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Category Management

In case of Pantaloon, it has come up with some sort of implementation of category management principle. Pantaloon has four categories - Men's formal, Men's casual, Men's Knitwear & Ladies & Kids wear.
Each category manager operates like a CEO of his category and is given a quantum of showroom space, and his objective is to maximize contribution after meeting the variable cost and fixed cost (including rental cost) for the space under his management, category manager with the help of 6 to 7 executives pores over the sales data of each of the stores and tries to figure out the trend of sales. On the basis of this extensive analysis, he draws out the plan of procurement and negotiates with various brands (Say, color plus, Levi's, Lee, etc.) as to how much space and at how much cost such rental shelf space is available to them.

To give an example, as the Begumpet's Pantaloon real estate space is expensive and the customers are more up market, the category manager has given space to some brands. Such a local flavor and variation is possible as the category manager is fully empowered to increase the sales per square feet and his pay packet is structured in consonance with the target achieved within the category. To cite another example, initially Pantaloons was not selling men's shorts, except that of some local brand. The category manager of men's casual identified this niche and started stocking Men's shorts, and in the recent festival season Pantaloon could sell 13000 men's shorts. Hence, unlike other retail players who work on the pull of brands, Pantaloon shops do not have any particular allegiance to brands. The category managers work out the optimum mixes of brands for each of the stores that can maximize sales. They specifically follow the following model: -

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* Contributed by -
Manasi Panigrahi,
Pursuing MBA, Batch of 2006,
ICFAI Business School, Hyderabad.