Category Killer

From CEOpedia | Management online

A category killer (also referred to as power retailer or category specialist or specialist market) is an enormous specialty store that focuses on an individual product line and an very large amount of products and competes by offering budget price ( W. Pride, R. Hughes, J. Kapoor 2009, page 412) and thus, can kill a category of commodity for other retail traders (W.Lavy, Weitz 2007 p.50), predominantly for specialty stores.

This term is used for a firm operating in one specific classification with a very wide range (S. Finne, H. Sivonen 2008, Page 87). The service level forthcoming by category killers is generally kept at a low level. Self-service approaches are generally applied to sell commodity, but assistance is offered if required by the clients (J.Zentes, D. Morschett, H.Schramm-Klein 2007, page 33).

Instore design and store architecture are kept very simple and offer a shopping experience that is dominated chiefly by pricing and size (A.Wileman, M.Jary 2016, p.78).

The strategy of category killers

The strategy of low operating costs in terms of rents,low-cost design, personnel costs (expenses related to employee remuneration, insurance and taxation) etc., combined with huge purchasing power, normally leads to high asset productivity (e.g. stock rotation or space). This makes category killers one of the retail formats with the highest growth rates over latest years.

Category killers have gained market share mostly at the cost of specialty stores, because of assets in terms of price and product assortment. Category killers are currently established in many non-food classification such as:

  • consumer electronic goods
  • furniture, sports
  • office products
  • do-it-yourself
  • toys or pets
  • baby products
  • the format is still opening out into new categories (J.Zentes, D. Morschett, H.Schramm-Klein 2007, page 33).

Traditional retailers and category killers

Entry of a category killer frequently affects many traditional retail traders and may concentrate the market to a few players. Category killers can be found in many merchandise areas. The surge of category killers has made life difficult for many department stores (S.Finne, H.Sivonen 2008, page 87).

Category killers and Internet

The existing trend is for an increasing share of category killers to move into E-business. Over the internet, a category killer may combine big, geographically spending power and maintain wide range (S.Finne, H.Sivonen 2008, page 87).

Examples of Category Killer

  • Walmart: Walmart is considered one of the largest and most successful category killers in the world. It is a discount retailer that offers extremely low prices on a wide variety of products, ranging from groceries to electronics. Walmart has been able to effectively compete with other retailers and specialty stores in multiple markets by offering lower prices and a larger selection of products than traditional retailers.
  • Best Buy: Best Buy is another example of a category killer. It is a specialty electronics retailer that focuses on offering a large selection of consumer electronics. Best Buy offers competitive pricing on a wide range of products and also offers a variety of services such as installation and repair.
  • Target: Target is another example of a category killer. It is a discount retailer that offers a wide variety of products, from groceries to clothing. Target's low prices and large selection of products have allowed it to compete with traditional retailers and specialty stores in multiple markets.

Advantages of Category Killer

Category killers offer a variety of benefits to shoppers, such as:

  • A wide selection of products: Category killers typically carry a wide selection of products in a particular category, allowing shoppers to easily find the product they need.
  • Low prices: Category killers often offer competitively low prices on their products, which can save shoppers money.
  • Expert advice: Many category killers employ knowledgeable salespeople who can provide helpful advice to shoppers.
  • Convenience: Category killers often have convenient locations and large stores, making it easier for shoppers to find what they need.
  • Specialized services: Category killers may also offer specialized services, such as in-store repair services or home delivery.

Limitations of Category Killer

  • Market segmentation: Category killers are usually geared towards a specific market segment, such as middle-income or affluent customers, and may not be able to appeal to a wide range of shoppers.
  • Limited product variety: Category killers are focused on one or a few product categories, and thus they are unable to provide the varied selection that a full-service retailer can offer.
  • Limited services: Category killers typically have limited services, such as no delivery, installation, or repair services.
  • Large physical footprint: Category killers require a large physical footprint, which can be difficult to acquire.
  • Product obsolescence: Category killers may become obsolete when a new product category or technology emerges and the category killer is unable to adjust quickly enough.

Other approaches related to Category Killer

Category killers employ several other approaches in order to create their competitive advantage. These include:

  • Offering a wide selection of products - Category killers specialize in carrying a wide range of products within their product category, allowing customers to better compare and contrast different items. This also allows them to capture more market share as customers are able to find the item they are looking for under one roof.
  • Focusing on price - Category killers are able to offer lower prices than their competitors due to their scale and buying power. This allows them to capture customers who are looking for the lowest price for the item they are looking for.
  • Creating an engaging experience - Category killers often create an engaging shopping experience in their stores by focusing on the customer experience. This includes providing helpful customer service, offering a pleasant shopping environment, and creating loyalty programs and other incentives.
  • Leveraging technology - Category killers often use technology to provide customers with a better shopping experience. This includes providing online ordering, utilizing point-of-sale systems and self-checkout, and providing digital marketing and analytics.

In summary, category killers employ various strategies to create their competitive advantage, including offering a wide selection of products, focusing on price, creating an engaging experience, and leveraging technology.


Category Killer — recommended articles
Scrambled merchandising — Exclusive distribution — Mass Merchandising — Differential pricing — Chain stores — Customary pricing — Optional product pricing — Augmented product — Market follower

References

Author: Edyta Pach

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