Category Captainship Research Articles

Retail category management under shelf-space dependent demand: The effectiveness of category captainship

Category captainship is a retail category management practice where the retailer delegates certain category decisions to a vendor, known as the category captain, to leverage the vendor’s market expertise and reduce the retailer’s workload in managing the category. We examine the effectiveness of category captainship compared to traditional retailer category management, focusing on scenarios where shelf space capacity decisions are delegated to the category captain, and demand is dependent on shelf space capacity. Our study considers two competing manufacturers, each selling a substitutable product through a common retailer. We find that when the retailer’s profit-sharing ratio is sufficiently but not excessively high, category captainship can enhance profits for both the retailer and the captain manufacturer. These profit improvements are more pronounced at intermediate values of shelf space elasticity of demand. Although the non-captain manufacturer may suffer from competitive exclusion under certain conditions, “win-win-win” outcomes in profits and sales occur when the products are highly differentiated by price or shelf-space elasticity. The retailer benefits from increasing demand elasticity of shelf space and prefers to designate the manufacturer with the higher elasticity as the category captain. When the profit-sharing ratio is determined through a retailer-led bargaining framework, the retailer benefits most by negotiating sequentially with the manufacturers, inducing the manufacturer with lower bargaining power to take on the category captain role. Our findings provide valuable insights into developing category management strategies under shelf-space elastic demand.

Should the fox guard the henhouse? Category captainship arrangement as a strategic information transmission mechanism

Retailers may collaborate with key suppliers to manage some specified categories. This collaboration is often formalized as a “captainship arrangement” between the retailer and her leading supplier in the category. The designated “category captain” assists the retailer with category management decisions. We show that captainship arrangements have the potential to generate a valuable information effect for the retailer: nonprice decisions by the category captain can reveal information that allows the retailer to improve profit through better retail pricing decisions. We also show that captainship arrangements have the greatest potential to make the retailer better off in categories where the retailer is highly uncertain about the impact of category resources on brands' demand. Moreover, the more substitutable the brands in the category, the more valuable a captainship arrangement is to the retailer. The information effect of category captainship is robust to a variety of arrangements. It is present under delegation arrangements (where the retailer delegates the task of category resources deployment to the captain), as well as under advisory arrangements (where the retailer retains control over category decisions, relying on the captain for advice). Interestingly, we find that delegation has a “better” potential to transmit information than advisory. Furthermore, in case of an advisory arrangement, the retailer is better off keeping the captain's advice confidential rather than sharing it with the other suppliers.

Service-dominant logic: reframing category captainship and retailer category management

PurposeThe category captain system (CC) of retailer category management (RCM) is established, accepted, and widely adopted. The paper empirically assesses the application of this system in building collaborations between retailers and their suppliers to generate growth following COVID-19. This study applies service-dominant logic (S-D logic) to RCM and establishes the current ‘practical’ application of the five axioms of S-D logic within the CC system.Design/methodology/approachThe researchers adopted a qualitative research design which examined both category managers and retail buyers currently involved in the CC system, using thematic analysis of transcripts from 25 practitioner participants.FindingsThe study reveals service is not a fundamental basis of exchange in the CC system. Value is uniquely, independently, and separately created by the retailer that significantly restricts the scope of the category service eco systems and the opportunity to innovate through value co-creation.Practical implicationsSignificant change is required to realise value co-creation and innovation applying S-D logic to RCM. The study indicates there is potential to start this change by the formalisation of wider informal category relationships between non-captain suppliers and retailers through consumer insight technology, and by aligning suppliers and retailers to make more effective and sustainable trading decisions.Originality/valueThe study indicates that certain elements of the CC system proposed by the literature's games-based theoretic models, are not applied in practice. The lived experiences of practitioners suggest informal ways of by-passing the formal system using S-D logic.

Category Management or Category Captainship in the Consumer Value Chain?

