prabhuIn the morning rush hour, finding one pair of matching socks from the unfolded laundry is one pain point in their routine. But when the same laundry is neatly folded, where jackets are hung, home tees separated from work shirts, and those socks find their rightful place in a drawer, you save time, and energy, and mornings are more productive with a great kickstart. This is the analogical explanation for what a bit of organization and category management procurement can do to your business, specifically if you own a retail store.
Retailers buy products in bulk from wholesalers and resell their wares with a margin to cover their costs and leave them a decent profit. Wholesalers do not indulge with end-users, as they find it time-consuming to tend to smaller ticket sizes. Businesses are empowered to negotiate better with vendors with category management strategies. Grouping of products based on type, location of seller, value, and risk gives the brands this edge. Instead of asking for a decent discount at the SKU level, a category management tool will aid the business owners and managers in negotiating prices at the category or portfolio level. Here are ways category management will help retailers.
- Think Bigger, Do Better
The category management approach strategizes the sourcing operations. Instead of focusing on short-term lower benefits, managers can negotiate with high-value vendor communities that collaborate for consistent order flow. Bulk discounts are a win-win trade for all the stakeholders of a deal. Vendor relations are fostered over a period and prove useful during challenging times, when there are supply constraints, and the business needs the product line for its brand image.
- Valuable Insights
The spending analysis of each category helps in breaking down the profit estimates from each category. There can be high-cost high-value and low-cost high-value purchases between different categories. Prioritizing energy in negotiating better prices for the former and better marketing strategies for the latter will improve overall sales and margins. The concentration risk can be eliminated from time to time. Biases can be handled deftly to overcome behavioral finance heuristics.
- Stakeholder Loyalty
Loyalty accrues from the trust that our customers and vendors develop when they partner with us. When consumers are assured of finding valuable products with steady and competitive prices, they will keep coming back for more and bring in their friends and family. It’s useful for business. However, a retail business can offer what they get from their vendors. Category management aids in keeping both these sections of stakeholders happy while improving the net worth of investors. You do good, and you get back the best. It’s simple logic, and there’s no need to reinvent the wheel for this.
- Benefits of Automation
Category managers no longer have to work with long spreadsheets to crunch big numbers to arrive at value-proposition recommendations. The platforms are automated and can be easily integrated into the present software to reap the benefits.
Conclusion:
Try category management to control the costs and improve sales margins simultaneously, while offering a great shopping experience.
