Explore a Career in Category Management in Retail - Discussion with Ariel Lee, Former Category Manager @CVS Health
Ariel Lee, Former Category Manager at CVS Health, shares with us what the role of a Category Manager at a large Retail company is all about.
At CVS Health, Ariel was responsible for $300M P&L and 16+ partners across 7,800 stores and CVS.com. Ariel has a BA in Neuroscience from Cornell University, and an MBA with a focus on Marketing and Strategy from Tepper School of Business, Carnegie Mellon University.
Check out the podcast below to listen to the complete discussion!
Some of the areas we touch upon in this episode include:
1. What is Category Management
2. The day to day job of a Category Manager in Retail
3. Importance of understanding consumer behavior to be a good category manager
4. Dealing and negotiating with multiple partners for your category
5. The kind of person who would do well in this job - dealing with multiple stakeholders, lot of data analysis, deadlines, etc.
6. Interesting and challenging aspects of the job
7. Tips for interested candidates
Thank you for listening!!
If you have any questions for Ariel or for us, you can email us at firstname.lastname@example.org or tweet at us @led_curator or like us on Facebook at facebook.com/learneducatediscover
Detailed notes with timestamps:
Good morning, Sonali. Thanks for having me.
Absolutely. I'm really excited about today's discussion. But before we talk about category management, I heard recently that since you left CVS, you’ve been traveling around the world.
Yeah, this is one of those things that I always wanted to do in my life. And I've been fortunate enough to have both the time and resources to do it. I've actually been traveling around the world off and on again, for a little over a year and a half at this point. And I gotta say, it's definitely one of the best decisions I've ever made.
I mean, that sounds so cool! What prompted this?
Well, I suppose this is a, somewhat of an introduction to my role at CVS because I actually left because first of all, I wanted a breather from the corporate world. And secondly, I just felt that, you know, coming from Merchandising, and marketing, there's a lot to be said about leaving the office and connecting with people in very different situations in life. So those were my two biggest motivators. I went to, gosh, let's see, the countries I went to besides your typical North American, you know, Mexico, Canada, I did a trip to Iceland, Ireland, the UK, which includes Britain and Northern Ireland. Belgium, France, the Netherlands, Germany, Czech Republic, Prague. Gosh, Taiwan, which is where I'm originally from China, which is where my family's from. And several more, I'm sure I'm leaving some off the list right now.
That sounds incredible. Wow. And were you sort of constantly hopping from one place to the other or would you come back to the US in between?
Yeah, I actually came back home in between. So these trips were designed also around my fiance’s schedule. We would go in little bursts. For example, one of my cousins got married to someone in the Netherlands. So that prompted most of the European trip. And a lot of going home to see family was a trip in itself to Asia. So there was a lot of back and forth.
Interesting and was it more of a backpacking kind of trip?
That's a really good question. I think the backpacking and hustling phase of my life is officially over. So there was a lot of Airbnb and staying with family involved. But in general, if you look hard enough, through hotels.com, which is what I use primarily, it keeps everything pretty reasonable for a two person trip. That's how I did it.
I feel that I can do an entire episode with you just on your travel trip! So moving on to category management, then. Ariel, why don't you first tell us a little bit just about your career path. And what made you try out category management in retail?
Yeah, I'd love to. I want to first give the disclaimer that my career path is a little bit different than what you might find, typically for a Category Manager. I did my undergrad degree at Cornell in neurobiology and behavior. And I started out by working in pharma, and in the drug industry doing drug development. And after a while, I wanted to see more of the business side. But I think the lack of a business degree kind of prevented that transition. So I went to the Tepper School of Business at Carnegie Mellon to obtain my MBA. After my MBA, I was recruited directly into CVS, where I first started as an analyst in the pharmacy operations department. And then I worked my way up from there. So starting by being the person doing all the analyses for pharmacy, which is trying to figure out how to keep them running smoothly and profitably, I got promoted to a senior consultant role. And then after being there for about a year or so I was tapped by a VP at the merchandising department at CBS, where he was a former McKinsey guy, he was looking for people with fresh ideas, and a lot of motivation to change the way retail happens at CVS. I was invited to interview, had to take a bunch of exams, and pass them and ended up in my role there ever since.
Oh, interesting. So it wasn't like you got into category management directly, or even your role sounds a little bit unique. It was more an opening that happened to be there at CVS due to this McKinsey guy. And you knew him from your past work, and then he asked you to try it out.