The purpose of this study is to identify the advantages and disadvantages of the Category Management and Category Captainship, to conduct comparative analyses of them and determine the princeple differences. Within the research purpose were solved the following tasks: to reveal the essence of Category Management and Category Captainship; to describe the main stages of Category Management development; to identify and substantiate the advantages and disadvantages of investigated approaches; to conduct the comparative analyses of Category Management and Category Captainship. Based on the received results we summarize, describe the main obstacles and formulate the recommendations for retailers by the decision making about the approach choosing. Finally, we define the future research destination in this area. The article discusses the essence of Category Management and the stages of its development considering current trends in the market and in the customer behavior. Based on the existing literature analyses we identify the main factors that influence the Category Management transformation from CatMan 1.0 to CatMan 3.0 this work identifies existing advantages and disadvantages of Category Management for all participants in the customer value chain. Further we reveal the essence and main features of Category Captainship, its advantages and disadvantages. Finally we conduct comparative analyses of the investigated approaches, define the main defferences of them and formulate their limitations and obstracles. This study let to formulate the recomendations for retailers that they could use by the decision making about the approach choosing. Finally were defined the future destinations of the researches in this area.

Impact of Category Captains on Category Sales and Profitability

The Indian retail industry is a growing segment and there are several players in entire India. Some of the big names are Reliance Retail, Future Retail, Spar, Spencer’s, Ratandeep, and many more. They are present in different states of India and catering a huge urban population. In any retail store, category plays a vital role and its management is very important. Sales of any retail chain is dependent on better and effective management of different categories. For every category, there are some of the main brands which lead the category sales. Category captains may play important roles in driving the overall retail chain business. Category captains can formulate the strategy for different product categories and can suggest the retail chain for implementing the same. However, the final decision is taken by retail chains only.

Impact of Category Captains on Category Sales and Profitability

Impact of Category Captains on Category Sales and Profitability

Category management under non-symmetric demands

Category management is known as a strategic approach that can enhance the collaboration between retailers and manufacturers in a supply chain. In this study, we examine two category management scenarios, Retailer Category Management (RCM) and Category Captainship (CC), for a two-stage supply chain in which two manufacturers sell their substitutable products through a common retailer. Based on non-symmetric demand functions, we develop two mathematical models in which the retailer adopts RCM and CC. By comparing these two models’ equilibrium outcomes, the following insights are found. First, the optimal policy for shelf space allocation and pricing decisions are obtained. Second, we indicate three situations under which competitive exclusion does not exist. This supports decisions on whether to switch from RCM to CC. Third, our analysis shows the evidence to support the retailer on choosing the category captain regarding either the retailer's join profit gain or the competitive exclusion. Last, we highlight the various conditions under which the retailer has either low or high flexibility in choosing products for the category, when the competitive exclusion is concerned. Our model is the first to illustrate the interaction impact of non-symmetric market potential, non-symmetric own-price elasticity and cross-price sensitivity on category management.

Strategically releasing control: Navigating the complexities of enabling category captains

Many retailers seek growth by strategically enabling a category captain to manage a category on their behalf. Past research assesses the efficacy of category captaincy from a retailer perspective, with results showing effective categorycaptain arrangements depend on the respective abilities of actors to effectively operate in such a network structure. Less is known about what and how manufacturers become successful captains or how challenger manufacturers unseat an incumbent captain. With this research, we contribute to the growing but still small literature on category captaincy in two main ways. First, we re-orient the focus from the retailer to the manufacturer (both captain and non-captains) to uncover the enabling strategies and underlying capabilities captains and non-captains require when operating in category captaincy networks. Second, we contextualize the captaincy lifecycle in terms of three stages; consideration, captaincy, and renewal. Drawing on interviews with retailers, category captains, and non-captains from six sectors we develop propositions whereby capabilities are contingent on actor goals across the captaincy lifecycle. In so doing, we extend existing research by identifying the capabilities necessary for different actors to gain benefits from category captaincy arrangements.

Category Captainship in the Presence of Retail Competition

Category captainship (CC) is a supply chain practice in which a retailer collaborates with a manufacturer to develop and implement a category management strategy. We examine the role of retail competition in CC implementations by analyzing a game‐theoretic setting with two competing retailers. We first consider a benchmark model in which both retailers adopt traditional category management. Then, we consider a CC model in which the focal retailer implements CC. Comparing the equilibrium outcomes of these two models leads to the following insights: First, despite preventing the emergence of CC in some cases, retail competition increases the upside potential of CC for the focal retailer. Second, the focal retailer’s CC implementation can increase the competing retailer’s market share and profit. Third, a manufacturer may agree to serve as a captain even though CC decreases the profit it generates through the focal retailer channel because retail competition enables it to recoup its losses through the competing retailer channel. Last, retail competition alleviates concerns about the potential negative impact of CC on consumers. We discuss the implications of the study for retailers, manufacturers, and policymakers.

