Quest for common definitions drives NACDS project

Drug Store News, Sept 8, 1997 by Liz Parks

ALEXANDRIA, Va. -- A project designed to provide a common language between retailers and suppliers when they discuss categories has been initiated by the National Association of Chain Drug Stores. The association is working with other trade associations, such as the Grocery Manufacturer's Association and the Food Marketing Institute, and with market research companies, such as Information Resources Inc. and ACNielsen.

According to NACDS' director of industry affairs Steve Perlowski, the initiative hopes to achieve "common definitions of product groupings, which will become the building blocks for category analysis."

As a first step in defining a building block, the NACDS Retail Advisory Council, at its mid-August meeting, selected three categories to be broken down and grouped based on definitions to be mutually agreed upon by retailers, manufacturers and market research companies. The categories include oral care, feminine hygiene and hair care.

In support of NACDS' initiative, Chicago-based Information Resources is now in the process of surveying a variety of trading partners, including retailers, manufacturers and research companies, to see whether it is possible to build a consensus on which segment groupings should become building blocks or the "unicats" of each of these categories.

According to Perlowski, the process is not designed to standardize categories but to standardize the groupings that are the building blocks of category analysis.

That means that if the initiative succeeds, the industry would agree on the definition of a segment, such as baby shampoos, and that segment would become a unicat of category management.

Perlowski estimated that while it may take years to agree on unicats for all the product groupings in the mass market consumer goods industries, it might be possible to get a consensus on these three relatively simple and straight forward categories in six or eight months.

In addition to looking for a consensus on the definitions of unicats, the NACDS initiative is also designed to examine the costs and potential financial benefits of using unicats to redefine or "remap" existing product groupings.

Perlowski said, "This is not an attempt to standardize product categories, because each retailer and manufacturer needs the flexibility to define categories in ways that make sense to them and their customers.

"Unicats would give retailers and manufacturers the freedom or opportunity to build categories anyway they like. They would be the architects, but the unicats form the foundation on which to build the category structure.

"So, if a retailer wanted to merchandise baby shampoos in the baby care department in stores to accommodate customers with young children, then they would have the flexibility to track that segment by grouping it as part of the baby products department.

"But, if they have stores that merchandise baby shampoos as hair care items, perhaps because their primary customers are senior citizens who use baby shampoos to wash their hair, then they would have the flexibility to track baby shampoos in the hair care department."