Actually, I did not meet my VP until I applied internally within CVS. I suppose, I will have to admit that coming from a non traditional background is a bit of an uphill battle during the application process, but it is very much of a strength on the job. Just because coming from a neuroscience and psychology background, means that I have a lot more insight to how consumers behave and why. And I think that has really been a strength to the way that I applied. And I think that part of the reason that I was recruited, I'm not sure, you'd have to ask my VP is simply because most folks that come in, they start in a pretty predictable path. For instance, you come in probably as an inventory manager, or a forecasting person, or you could even come through the pricing channels, then you work your way up until you're familiar enough to take on an assistant Category Manager role, where you have parts of the responsibility of a CM, which is also called the Buyer in other areas. And then as you learn the ropes, you get more and more of the P&L and more and more of the strategic work added. Until then you hit the Category Manager position.
I see. Alright, so you said a lot of things there that I would I have questions on. I still think to put all of this in context, what is traditional versus non traditional background? Why is it important to know how people behave? Maybe you can first give us a slight flavor of what is the role of a Category Manager. And then I think all of these things will make more sense.
A Category Manager at CVS is very much like a small business entrepreneur that runs a business line within the company. So in other instances in retail, they're frequently called a buyer, but in this case, the term Category Manager refers to not only a buyer, but somebody with very significant P&L responsibility. I would say that my role can be broken up into three major components. The first is the financial, the second would be the strategic, and the third would be the executional. So in terms of financials, this would cover all the P&L metrics, for example, sales, contribution margin and significant costs. There's also a financial forecasting aspect, because CVS is publicly run, we have to present our forecasts, quarterly to Wall Street, and I did that monthly for the VP. There's also quarterly business reviews and also negotiating contracts with our vendors. In terms of our strategy, a big component of this is managing our supplier partnerships. So to figure out which suppliers are the best ones to partner with CVS, and to figure out how we can maximize the business relationship with both of them. There's a lot of SKU selection involved, figuring out how to differentiate and improve our customer experience. There's also pricing and promotions, figuring out special offers, and getting go to market strategy covered, I'm the person who directs these for my business. And in terms of execution, the best one that comes to mind, of course, is launching new products. It's to make sure that inventory and operations are running smoothly at the highest level. And to make sure that the planogram design and the promotional channels and all of our store brand products look great. And in the unlikely event to manage product recalls.
Wow, that's a lot of stuff! So very quickly - What was the category that you were managing at CVS?
Sure, within CVS, just to give you some background, there are four major divisions. There's beauty, personal care, there's general merchandise grocery, and I believe seasonal.I was within beauty and personal care, and I had three categories. So they were deodorants, which is kind of a commodity CPG item, I had hosiery and hair appliances. The last one meaning it's something you use for your hair that either has a power source or a plug in it that includes blow dryers, curling irons, but not hair ties or hair brushes.
That's an interesting distinction. So anything that requires electricity then. So for these three categories, deodorants, hosiery and hair appliances, you were the one who was responsible for the financial aspects, whether that is the p&l, the cost forecasting, you mentioned negotiating contracts, then the strategies are figuring out which deodorants you should stock, etc. So with this background, you mentioned that you really need to understand how do people behave - Can you talk a little bit about that?
Sure, the first thing I did was understand the distinction between these three categories, because they're actually given to CMS based on their total revenue dollars, rather than the direct connection between both, for example, for deodorants, this is a very commoditized product that's generally seen as a need. So people tend to be more price sensitive. And there's a lot of branding involved here, when it comes to selecting supplier partners, I had a handful of the really big guys everyone's familiar with, for example, Unilever and P&G were some of my top clients. But I also had very niche products that had maybe one or two skews that go on the shelf. So these lead to some pretty interesting and very different types of negotiating. And for hosiery and hair appliances. Most consumers come in to CVS for a convenience need, because maybe you're on vacation, and you forgot your favorite curling iron. And so we actually have you look at the shelves, exclusivity agreements with our partners, because in these cases, it's not so much of the sales volume and demand that drives the sales. But it's the margin that matters most to CVS. So the negotiations for these vendors are consequently very different.
Can you talk more about it? Like why is it that the volume matters less than the margins?
