AUSTIN, Texas -- Category management is creating a myriad of changes in frozen foods, on both the store level and in corporate headquarters.
So said Robert Tomberlin, corporate systems coordinator for Winn-Dixie Stores, Jacksonville, Fla., speaking here at a category management conference sponsored by the National Frozen Food Association, Harrisburg, Pa.
Fewer stockkeeping units and increased sales are among the changes on the store level, he said. In the office, buyers are becoming "category managers," computer data -- often broken down to individual store sales -- is playing an increasingly important role, and partnerships with vendors are becoming more commonplace.
That's par for the course throughout the industry, other conference speakers told attendees.
Brian Harris, chairman of Retail Directions, Salt Lake City, said category management will result in many changes in the way supermarkets are run. Between 20 to 30 chains worldwide, he said, have become leaders in implementing the strategy.
Category management, he said, "is a distributor/supplier process of managing categories as strategic business units." Effective category management, he said, will produce enhanced business results by focusing more on delivering customer value.
Ted File, senior vice president of Information Resources Inc., Chicago, told attendees that Harris has mentioned six retailers in the United States that "are doing a great job" in category management. Only one of those, however, has a frozens category manager.
Regardless, the movement toward category management is continuing, with frozen foods expected to play a larger role as time goes by. File said the number of chains excelling in category management in the United States is expected to swell to 25 or 30 by the end of the year, with more chains expected to add frozens category managers.
Tomberlin remarked that a move to category management requires a change in one's mindset. "Now instead of focusing on buying, as we did for years -- and we got pretty proficient in buying -- we have to change our direction and start looking at selling. How can we sell more?" asked Tomberlin.
Winn-Dixie, he said, implemented category management methodology in its stores within the past year.
"We've seen a lot of changes in our organization as a result of category management. We've begun to break our categories down and we're measuring category performance on an individual category basis. We do that systematically. We're buying by category, rather than by vendor. In the past we bought all lines by vendor, whether it fell into the coffee section or the tea section, or whatever. Now we buy by category."
That can sometimes mean managing across store departments, Tomberlin warned. "We felt that if you're going to manage a category, you've got to manage the category entirely. You can't manage part of it and be proficient at it. You have to know what's going on across the entire category.
He used broccoli as an example of how such a setup helped the chain to act quickly. "Fresh broccoli prices were rising rapidly, so we jumped on frozen broccoli. We ran a frozen broccoli ad and took advantage of the price being right on frozen. That's one example of what you've got to do in category management."
He also gave an example of what category management can do for an entire frozens department.
One Winn-Dixie store, he said, reduced its frozens SKUs by 300 and recorded a 10% rise in department sales. The 300 eliminated items, he added, were spread throughout the department.
"The customers were amazed at how much more variety we had than in the past," he said, noting that a shopper's definition of variety may be different than that of a grocer.
"We found the customer's perception was having what they wanted when they got to the store. Most of the time when they came in for a 5-pound bag of potatoes, we were out of stock on because we had three rows of pig ears over here in the corner," he joked. A reduction in SKUs is just one of the changes brought about by category management, Tomberlin said. By weeding out weak performers, chains experience more efficient use of space, both at the warehouse and retail levels.
Out-of-stocks are also reduced, he said, noting its toll on retailers as well as customers.
Tomberlin warned the manufacturers in attendance that each SKU is going to be scrutinized for its contribution to the category.
"If you do not take the initiative to manage your category and manage your business as the retailers are, you're going to be left behind." He said retailers are going to be listening to someone who's interested in building the category business, not necessarily their brand business.
"Now we have 26 weeks of census data on line, so it gives us the ability to measure how categories are performing. Therefore, it's going to be affecting the way we make decisions."
