BOCA RATON, Fla. -- Category management -- long considered one of the industry's key strategic initiatives -- is currently a lot more talk than action, a leading food industry executive claimed last week. Robert Schwarze, president and chief executive officer of the National Food Brokers Association, Washington, said only a handful of retailers and manufacturers actually practice category management. Most trading partners simply have not retooled their businesses to use the techniques that are a cornerstone of Efficient Consumer Response.
"The industry is struggling as it attempts to come up to speed with category management," he said. "There are a limited number of trading partners that have truly formed the organizational model that's needed to be successful. "We also see a lack of senior management commitment. We have a lot of people who talk the talk but don't necessarily walk the walk," said Schwarze, speaking here at the second annual supermarket retailer symposium sponsored by MasterCard, Purchase, N.Y. In terms of trade relations, he said, it's typically business as usual today. The retailer is still unwilling to share information critical to a partnership. A lack of retailer expertise is also impeding progress in category management, he added. "A lot of 'buyers,' if you will, are now being reassigned to the category management function without the proper support or the level of expertise needed to implement it. There's a tremendous lack of understanding of what category management is all about. "In many instances, what we are finding is that category management is nothing more than 'pilot' change, but what many of the buyers are doing is business as usual," he said. Even when supermarkets embrace category management, there are growing problems with execution at the retail level, according to Schwarze. These problems stem from high employee turnover and inadequate labor. "We find, as the perimeter of the store becomes more important, that the work allocation -- the people who are allocated to work in the store -- has not gone up. The work has been allocated to other departments. With that kind of environment at retail, I really can't see how you can be truly effective," he said.
"As a result of category management, the number of resets that are taking place is absolutely mind-boggling. The retailer does not have the resources to implement all of those resets. They are putting tremendous pressure on [brokers] to supply more and more people to reset these sections more and more. I think it's out of control."
There are also problems with category management on the part of manufacturers, according to Schwarze. One is a lack of senior management commitment. Another is a lack of understanding of how category management really fits in with how they have traditionally looked at the business. Schwarze said such companies as Procter & Gamble have made a commitment that category management is the way they will go to market. "But that doesn't exist, in my opinion, in an awful lot of companies. They have not been able to cross over the bridge. And, as a result, the majority of their sales and their marketing strategies are still predicated on the traditional ways of doing business. Even in those instances where they are planning to do category management, they have not aligned recognition with incentives and rewards to correspond to it." From a broker perspective, Schwarze said, the individual retailer in a market drives the level of expertise in category management. But it's very difficult to practice category management with some manufacturers that brokers represent. "A lot of them don't have a clue as to what it takes to be 'best of class' in category management," he said. "In fact, in many instances, because of the size of the principal, they never will have the capability of being able to do it on their own.