Right, for example, if you take one of my formerly best selling items, it was the curl secret. It was the hairstyling product by Conair that curls your hair. It's an As Seen on TV product. It costs about $70. So if you think back to the last time you went into a CVS or Walgreens or Rite Aid, you probably didn't spend $70 on your total purchase, excluding prescriptions. Now, you probably didn't spend $70 on everything together, let alone on one item. So in this case, we know that people who are coming in have a pretty inelastic demand, which is that, if they do come in, they're willing to pay whatever they'd like for this item, they're probably not going to be upsold as in a buy one get one discount is probably not going to benefit us as CDs. And so I think in this case, managing the margin means a lot, because when the consumer does come in, which is hard to predict, you want to make sure you do the best you can for the business in that situation.
I see, this is interesting. So it's not so much that you're fighting that, will they buy this or that, as you said, it's more of a last minute, hey, I really need this. And so they're thinking do they want to make the purchase, and you want to make the most out of that situation?
That's one example. I would say in contrast for hosiery where we also have exclusivity, if you think about the women in your lives that you know, that are about millennial age, or maybe Gen X, you might notice that people are wearing a lot less pantyhose or hosiery. This doesn't include leggings or jeggings, for example, but people are wearing less pantyhose than they used to because this market is slowly declining. I think it's a matter of time before it's almost phased out. It's a legacy from our parents generation and our grandparents. So in this case, a lot of the Promotions we are doing are designed to maximize margin again, because when the consumer comes in who actually really wants this product, we want to make sure we must make the most of the interaction.
I see, so this is where knowing really well what the consumer mindset is very, very helpful. Exactly. And so you said that your background in neuroscience was a non traditional background. Can you give us an example of what is the traditional background for a Category Manager?
Sure. So from many of the people I've seen at CVS, I think a lot of them started with an undergrad business degree or some type of a marketing degree. And they demonstrated an interest in retail and merchandising early on. A very common route to enter is demand planning or inventory management. So they come in, and they help understand the nature of the different products, how they sell, how seasonal they are, and to understand the business from the inner workings out, I think once they get a foothold there, some of them move into the visual merchandising, which might mean planogram, which is figuring out how to optimize the way items are presented on the shelves, or they might go straight into an assistant Category Manager role, which is to support the category managers while they're learning the ropes.
So it’s much more of a business background. Is it generally like a post MBA kind of role, then?
I would say, Assistant Category Manager or CME roles tend to be post MBA roles. If you didn't come from a merchandising background before? Yes.
Okay. And if you did come with a merchandising background?
I think then it depends on how much relevant experience you have, and how well you're able to convince the hiring team of that.
Can you tell us a little bit about the various levels in this role? How do you progress?
Yeah, let me start with a top down approach. I think that might be more helpful. So at CVS in particular, we start with Larry Marlowe, who's the CEO of the entire company, pharmacy, everything and retail included. The next step down from him is the president of CVS retail, so that includes everything you see in the brick and mortar store, I believe, and from her down is the Senior Vice President of merchandising, she is in charge of my entire division, and she is who all of my managers VP bosses report up to. And she is the first step at the executive level. So below that, there were four VPs, for each of the divisions, I described beauty, personal care, and so on, from the VP level, then it goes, each VP at CVS has two DMMs. They're called divisional merchandising managers. They're the equivalent of a senior director in level. And each Senior Category Manager or Category Manager reports into these senior directors. And so these are the people I work with.
Gotcha, a very quick question then. Let's take the example that you shared that you have to figure out which suppliers to work with. So let's say you find some new deodorant company you really like as the Category Manager. What would you have to do to actually have that show up on CVS shelves?
Sure, assuming I already really like this partner, I would say, then the trick is really to go to the shelf and figure out who needs to be taken out. So that my new supplier can be brought in, and how many SKU items, how many product variants need to be removed for this item to be there? So part of what I do is a strategic analysis to see, you know, does my new supplier bring in either a new delivery form or something else that the consumer really likes, and also to justify what my forecasts of their performance will be? And to compare it to a weaker SKU that I think, will not do as well in the next month, or quarter or a year? That's interesting. That's the simple big picture version of the thought process.
Got it. And so are you then the final decision maker, or you'll have to run it by the director that you're working with?
So with any company, I suppose no one is officially the single decision maker. So what happens is. I'm the frontline for negotiating with all the partners and vendors. And I finalize my strategy. So then in that case, I have to sell that idea to my DMM, my senior director, and then sell that idea to the VP as well as the Senior VP. So usually, if they agree with it, it's a simple Alright, let's do it. If not, then it's a bit more of a sales pitch internally,
Are you responsible for a certain territory, or are you looking at CVS globally? How does it work?