Competitive Exclusion in Category Captain Arrangements

Category management is a retail practice wherein the products of a retail establishment are divided up into different categories and then managed as if each were a free-standing business. The most popular approach to category management involves outsourcing decisions to a single manufacturer in the category (a.k.a., the “category captain”). Category management and category captain arrangements can benefit competition and consumers where they help to enhance the efficiency and effectiveness of retail decision making. However, given their potential to adversely affect competition and consumers, category captain arrangements have attracted the attention of public policy makers, antitrust enforcement authorities, and marketing and legal scholars. At least two types of competition-related concerns are identified for category captain arrangements. One concern is that a category captain will use its role to coordinate competitor behavior resulting in anticompetitive collusion. A second concern is that a captain will use its role to disadvantage competitors leading to anticompetitive exclusion. This monograph focuses on anticompetitive exclusion. Despite expressed concerns for anticompetitive exclusion involving category captain arrangements research offers surprisingly few insights into the issue. The application of antitrust law to category management also continues to remain relatively undeveloped leaving practitioners with little guidance on what is permissible. Given this state of affairs continued effort is required to better understand the nature and competitive consequences of category management and category captain arrangements. The goal of this monograph is to offer this understanding. Chapter 1 offers an extended introduction to the topic. Chapter 2 describes and elaborates on the nature and practice of category management. Chapter 3 then describes the approach to category management found in category captain arrangements. The key sources of competitive concern for category captain arrangements are identified and elaborated upon in Chapter 4. With the antitrust importance of understanding the power of an organization to harm competition, emphasis and discussion is given to the nature and sources of power and influence held by category captains in Chapter 5. This is followed by Chapter 6 which identifies, organizes and describes the types of exclusionary conduct and practices that may be found in category captain arrangements. Managerial safeguards against competitive exclusion involving category captains are then identified, organized and described in Chapter 7. The effects for competition and consumers that can result from competitive exclusion involving category captains are described in Chapter 8. The findings of empirical research on competitive exclusion in category captain arrangements are then described in Chapter 9. A brief conclusion to the monograph is provided in Chapter 10. The monograph is comprehensively annotated with citations in order to serve as a resource for interested readers.

A planned study of the impact of B2C logistics service quality on shopper satisfaction and loyalty

Purpose of the paper : This paper reports on an in-progress study of the impact of business to consumer (B2C) logistics service quality (LSQ) on in-store shopper satisfaction and loyalty. Methodology : A comparative research approach is being used across the UK, France and Germany to also investigate country-specific differences of consumer shopping behaviour and channel strategies. The first stage, in-line with a deliberate integrated supply chain approach, consists of structured in-depth interviews conducted with managers at the producer/retailer interface, e.g. producer category captains and retail category managers. This qualitative stage will be followed-up by a quantitative survey stage targeting consumers as shoppers to determine how their expectations of retail LSQ and associated activities influence their satisfaction and ongoing loyalty. Findings : A broad literature review has generated over 40 variables of interest for both LSQ and loyalty, and almost 10 variables of satisfaction. This study will contribute theoretically by considering a B2C setting for LSQ, which is the final aspect of point of origin to point-of-consumption, whereas most general LSQ literature and LSQ’s impact on customer satisfaction and loyalty has been dominated by business to business (B2B) designs from point-of-origin to point of sale, that is they assume consumer expectations are a given or a different domain. Research limitations : Although covering three major European grocery retail markets, this study might not be considered as representative, especially when adopting a world-wide perspective. Practical implications : As this study emphasises consequences of B2C LSQ on downstream or consumer satisfaction and loyalty, rather than considering the upstream origins of related problems that dominate extant research, it will contribute practically by providing managers with an understanding of the components of LSQ considered critical by consumers. Originality of the paper : LSQ in this study is considered to be a holistic concept and not limited to specific dimensions and trade-offs, for example on-shelf availability versus out-of-stock situations.

