ORLANDO, Fla. -- Both retailers and manufacturers have much to gain from category management, but the full potential of such programs may not be realized because supplier support often fades over time.
That trend was among several highlighted during a presentation at Solutions '95, the annual users conference sponsored by Nielsen North America, Schaumburg, Ill., here last week.
Win Weber, president of Winston Weber & Associates, Chicago, told about 300 attendees that despite measurable success in the first year of category management, suppliers frequently withdraw funding in the third or fourth year, when incremental gains begin to diminish.
Category management can produce dramatic results, he said, citing a program that increased the retailer's market share by 4 points and gross margin by 2%, while the supplier's sales jumped from $17 million to $28 million. However, unless the commitment remains firm, "those benefits will be short-lived.
"We see a backsliding" of supplier support in the third or fourth year after a program is introduced, "forcing the retailer to fill a void," Weber said.
The ability to develop sustainable collaborative relationships
is indeed a challenge, he added. Other areas category management partners should focus on to ensure program success include an emphasis on the consumer, development of category managers' skills and improved information sharing.