So what I cover is all CVS stores and acquisitions in North America, which comes out to 70 -100 stores. I'm also indirectly responsible for the E-commerce section, which is cvs.com. And what sold on the mobile app.
Gotcha. But that can get very complicated, right, because the assortment that you think will sell in let's say, San Francisco might be very different from what you think might sell in New York.
Yeah, that's a really great point. Of course, I have a whole team of people that helps me figure out this issue, for example, we have a lot of stores, some are much bigger than the others. And so if you walk into some stores, you'll see much more product in a large footprint flagship store than you would in some small, rural, Midwestern area. So what we do is, the planogram managers, I'll send them a list of all the SKUs that I want to be considered, and I'll rank them in priority. And then we'll planogram folks will help me put together the best visual representation of this order and priority for every class of stores. So every store is grouped into a priority, geographic region store size, layout, and thank goodness, these folks manage it better than I ever could.
So, what are these planograms? I'm not familiar with this! :)
Sure, a planogram person is the one who will actually take the items, go to our fake CVS store internally, where we get to lay things out, but it's a store where customers can't come shop. But if we need to see what something looks like in real life, we can go there and adjust things in real life real time. So our planogram person will build the layout and say, for example, you know, my P&G products should be on the left my Unilever products should be on the right this SKU should be higher up on the shelf than lower because the consumer expects to see this more and more at eye level where expects to see this one lower. And the color scheme matches better this way. There's a lot of psychology. And these are the folks that are in charge of that plan.
I can imagine that, so a planogram is a fake CVS store of sorts that you can use to sort of figure out what the layout should be, but it's not an actual store where someone can come in and shop
I probably shouldn't have used the word fake, but it's a representation of a real store. So we can keep, for example, a lot of times, how you see like a Christmas display that's already out in Halloween, it kind of seems strange when you walk into a store when things are that early. But what we do in our store is because we plan so far ahead for certain things like product launches, or seasonal events, that we need an area within the company, where we can just go set that up in real life and see for ourselves. So the reason we don't allow customers in is first of all, the system isn't set up, so you can't actually buy anything. Right? And secondly, that would be a lot of interruption to the construction that's constantly going on.
No, no, that's totally understandable. I just Googled planogram on my laptop. And that looks really interesting. And it's a great way to actually see what the actual thing will look like. And then you can sort of play with it. Exactly. Yeah, this sounds like I mean your role has so many flavors. I'm guessing you would have different people on your team who are handling various aspects, someone is actually doing the analysis for forecasting, and someone else is looking at the profit and loss statement for let's say, the store in New York, do you have different people on your team doing that?
I do. I have people from every team that cross functionally support me. But ultimately, at the end, I'm the one that holds responsibility for the category, for example, if I see that, for some reason, I ran a promotion, and it's not doing very well, I can ask my analyst from the vendor side, or I can ask my folks from the pricing side to tell me what were the competing competition, competing promotions for my competitors in different areas. And they can help put together a quick summary like an analyst would for their managers, just so I can brief the VPs. Because I know that's the first question I'm going to get asked in the morning. And for example, when I prepare for my forecasts to present to the VP, I will touch base with my finance guy who's going to tell me, or if there are any special events to look out for, or any special points I should be prepared to talk to. And then that way, it helps me hone in on the important areas. And then day to day, they tend to help me manage the rest.
Gotcha. Yeah, that makes a lot of sense. So on a regular basis, can you give us an idea of what are the metrics that you track and specifically, in the context of your role as a Category Manager? What are the most important numbers or figures or metrics that you're looking at?
So for a day to day basis, I would say it's very short term, I look at things that happened during the week or even by the day for the whole chain. Definitely the most important metric I would say is top line sales. And I look at that in terms of dollars, volume and share. And I look to see if the promotions that I have set up have done well. And if I need to change my strategy for the week going forward, I look to see whether my competitors or people on the blog have picked up anything unusual that I haven't noticed as well. If I have a product launch of a new item that's going on, I keep very close tabs on every SKU in particular. And then I also answer any questions about special events. For example, for Christmas, what types of items I want to release for, like gift packages or for doing something for Super Bowl, things like that.