On the Competitive and Collaborative Implications of Category Captainship

Category captainship (CC) is a retailing practice wherein a retailer collaborates with one of the manufacturers in a product category (referred to as the captain) to develop and implement a category management strategy. Although CC has been studied using both theoretical models and surveys, empirical evidence on the benefits and drawbacks of CC is scarce. The authors use a unique data set collected during a CC implementation to empirically examine the impact of CC on the retailer, the captain, and the other manufacturers in the category. The authors find that both the retailer's private label and the captain benefit from CC because of pricing and assortment changes. They also find that some competing manufacturers benefit from CC while others suffer. Specifically, the manufacturers that closely compete with the captain benefit, whereas the manufacturers that are in close competition with the private label suffer because the retailer protects its private label. The authors show that category sales would have been higher if the retailer had not protected its private label. This study sheds light on how joint consideration of assortment and pricing, the presence of a private label, and product characteristics may influence the outcomes of CC implementations.

Intrinsic impediments to category captainship collaboration

Category captainship, the approach where retailers use manufacturer-retailer collaboration, is a common way to leverage resources and capabilities in order to improve the sales/shelf performance ratio. However, evidence suggests that the depth and effectiveness of category captains and collaboration in retail are not as high as theory or best practice would predict. Suppliers and retailers suspect each other of opportunistic behaviour detrimental to both. In a stylized dyadic supply chain model prior to the effective contracting of the category captain, we show why information asymmetry between both is preferred: the retailer will hint at or develop retaliatory power to keep the supplier in check whereas the supplier will try to extract a rent by taking advantage of available information about relationship specific investment. We model single-period interaction when the retailer has to invest in relationship specific assets and alternative category manager grooming. We provide normative and positive support both to the captain's potential opportunistic behaviour as well as the retailer's investment decision in alternative captains and monitoring ability. In a two-period extension, we show how the retailer can discipline the captain ex ante. The model and its results complement and extend research in pre-contractual category captainship and supplier-retailer collaboration and coordination. They represent a departure from the usual vision in which sharing information and collaborating generate higher supply chain rent.

Category captain arrangements in grocery retail marketing

Purpose – The purpose of this paper is to examine shelf management practices of grocery retail chains and their category captains (CCs) in the marketing of consumer packaged goods. Design/methodology/approach – This is a qualitative, exploratory study that is set in a duopoly retail environment in the Asia-Pacific region. The study employed 18 in-depth interviews with executives and managers of two umbrella retail organisations and their suppliers/manufacturers. The method of data analysis employed was content analysis. Findings – Despite CC input in merchandising decisions, it is the retail chains that have the final say on shelf matters. There is no risk of strategic loss of power in employing CCs to manage store product categories on behalf of, or in partnership with retailers provided the retail chains closely monitor the activities and decisions/recommendations of the captains. Research limitations/implications – The paper is developed from data obtained from the grocery retail industry of one economy. Future research would need to extend this study to other economies with similar as well as different conditions. Practical implications – The research offers reassurance to grocery retail practitioners who may be contemplating lessening the burden of managing all their store categories by themselves and switching to CC arrangements. The reassurance is that the reported risk associated with loss of power is manageable. Originality/value – The paper has created a typology termed the “category captain arrangement/grocery retail concentration matrix” and specific directions for further research.

The Impact of Category Captainship on the Breadth and Appeal of a Retailer's Assortment

Category captainship is a collaborative channel arrangement wherein a retailer cedes control of category management decisions, such as developing a marketing strategy to grow the category and assortment selection, to one of the category's leading manufacturers. This paper studies the consequences of captainship practices on the breadth and appeal of a retailer's assortment. We consider a model where multiple manufacturers sell a product to consumers through a common retailer. In the benchmark, the retailer decides on effort to drive traffic into the category and assortment. Under captainship, the retailer delegates both of these decisions to a captain in return for target sales. The capability of the captain to stimulate demand is unknown to the retailer. We find that the breadth and/or appeal of the assortment at the retailer can increase or decrease under captainship relative to the benchmark. We identify three factors that play a role on the impact of captainship on the breadth and appeal of retailer's assortment: (i) the retailer's beliefs about the captain's capability, (ii) the captain's true capability, and (iii) product set heterogeneity. We find that the benefit to the captain sometimes comes at the expense of the non-captain manufacturers, but we also identify conditions where captainship can be beneficial for not only the retailer and the captain but also the non-captain manufacturers.

