Until recently, the main focus for many retailers was the performance of a single article and/or department. This type ofanalysis is needed and still remains the fundamental essence of retail merchandising. With new technology capable of managing largeamounts of data, however, category performance has attracted the attention of many retailers. Category management entails groupingarticles together based on similar traits and tracking the sale and margin of the entire category. The big challenge facing thecategory manager is finding the proper mix of merchandise needed to sustain or grow an entire category. When a new article isintroduced to a category, although it maybe a stellar-selling product, the question should be, did thesales for the whole category increase? Perhaps the sales simply moved around within the category, increasing sales for the singlearticle while reducing sales for similar articles. Did the profit for the entire category increase or decrease with theintroduction of this fast-selling new article?

The essence of category management is grouping articles together and tracking the grouppeformance.

The essence of category management is grouping articles together and tracking the group performance. Retailers may have adifferent objective when implementing a category management system. Category management could even entail developing anunderstanding of how location of the category within a store influences sales. This analysis will focus on the basic performance ofthe category of merchandise. It is very similar to the basic inventory analysis mentioned earlier. Most retailers already have sometype of category management reporting. If you do, you should tailor...