That makes a lot of sense. It's interesting to hear that you guys look at numbers on a daily basis and are making changes on a weekly basis. Because that's pretty quick, right? Can you give us an idea of the kind of things that you might change on a week to week basis, like you said that, you might see that, hey, maybe this promotion is not working as well as I might have thought of. So what kind of tweaks would you make?
So for instance, if I realized that, for some reason, I run the same promotion on the same items as Walgreens every single week. I'm going to try to stagger that a little bit. And I'm also going to try to run my promotions in a way that's not very predictable for a lot of the consumers who are very coupon and bargain driven to figure out just because I want to incentivize the right behavior, which is to upsell for those folks that actually want to make a purchase and not the ones who are trying to make money off my category. That's one major type of tweak.
Can you share an example?
Oh, easy. I had this one time where I think I forget the brand. But let's pretend it was Speed Stick deodorant, something like that. And they ran a pretty decent promotion where I think the item was like $4. And they had a $3 discounts. So there is pretty much $1 Off to the consumer at the end of it when you do all the math. But I think there's somebody called crazy coupon mom online who is this very prolific, I think a corporation owned blogger who all she does all day is compile discounts from the Sunday paper, what you would see in the CVS circular, everywhere, and just stacks them all together. And it turns out that she found a way for people not only to get it for free, but to also like make one cent off the purchase or something ridiculous. So when I looked at the data, the next day, I get a very angry, knock on my office saying why are you X amount over your planned budget for this item, were completely sold out of stock, and all these territories, something what is going on? And I look at the distribution of sales, I think maybe 10, 50% of people bought one item. And then 10% of people bought two units of this SKU. And then I would see good 30% bought 10 or more units. And I'm thinking what are you doing, trying to open your own store? Are you cleaning out my shelves, it's a very interesting phenomenon that I really, really like to try to avoid. And these are, these are some of the less than pleasant surprises that happen pretty more often than you would realize.
That's a great example. I guess it was because that blogger figured out a way in which you could actually make money off the purchase that suddenly people were buying in huge volumes.
So that was definitely a very difficult talk that I had with that supplier to say, what happened? Why didn't you see this coming? Because suppliers sponsor a lot of the coupons that they put out, and to figure out how to time it so that it never happens again, and honestly just prevent it from happening with other suppliers going forward.
Right. Very interesting. Yeah, I would love to hear more stories. Can you share an example of a project that you worked on as a category manager that really stands out in your mind?
I think coming from an analyst perspective, I like looking at the numbers myself, because I think they tell a story that we would sometimes otherwise miss. So for example, what my hair appliance SKU that I mentioned earlier curl secret. I found out that within the chain, most items you’d think they would sell well in major metropolitan areas that have a huge store layout, but I saw only a very small number of stores were selling disproportionately high amounts of this item. And then the rest of the chain wasn't really selling any or it didn't even carry the product. I call those stores myself and I call down just ask the store manager, just what on earth are you doing right? What am I missing here. And they told me, for example, the Las Vegas Strip store sells a lot of our very high priced items across all categories. Because people go to Vegas, if they win money, which statistically, somebody is going to win something, they go and they blow it as fast as they can on the strip, they want to impress all their friends, they just buy out everything on the shelves. So it's very difficult to prevent the inventory demand and to forecast things like this. Because the people there are just completely out of control. And another thing I didn't realize is close to you know, cruise ship terminals and very high demand vacation spots. People who forget their most important possessions that they feel are worth replacing no matter the cost, they tend to have sales of high price items, too. So it was figuring out that different categories and different items might have a completely different rationale for selling than something like you know, a single stick of deodorant.
Right. Yeah, I can imagine that you guys must have access to so much of this odd consumer behavior, right? Which is not very obvious. And at first, but then as you go deeper into the data, this is what it is. Can you share more instances ?
Other instances, I would say another great example is that sometimes the way we break up our business decisions, they don't quite make sense to the customer, for example, I think we've all seen those as seen on TV infomercials, where it's some crazy gadget that says, as seen on TV, you can't buy this in store. But it's actually a specific company that manufactures these items. And you can buy them in select stores, depending on whether or not they want to carry it. So for the hair appliances category, usually what comes out is something that's really fashionable, really trendy. And to be quite honest, no one can really predict how well they're going to do until they hit the shelves. Excuse me. So for a lot of these appliance items, we actually keep them separate from the accessories that go with it, for example, if it's some type of motorized hairbrush, the hair ties, and like the shiny, dangly things you might add to your hair are located somewhere else in the store. And we found out that these are all high margin items that are very much correlated with each other in terms of consumer sales. But if the consumer can't find one or the other, they tend not to buy either of them at all. So a lot of times, what we do is we have to go through great lengths to make exceptions to have these items grouped together and to have them promoted together. Even though internally cross category sales, as we call it tend to be pretty rare, just because they're managed by different people.
