The Dominick's Approach

One retailer, Dominick's, has instituted a category management process that calls for a joint learning process and a sharing of knowledge of how merchandising and marketing actions impact items of a product category, how characteristics of the items and/or markets influence these item-specific impacts, and how the items should be merchandised.

Dominick's has

'stiffened' requirements for acceptance of new items, become 'heavily involved' in a category management system in the last two years, and has adopted a 'targeted marketing' philosophy, which treats each store as its own marketplace.

Dominick's reviews every category at least once a year, using a five-week category review process:

1. Planning Meeting: review information
   
2. Analysis: analyze DPP and shelf space management
   
3. Planogram Develop: develop a new planogram
   
4. Shelf Layout: physically layout the planogram
   
5. Implementation: implement the planogram at the store level

A category review should not be based only on internal data. The figures are accessible and familiar, but this is a short-sighted approach. The retailer is operating in a vacuum.

Vendors have the opportunity to provide such data for use during this review, and are required to submit demographic data for every new item introduction.

Dominick's approach to merchandising planning is moving the chain into sophisticated use of information and computer systems. As a result, a vendor's sales force must be able to make similar use of information and computers. Ciaccio states that sales representatives should be prepared to answer the following questions about the category, brands, and items. These questions require account level data, along with corresponding market level data.

• Am I getting my fair share?
  
• What items should be added or deleted?
  
• What new items are in the market that we are not carrying? Should we stock them?
  
• What is our private label share in the category?
  
• What are the 10 best and 10 worst performing items?
  
• How am I priced compared with the market?
  
• Are we under- or over-promoting compared with the market?
  
• How are our promotions doing?

We want information based on extensive market research, provided with the focus of assisting us in maximizing market potential quickly and efficiently. ... Fewer than 40% of the sales representatives who call on us are fully prepared for today's needs. That means that more than 60% would be judged fair to poor.

The Category Exploration discussion describes a prototype system System, which would allow a firm's sales force to be better prepared to participate in such a partnership arrangement with a firm like Dominick's.