CATEGORICAL IMPERATIVE

JOEL ELSON

Supermarkets are beginning to get religious when it comes to merchandising highly impulse-driven general merchandise categories. That new-time religion is category management.

It is happening by degrees in general merchandise, as it has in health and beauty care. Some retailers say the application is even slower for general merchandise, however.

Homeland Stores, Oklahoma City, is at the halfway mark in appointing category captains to manage its general merchandise categories, according to Tom Keller, director of category management.

"We've looked at film, lightbulbs and batteries. Now, we are looking to assign more category captains in general merchandise, as we move deeper into category management," he said.

Associated Wholesale Grocers' Valu Merchandisers, Kansas City, Kan., has applied category management to all its general merchandise categories, with the exception of seasonal merchandise, said Charles Yahn, vice president of general merchandise at Associated Wholesalers, York, Pa.

Others, such as Copps Corp., Associated Food Stores, Pay Less Super Markets and Harps Food Stores, are either in the initial stages of the process or are simply contemplating it, bearing in mind what already has been achieved in grocery.

"We're putting the infrastructure together to get into category management in general merchandise. We have begun realigning the categories and our buyers into category managers," said Wayne Gresl, director of nonfood at Copps Corp., Stevens Point, Wis. Copps hopes to start testing the concept in nonfood next year.

"Until general merchandise category management is launched full- force, we're trying to just do stockkeeping unit rationalization, and some space-planning and planogramming," said Brian Duff, manager of general merchandise and HBC at Associated Food Stores, Salt Lake City.

Associated plans to test the category management concept in several categories in five of its stores soon, Duff said. "The test will encompass specific departments using space management, products tailored to those stores, and the rationalization of those SKUs. We'll retrieve the scan data to look at its validity," he added.

Pay Less Super Markets, Anderson, Ind., has so far applied category management to only its grocery categories. "We'll gradually start applying it to general merchandise, but don't expect any major headway into nonfood until next year," said Dick Sizemore, nonfood merchandiser.

Harps Food Stores, Springdale, Ark., is not pursuing category management at this time. "It's something we may be getting into down the road," said Art Bundy, Harps director of nonfood.

Particularly for high-volume categories like film, batteries and lightbulbs, retailers are seeking to forge partnerships in applying category management, which is integral to the Efficient Consumer Response movement.

"Most of the major vendors are well armed to provide the information we need to go forward," said Keller. He also believes some smaller vendors will be better equipped to practice the process in the future.

"Every general merchandise category now has a partner, which is a major vendor," Yahn said.

In this partnership, retailers and vendors exchange sales data. Associated Wholesale Grocers will compare the vendor's national sales data with its own market information.

"The vendor has to be a significant part of the category," said Yahn. "Sometimes we go to their facility to develop the planograms. And when we go out and reset stores, everyone involved in the category helps reset it."

Pay Less' Sizemore commented on partnering with suppliers: "They can track movement in our stores and be in a better position for on-time reordering. This will eliminate slow inventory from vendor warehouses while they increase faster-selling products and lower their out-of-stocks."

Associated Food Stores' Duff pointed to demographic and trend information that partners can utilize in category analysis. "This can help us regionally and in a store cluster affect, where we serve a variety of stores in a large area," he explained.

He said even the climate can impact product variety. "Montana weather varies quite a bit from Southern Utah, and there are other variances, including seasonality in our region," Duff said.

Among the category leaders mentioned by retailers were General Electric, Kodak, Fuji, Eveready, Hartz and Rubber Maid.

Associated Wholesalers is in the process of replanogrammming its film section. The resets are expected to be complete by October, said Yahn. "In the film category the mix is being re-merchandised down to Kodak, which does 75% of the business, and a private label. Sales actually have increased with fewer brands in the replanogramming."

Although the category process is time-consuming and labor- intensive, and requires investment in information systems, most retailers believed the process is worth the effort and necessary in maintaining a competitive position.

"We're putting in the computer software system, IRI Category Manager, which will probably be installed by early next year. In addition to having the category captains, this will enable us to evaluate categories from the aspect of best practices," said Homeland's Keller

. Most retailers agree the consumer should benefit most from the process. Retailers, meanwhile, will have more efficient and profitable product sets.

"The bottom line is that suppliers must realize we're all ultimately selling to the consumer and not to the wholesale buyer. Category management allows you to carry a variety that sells instead of items that merely sit on the shelf," said Yahn.

"Many of our markets are specific to a store location. We have three stores in one town; each is different and caters to a different customer type," explained Bundy of Harps.

Through category management, the product mix can be tailored to individual stores to satisfy the needs of various customer types, he said. "The benefits from category management in general merchandise would be enormous if this could be accomplished. Housewares, for example, could benefit by offering the correct mix that sells the best in each store," Bundy said.

"It will give us a better presentation and the products consumers really want at retail," said Gresl. The result will be large cost savings for the company through elimination of excessive inventory, he added, and realizing better turns from the inventory carried.

"We hope category management will help us in our variety and selection. Other benefits would enable us to better monitor and track sales and product variety. It would all tie-in with electronic data interchange with our suppliers," said Sizemore.