Yeah, that's interesting. And I think that's where you might have to work with a number of other category managers in the company to make something like this happen.
Exactly. Yeah. Takes a lot of a lot of very persuasive negotiating both internally and externally.
Yeah. And then I'm guessing the other category manager is also similarly watching his or her metrics. So there has to be a benefit on both sides.
I would love to spend a little bit of time on just going through the typical stages in a project that you might work on just to see the kind of activities you might do. So pick any project that you worked on, recently, which is broad enough that it would give a good flavor for the kinds of things you would do and the kind of people you would interface with. We can take a real or fictitious project that's up to you.
Sure, I'll give an example of a new item launch because this actually happened while I was with CVS. The item was by Unilever, they're actually still on shelves today. They're called dry spray deodorant. So just for some background, people typically buy like a stick or something wet and they rub it on their forearms. This is a type of item that has antiperspirant in it, but it comes in a little Can you can spray it on yourself. It's just a different form of delivery that's very popular in Europe, but for some reason, has just not really taken hold in the US prior to when it when Unilever made a big push, and I think like 2014, this is basically a go to market strategy. So Unilever developed this technology in house because they're really good at branding. They're really good at product design, they came to every major retailer and said, we have this new product, we think it's really great. It's going to revitalize our deodorant line help boost growth, they'll tell you the world, then for CVS, what my team and I did was to figure out, does this make sense for our portfolio, given the products that we had made huge bets on and given the direction of the company, and the direction of the category that we wanted? And the answer was Yeah, well, we don't want to miss out on a part of this. So then there was a lot of negotiating, well what items do you want to trade to put this item in? Or what do you propose, what's in it for us. And then it's to figure out both that strategic and financial piece as well as what the items actually look at. So part of my role is being able to give feedback to the CPG companies to say, we need this type of messaging or this type of attribute from your product. Once that happened, it's to decide how the product should be promoted. What advertising revenue is going to support it, as well as how it's going to be promoted to the customer? What channels for example? Are they going to mail out coupons? Are we going to support it? Are they going to see web ads? Are they going to see commercials things like that and to figure out when we were going to execute it? So CVS actually is really great at getting things onto the market first, so we actually got the Unilever dry space to be on the shelves. I think in like December 28 or something after Christmas of the year that it came out, which is insane because you think it's the middle of winter most states are frozen over Yeah, why are people buying this? But after, did we managed through our promotional strategies, and with the help of Unilever to stay number one in sales for drug just because we got it out there so fast. So the very long answer to your story. No, this is typical for major product launches.
This is actually very, very interesting. I have a couple of follow up questions. One, I'm guessing that when the CPG company comes to you, you're primarily interfacing with the brand manager, I guess at the CPG company.
It's not actually the brand manager, it's the sales team person, or sometimes they would call them the account manager. So, brand managers, I believe, tend to face more internally, and they develop more of the innate product strategy and the sales team are the ones that convey it, but they have a less deep understanding of the whys rather than the how to make it happen.
Gotcha. So there will be some people dedicated to working with CVS at Unilever, in this case, who are then working with you to figure this out? And you said that, let's say when it comes to things like advertising, and the messaging, etc. You have to figure out whether it makes sense for you or not. So that's a great point, because I'm guessing that CVS itself has a certain image and a certain positioning in the market. And then Unilever might come in with some kind of product. How do you bring the two together? Is it CVS branding that goes out? Is it Unilever? Is it some kind of mishmash?
That's an excellent question. So one thing at CVS that we really try to keep in mind is, we want the consumer to remember that you bought it at CVS. One thing that my VP and my senior directors always told me was to say, the supplier needs to convey a direct benefit to CVS consumers and not to their own consumers, for example, we might say, if you're offering a promotion for $1, off, like a CPG product for all of our competitors, you need to make it better for us either $1 off plus a free sample of something, or $1 off plus an extra care coupon. Because if you don't do that, then I don't see the point of building your business at the expense of mine. So it does take a little creativity. And I think that depends on the nature of the product and the category.
