ECR Strategy – Category Management – part 1
The beginnings of sales organization in Poland in the form of the Category Management (CM) process could be observed in 1997. But a year earlier – in 1996 – Polish producers were not interested in starting cooperation with retailers. The Polish market was characterized by dynamic growth and high margins. Nobody was thinking about optimization and saving at that time. Suppliers and retailers had not heard, or did not want to hear, about mutual cooperation (which is the basis of CM). Companies believed they had no time for innovation, that making planograms and calculating space productivity in stores was a waste of time. According to them, everything was flying off the shelves by itself; they believed that the goal to increase turnover was to open a new point of sale.
At the beginning of the development of Category Management in Poland, trading partners lacked courage. The retailer was afraid of disclosing information about sales, margins, etc., and the producer was not sure of the effects associated with investing money in a Category Management project. A few started using software to build planograms, others later initiated consumer research of the ,,shopper as a buyer” type, and even later companies began to train specialists in the field of Category Management. Initially, large corporations also spent their time establishing close cooperation with research institutes providing market data and conducting consumer research. Anyway, in the second half of the 1990s, the FMCG market was still characterized by high growth dynamics, and retailers focused on other sales stimulation techniques, such as opening new facilities or intensifying promotional campaigns.
Over the years, more and more retailers and suppliers in Poland became familiar with Category Management. Some received guidelines from their parent headquarters that the CM process should be implemented, others came to the conclusion themselves that they needed to optimize, i.e., sell more, better, and cheaper in the space they had. Companies became more and more interested in the Category Management process, and a still small group began to implement projects in this area.
Currently, Poland is a fast-developing retail market where almost all major international distributors operate.
After a period of very dynamic growth starting in 1989, chain retail has recently entered a period of some slowdown, caused by the deterioration of the general market situation and the gradual saturation of the supply of goods and points of sale. Margins are falling, growth opportunities through expansion are limited, and discounters are strengthening. The economic situation of the years 2000 – 2003 means that consumers have less and less money, which in turn means they give up branded products and buy private labels or shop at discounters. All this leads to increasingly fierce competition.