male grooming stores is an excellent example of category management, taking this retailer's strategy of differentiating itself from supermarkets by offering health and beauty services in its store and turning the idea into a radical new point of purchase. Similarly, Asda's aggressive move into food to go in recent years demonstrates what can be achieved in a short period of time. A big idea and speedy response has enabled it to steal a march on its competition. It is now the biggest curry retailer in Europe. Tesco has similarly focused on outputs rather than process to good effect. For this retail giant, applying core principles in a practical way has been far more important than the systematic completion of templates. Its Sweet Dreams confectionery initiative is an excellent example of category management making a difference in store. Resiting the category addressed the issue of low aisle penetration; resegmenting along shopper lines made shopping easier; and new merchandising solutions brings fun and excitement to shopping for confectionery. The next area to be tackled is the enormous supply chain savings offered by the industry gurus. Examples of significant cost reductions as a result of ECR/category management initiatives are few and far between. The answer probably lies in the objectives and measures of buyers and account managers. Despite talk of driving cost out of the supply chain, most retail buyers and category managers' objectives and measures still do not include a supply chain dimension. Key drivers of net profitability such as service level, stockholding and stock turn remain the sole preserves of product supply teams. With bonuses paid primarily on gross profit, the principle of attacking supply chain costs has not been driven into the buyers' role. The same goes for account managers, where few are focused on supply chain savings. Category management is definitely at a crossroads, yet the forces which led to its emergence are stronger today than they were at its inception. The pressure to increase category returns and the drive for differentiation are unrelenting. So how should category management respond? Our plea is for less data and more insight; less process and greater focus on making things happen at the point of purchase. Perhaps by swapping some of the perspiration involved in category management for inspiration, retailers and suppliers could join forces to up the pace of change and set about redefining and re-engineering categories, as opposed to tweaking them. As a final thought, I should like to propose a new category management initiative. Every category management project should start with a photograph of the current point of purchase to be compared with a similar picture six months later to see what has changed. In some categories, I'd be surprised if you'd notice the difference. n Phil Smiley is senior consultant at Glendinning Management Consultants. {{MANAGEMENT FEATURE }}