Right, both the companies have to work together to make sure that it makes sense. But in this case, Unilever has to put in the effort so that finally the final product that's being sold, or the final package, that's being sold through CVS aligns well with the CVS strategy, at least for that category.
Exactly, any vendor bigger, small, and the smaller vendors might not have the resources of the larger ones. But they can work with us more long term or be more flexible when we have more requests for them down the road.
Exactly. Right. And I mean, CVS is a huge company. I'm sure that you guys have a lot of sort of say in things. But I'm guessing that these kinds of negotiations also very time sensitive, because negotiations are going on not just with CVS, but Walgreens and Target and Walmart and whoever else. Does that at all come into play?
Oh, exactly. Very much, when it's a category with commodities, or if it's a very seasonal one, for example, the candy category at Halloween, you need to really just hash out these negotiations, and make sure you have enough time to push the product out to the shelves, or else all the work you do is not going to matter because your competitors are going to their customers are going to buy you out very quickly. So I think time is definitely of the essence. And it matters more, depending on special situations in the category.
Right. I mean, how quickly have you been through one of these?
I mean, sometimes you're not leaving the office until you figure it out, which is pretty extreme situation. I think the answer is it just it depends on what the situation is, and whether or not there's a crisis to focus on.
But I would imagine that something like this will take at least a few weeks, if not a few months. But correct me if I'm wrong.
I think these things tend to happen on if it's a long term project, maybe on a week to a monthly schedule makes sense. But if it's a last second emergency, then it happens on an hourly to a daily basis.
Oh, really? Like Unilever can come to you tomorrow and you have the product on CVS shelves, within just a few days.
It also depends on obviously our ability to move internally. But at CVS, a lot of my suppliers actually lived locally and they had their sales teams at our offices either in our building or just right down the street, and the remainder of my suppliers would fly in and have appointment with me either on a weekly, monthly, sometimes annual schedule, and I would spend a good 40 hours a week at least in negotiations with suppliers on average.
And it's also cool to know that you're the one who was doing the negotiations. Do you have any other expert negotiators with you helping you out?
Sometimes, if I'm negotiating pain point on price, for example, I'll have the director of pricing in the office to talk with me because they can fill in some more gaps when I talk to suppliers. And similarly, the suppliers, if it's a very big product launch or strategic issues, sometimes they might bring in their own executives as well.
This is great. By the way, Ariel, I'm sorry, if I'm asking a lot of questions. But what you do sound interesting that I can't help myself!
Coming to some of the more qualitative aspects of your role. How would you determine how successful a certain CM is at his or her role?
The way that the company itself decides is, by specific numerical metrics, and I guess, some of the softer ones, for example, obviously, hitting your sales, margin revenue, cost targets, these are all extremely important. And I think the financial ones make up the lion's share of it. I think another one is for vision. I think if you have someone who's really afraid of change, or someone who just really feels out of their element, I think it's pretty fair to say that that person might be seen as less successful as someone who takes a lot of bold risks and makes them work. I think these come down to like any other company, how the rest of the team feels about them how easy they are to work with? How great of an understanding do they have between the relationships of different departments, for example, how they can make finance work together with promotions and with inventory, and not to just, set off roadblocks that fire along the way.
If this is not something confidential, could you share what your vision for, let's say, one of the three categories that you own was?
Oh, yeah, simple. Hosiery, for example, when I first started there at CVS, I went to one of the local stores, one that we visit all the time, and I literally could not find my own category in the store, neither could the cashier, which I thought this is not a good sign, if it takes us 10 minutes and two walkthroughs. And we still didn't see it.I know it was there from the data we had. What I did when I was there to completely transform the branding, and I work in storebrand, team and product design. The vision was to say, All right, if this item is so irrelevant to the consumer, that it's kind of an afterthought. How do we bring it alive. What we did was to say, what people want here is its apparel, right? So having the feeling of you're beautiful, and this is an upscale product at a really great price. And in a way that's convenient for you, I think, really resonated with the consumer. What I did was work with a team to arrange photoshoots with models, that we could completely redesign the look of the product, which is how it looks on the shelves today. No more like polka dot box, or no more like pantyhose, like stuff together in this like little plastic egg that you used to see when you're a kid. But now it's the type of thing you would find in a department store. And also, another thing we did was to bring in items that people actually want. Now it is look around anywhere, especially in San Francisco, half the women are wearing leggings of some kind. So we brought those into the store because they never used to exist, we took out the different variations of beige and nude and colors I've never even heard of. And we also added in items that make sense to people that are a little bit less like myself, for example, we have a lot of aging baby boomers, and a lot of them have more health needs. We put in diabetic socks there, which turned out to be a great hit, because a lot of frequent travelers like to have really comfortable medically approved devices to wear because they think it feels better than what they could pick up at like the local Sports Authority. These are the classic examples of what we did to revitalize a category.