The Value of Category Captainship in the Presence of Manufacturer Competition

This research investigates the value of category captainship (a management practice in which a retailer relies on a manufacturer for recommendations regarding strategic category management decisions) in retail supply chains. We consider a setting where the scope of category management is limited to assortment decisions and demand enhancing activities. We assume that the retailer selects a category captain among multiple competing manufacturers with privately known capabilities for driving category traffic. First, we consider a benchmark scenario where the retailer is responsible for category management. Then, we consider the category captainship scenario where the retailer selects one of the manufacturers as a captain to manage the category. We find that captainship is more likely to emerge in categories where the cost of managing variety, the retail margins, and the competition for captainship are moderate and the captain is more capable of driving traffic compared to the retailer. In such categories the collaboration between the retailer and the captain ensures sufficient surplus for both parties. Finally, we show that captainship can also benefit the non‐captain manufacturers.

Category Captainship: When Should Retailers Outsource Category Management?

Category captainship is a management practice where a retailer relies on one manufacturer in the category for recommendations regarding strategic category management decisions such as assortment planning. This research investigates the conditions under which category captainship practices are more likely to emerge and deliver value to retailers in a context where multiple manufacturers compete for captainship. The scope of category management is (1) deciding on assortment and (2) undertaking (costly) demand enhancing activities. Manufacturers may be more efficient in undertaking demand-enhancing activities, but their capabilities are unknown to the retailer. We find that the retailer's desire to implement captainship is stronger in categories where cost of traffic driving is high. However, other category characteristics also play a role: when the cost of traffic driving is high (low), the retailer's willingness to outsource category management is stronger (weaker) in categories where base traffic, margins, and attractiveness of the products in the category are high and/or operational cost of managing variety is low. Furthermore, we find that intense competition among manufacturers for the captainship role not only has a positive impact on the emergence of captainship but also increases the variety offered to consumers.

The Impact of Category Captainship on the Breadth and Depth of Retail Assortment

This paper explores the consequences of a recent trend in consumer goods retailing where a retailer partners with a leading manufacturer and relies on this manufacturer for strategic recommendations regarding category management. We consider a model where multiple differentiated products compete to be included in the assortment at a retailer. We compare a scenario where the retailer selects its own assortment to maximize its profit to a scenario where the retailer delegates the assortment selection decision to one of the manufacturers (i.e., the category captain) who promises to deliver a target profit and drives additional traffic into the category. The category captain's ability to drive additional traffic is unknown to the retailer. While one would expect the category captain to exclude some of its competitors if given the power to modify the assortment, we find that this is not always the case. In particular, we show that the breadth (total number of products) and/or depth (overall appeal) of the assortment at the retailer can increase or decrease under category captainship in comparison to category management by the retailer. Furthermore, while the benefits that accrue to the category captain usually come at the expense of the non-captain manufacturers, we also identify conditions under which category captainship can be a win-win initiative for all the involved parties including the non-captain manufacturers.

Collaborating in an Imperfect World

According to some, category captainship is a way for retailers to abuse their power over suppliers, for a retailer and supplier to conspire against consumers, or for large suppliers to muscle aside smaller competitors. So what are the real pros and cons for retailers and their suppliers?

Category Captainship vs. Retailer Category Management under Limited Retail Shelf Space

Shelf‐space scarcity is a predominant aspect of the consumer goods industry. This paper analyzes its implications for category management. We consider a model where two competing manufacturers sell their differentiated products through a single retailer who determines the shelf space allocated to the category. The scope of category management is pricing. We consider two category management mechanisms: retailer category management (RCM), where the retailer determines product prices and category captainship (CC), where a manufacturer in the category determines them. Our analysis reveals that the retailer can use the form of category management and the category shelf space to control the intensity of competition between manufacturers to his benefit. We also show that the emergence of CC depends on the degree of product differentiation, the opportunity cost of shelf space, and the profit sharing arrangement in the alliance. The equilibrium category shelf space under CC may be higher than under RCM if the value to the retailer of eliminating double marginalization and putting price pressure on the non‐captain manufacturer dominates the loss from sharing the profit with the category captain. CC has been criticized for disadvantaging non‐captain manufacturers. While we provide some support for this claim, we also find that CC may benefit non‐captain manufacturers when implemented by a powerful retailer in categories with sufficiently differentiated products, because the shelf space allocated to the category increases in this case.