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Category Management: The Contribution of Procurement to a Successful Assortment

The great art in retail is the selection and management of the assortment. The better the range is tailored to the needs of the target groups, the higher the sales. Accordingly, it is important that retailers know what their customers want when planning their assortment. Learn what procurement can contribute to a successful assortment.

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Why is category management so important?

Customers have never been so well informed and had so many options as they do today. Through the internet, modern consumers are comprehensively oriented about products, manufacturers and the retail companies themselves.
In order to remain competitive in the long term, retail companies have to set up their category management holistically and across product groups. Even if strategic category management takes over central control in the future, an operational unit to satisfy local and region-specific customer needs remains indispensable.

The right assortment planning – “Walk a mile in your costumer’s shoes”

Today, simply optimising space is no longer enough to operate efficiently, stand out from the competition and increase customer loyalty. With our proven optimisation approaches in category management, we can provide you with important competitive advantages.
Our project experience shows that the contribution margin can be significantly increased through holistic assortment planning. In addition to optimising overall assortments with upstream potential analysis, we can also work on individual assortments and product groups as required.

The customer journey as the basis for assortment planning

Retailers should be able to actively shape the entire process of the procurement decision, the “customer journey”. In the course of digitalisation, almost unlimited technical possibilities are opening up for retailers to analyse the usage behaviour and needs of customers. The big challenge is to identify exactly the data that leads to the procurement decision and thus to better understand the target group.
Nowadays, this data comes from various sources: A classic customer card provides reliable information about shopping behaviour in the own store. For comprehensive and forward-looking assortment planning, however, this internal data must be linked with data from external sources such as social media or online marketing. Through comprehensive analysis, the right correlations can be identified and conclusions drawn about procurement behaviour.

In classical category management, this task can hardly be accomplished. This is because a category manager usually only manages one region, one distribution channel or one specific product group. As a result, there is often no interdepartmental exchange. This makes it impossible to identify the relevant data for the company and to derive strategic and cross-channel as well as cross-category target group definitions from it. This is, however, essential in order to set up category management in a customer-oriented way.

Category management in procurement

INVERTO has developed an approach that focuses on the holistic strategy of the retail company. In order to optimise the assortment, procurement must become a substantial part of category management, because it is often here that the greatest conflicts arise because the targets and processes of procurement and category management are not aligned, which is unfortunately often the case in practice.

How do we go about category management consulting?

Assortment Analysis

In order to create the basis for successful assortment organisation and planning in the company, we first analyse the assortment. We examine the current performance and the sales potential. In addition, the assortment design of the competition is compared on the basis of article mix, pricing and placement, and an assessment of the market development is made with regard to emerging trends.

Strategy & Process Development

Based on the findings, we work with you to develop a strategy for establishing long-term and efficient category management processes. Do you have the right mix of complementary, compulsory and profiling assortments? Are these assortments target group specific? We analyse and optimise area shares and develop a strategy that suits your company and ensures differentiation from the competition.

Organisational development

Companies are subject to constant change. We help you identify strengths and weaknesses in the existing structure and build a high-performance organisation that also takes process costs into account and is in line with your corporate strategy.

Inclusion of the entire supply chain

The Supply Chain Act, stricter climate targets as well as customer demands for more sustainability present supply chain management with challenging tasks. It is clear that category management, procurement and SCM must work hand in hand to meet customer needs and legal requirements. Transparency must be created throughout the entire supply chain and a risk management system implemented that maps compliance with the new requirements as well as logistical risks.

Realising Cost Reduction Potentials

After a concrete concept of measures has been developed at item level, we carry out professional procurement activities such as tenders and brand negotiations as a team in order to optimise the cost situation and to secure earnings in the long term. Finally, we coordinate POS and online strategies, sales planning and promotion planning with marketing and sales.

 

Your result

  • P&L effective increase in turnover and profitability
  • Increase in average receipt
  • Decrease in markdowns
  • Optimised order and inventory management
  • Transparency in the supply chain

 

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    What our clients say about us


    Maryne Lemvik, CEO Skanem AS

    „In an interactive sales training with a high degree of practical relevance, our sales staff learned how to approach negotiations like buyers. This change of perspective has decisively changed our sales negotiations. Thanks to INVERTO, our employees now feel better prepared and can draw on professional methods and tactics to achieve better negotiation results - a decisive step in the further development of our sales.“

    Ole Anton Gulsvik, CEO, Seven Seas

    „INVERTO conducted a detailed analysis of our international processes, and by introducing a new strategic approach for our procurement, it achieved substantial efficiency gains.“

    Patrick Juhl, Head of Procurement, Seven Seas

    „As a result of the central procurement organization implemented by INVERTO, as well as the pooling of demands, we were able to make double-digit percentage savings.“

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    Thomas Pfeiffer, Head of Product Development at willhaben.at

    „Together with INVERTO, we have achieved a result that we did not think possible at the beginning of the project. The overall package of tender preparation, service provider workshops and rounds of negotiations at top management level has raised our hosting landscape to a new level of price performance. I thoroughly recommend working with INVERTO.“

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    Dr. Jürgen Wickl, Managing Director of Styria Media IT

    „By preparing a functional specification, we managed to advertise requirements in a tailored way. INVERTO’s orientation towards precise customer requirements and benchmarks as well as professional negotiations has contributed significantly to the success of this project. The close involvement of employees in this structured tender process is an additional bonus, and something which will benefit us in years to come.“

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    Siniša Mitrović, mag.oec., Managing director, Styria Tiskara Zagreb

    „Due to the flexibility of the team, we managed to receive additional offers from suppliers and hence increase competition between existing suppliers. Through centralization of our former pick-up locations in Croatia and Bosnia-Herzegovina we managed to reduce the operational work for our employees. Furthermore, this centralization led to a huge additional revenue from our waste paper business. The project work with INVERTO was very professional and made this great result possible.“

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    Marc Lamure, Director, Montagu Private Equity Associates LLP

    „INVERTO has helped D.O.R.C. with the professionalization of the procurement organization and accompanied the supplier negotiations for various products and services. By implementing new processes and working with procurement staff, the achieved savings enhance sustainability and will result in a more profitable organization.“

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    Erwan Quemener, Purchasing Director, Chassis Brakes International

    „INVERTO helped us in raising undreamed-of sources of savings in both direct material and indirect material areas. They did not only identify these potentials but they supported us in the implementation phase with a great professionalism.“

    Nick Gerrard, CFO, MID Essex Hospital Services NHS Trust

    „INVERTO’s market and product knowledge have been invaluable in helping the Trust deliver substantial cost savings in a short space of time. They have the ability to talk the clinicians language, optimise the procurement process and deliver a result the trust could not have achieved itself.“

    Bart Stubbe, Vice President of Purchasing LINPAC Group

    „INVERTO are assisting LINPAC since early 2008 in transitioning from a decentralised to a category purchasing structure, bringing sourcing expertise, skilled resources, technology and methodology to recognise, create and release value to the company.“


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