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03/18/2015

Connect, communicate to better manage categories and own brands

Running a store brand program isn’t easy, and it’s pretty much impossible to do without communication between all parties involved in the category management process, Moe Alkemade, group vice president, general merchandise manager for Deerfield, Ill.-based Walgreen Co., told attendees of Store Brands' 2015 Innovation & Marketing Summit, held in Rosemont, Ill.

“There’s a lot of fun to it, but it’s a hard job because … you’re up against a lot of competition — a lot of competition that has information, that has money, that has a whole pile of things. So if you do not have that connectivity between your organization and your partners, it becomes a real painful job,” he said in his Feb. 25 keynote presentation, titled "How to Approach Category Management from an Owned Brand Perspective."

If communication and understanding in the category management process aren't taken seriously, Alkemade notes, one bad decision or instance of mismanagement at any point in the process could create a domino effect that creates an incredibly messy situation.

“The problem is when you make the decision on the product,” he stated. “That’s where the problem starts. And because of all the other things that are not considered — and without the kind of regimen and the religion that you’re either going to have this as your DNA or not — everything else screws up. It is a perpetual problem, and you end up working on the wrong things and you get a negative connotation on this business versus a positive one.”

Both retailers and their manufacturers need to ask themselves several questions when developing and executing the category management process, Alkemade said.

First, they must ask what their divisional strategy is. He noted that it doesn’t have to be “rocket science,” and when it gets pieced together, retailers will have a better understanding of the category management process.

Second, they should ask what the role of the category Is. The answer to this question will have a massive impact on what a retailer does with its own brands, Alkemade said; not all categories are equal, especially not across the country.

Third, they must ask themselves whether or not they are aligned with the four Ps (product, pricing, placement and promotion). When finalizing this alignment with the manufacturer, retailers need to make sure they have a set plan and understand exactly how it will be executed, Alkemade explained.

And fourth, they should ask themselves whether or not they have consistent leadership around own brands. According to Alkemade, the answer to this question is critical to determine, because if the program is not led from the top, then it will fail at the bottom.

“You are going to make different decisions because you’re going to have a lot of pressure,” he pointed out. “Especially as category managers and people with P&L responsibility, you have a tremendous amount to make your numbers. And own brand is a long-term proposition … absolutely the right one, but it is long-term.”