Strike any doubts from your mind: Category management is alive and well in the grocery business, although it means different things to many different players in the industry. More to the point, whatever specific elements consumer research, assortment overhauls, retailer-friendly tools, promotion and marketing support, you name it—a brander chooses to emphasize in a given initiative, category management remains crucial to the sales and profitability of products in stores across America, because the best category managers are willing to innovate, and embrace change.

This abundance of experimentation and change is apparent in the body of entries PROGRESSIVE GROCER received for the annual Category Captains Awards. We received another recordbreaking number of more than 100 total entries, rendering about 90 award winners in all, representing the best of the entries in the eyes of the editors of PG.

The awards are based on the detailed criteria listed in the “Methodology” section on the bottom of this page. In the summaries that follow of the initiatives deserving recognition, you’ll find many examples of smart category management orchestrated by vendors across the entire store.

The patterns of success that emerged this year include:

Greater reliance than ever before on hard data garnered from the stores, as well as copious research probing the minds and behaviors of shoppers.The key trend here is that much of the data is more powerful because it’s more specific to retail accounts and shopper profiles. On the other hand, what still needs work in many cases is the application of this data in retail execution.

Deeper collaboration among key partners, most typically category captains and their major retail accounts, forming one-on-one symbiotic relationships tailored to the needs of that retailer and that retailer’s consumer target for a given category.

Proliferation of user-friendly technological tools in the service of retailers’ needs for interpreting and implementing category strategies, not only sourced from off-the-shelf providers, but also increasingly custom-made.

The greatest challenge faced by Coinstar_® is also its greatest success: The company single-handedly created a new category, with the “4th Wall Profits” program it launched in May 2005.The program—a strategy for increasing efficiency, sales, and profits from the area of the store between the checkouts and the front door-represents the kind of revolutionary step that’s not too common in the category management world, where iterative innovation is more the rule.
Indeed, Coinstar’s contribution here is so unique that its bigger challenge hasn’t been selling the concept, but rather finding the right division of a typical retail organization to sell it to.

“Most retailers don’t have someone assigned to that area of the store, and thus are not sure who should manage it,” explains Ted Taft, managing director of Meridian Consulting Group, which worked with Coinstar on the project.

Those retailers that have figured out how to integrate the 4th Wall category management concept into their organizations are seeing significant benefits from Coinstar’s efforts, however, in the form of increases to the bottom line, due to the program’s primary goal of creating and fostering “post-register ring,” which is a sale after the checkout.

And the company has created, via acquisition, a host of solutions for the front of the store, consisting primarily of self-service coin counting, electronic payment solutions, entertainment services, gift cards, and self-service DVD rentals.

Meridian conducted a yearlong category and department management study for Coinstar that revealed untapped potential for profits of $2 billion to $4 billion over the next three years, all waiting to be exploited at the front end of grocery and mass merchant retail operations.

The study, which used data from 3,500 retail locations, industry metrics, and store audits, also showed that even a 10-store chain could see nearly $1 million per year in additional profit by introducing category management techniques in the area between the cash registers and the front door.

Coinstar has launched an initiative based on that research. For each retailer that buys into the concept, Coinstar is developing an integrated 4th Wall business strategy, by analyzing front end products and services to determine the categories at work there, and comparing each category’s size, growth rate, role, and generated income. Performance metrics also distinguish which categories generate the highest destination traffic.

The process then identifies synergies between current and emerging categories that generate growth, and the opportunities to enhance the consumer shopping experience just beyond the checkout. Retailers use this process to refine their mix, with an eye on what best fits each store’s community and chain signature.

The company continues to seek new opportunities emanating from its pioneering focus on the front of the store. Its latest venture is a plan to manufacture Disney-character children’s rides as an addition to its offering of entertainment equipment. The initial line includes classic Disney characters such as Winnie the Pooh, Dumbo, and Mickey Mouse, as well as other favorites from more modern times, including Pumbaa from The Lion King and Buzz Lightyear from Disney-Pixar’s Toy Story. In 2007 the line will expand to include characters from movies such as Aladdin, Pirates of the Caribbean, and Lilo & Stitch.

This way, as shoppers’ kids ride Mickey, retailers can ride Coinstar’s innovation all the way to the bank.