I love it. And this sounds really exciting because I'm sure when you're going through that process of figuring out what should this category be or what it could be inside of CVS. That's a fairly creative exercise. And if it actually works, that must feel great!
In your point of view, what do you think are the most interesting aspects of this job? Let's say, someone comes to you and says, Hey, Ariel, tell me why I should become a Category Manager in CVS or a similar company. What would you say?
Well, for me personally, I've always had this like fantasy, where if I could turn my love of retail and shopping into a career, that would just be ridiculous. And it happened, you know, as a Category Manager, because my main job is to run a company, but also to be aware of how to make it better. I'm constantly on the prowl, looking at what competitors are doing, what trends are going on in the market. And it's something honestly that I do, regardless of whether or not I'm on the job. I think that's the biggest one, if you love retail, you're gonna love being a CM. Another thing is coming from the Psych and the neuro background. I really like seeing how people think, and not just in the lab, but in an applied sense here is a stimulus we provide to a situation, how do the subjects there respond in real life in real time? This isn't a game anymore. This is happening, in reality, and I think these are the two most meaningful aspects for me for this role.
Are there any aspects about this role that you do not like?
Well, like I mentioned before, I spent 40 hours a week on average, working with my partners, which means I have to carve out the extra time to actually implement the things we've decided on. Don't get me wrong, being able to partner with the biggest brands in CPG apparel, like these are the top brands in their industries is very, very exciting. And it's great to have the benefit of all of their business intelligence and product strategy without actually having to be the one to develop it. But I think, going through internal channels, because CVS has to make sure that our CMs aren't just going wild with reckless abandon. There are a lot of checks and balances to be had. And I think some of those are a bit more work than I would have anticipated going into the role.
Right, just a lot of process that has to be followed.
I guess, to summarize it, there's a lot of process and not enough hours in the day.
Have you found any common mistakes that people tend to make in this role?
I think some of the ones that I see are being resistant to change, I think that’s a really big one. Because retail is one of those categories, where things change is inevitable. It's just hard to predict where it is. Sometimes it feels like, the safe thing is to play it safe. But that's actually just the easy misconception to have. I think another thing that is detrimental is that there are some folks who like if you take a finance class, they'll tell you people are rational, they'll always go with the best cost benefit decision. And that's just not how retail works. Because people are entirely irrational. And a lot of the things don’t make sense. And you have to appeal to the irrational part of your consumer. I think those would be the two big ones. And the last thing would probably be just lack of experience. I mean, going into the role, I certainly didn't have a lot of the background for why we did things the way we did and not taking the time and effort to get caught up on that I think kind of slows people down a bit.
I guess you have to learn a lot across a wide range of categories or areas because your role is really broad. Can you share an example of a stressful situation that you might have run into in this role, something that comes to mind?
I think a stressful situation would be if there's a product that we took a big bet on, for example, like a high price premium product, and it just doesn't sell it becomes a flop, then a lot of the projections I have for the year are based on that one product. Then this happens to all CMS we're scrambling a bit to figure out how to make it work, for example, I think when you sell something seasonal like candy, or you sell Valentine's Day, trinkets, I'm sure they get this all the time, if something doesn't sell, you incur a cost to either sell it at a discount to the consumer, or to send it back to the manufacturer. So one, you have lost sales, and two, you have to pay more than you thought to get that marked down, as we call it, a lot of the emergency comes to how do we get rid of it quickly? And what do we put in its place? And it's kind of hard to mobilize somebody else at the last minute. I would say that is a very, very stressful situation.
And in terms of the typical career path for this role, once you’re a category manager, do you then just gradually grow into the director and the VP roles that you described or something else?
I think what most CMs aspire to is to first get into the role, and then to become more senior and to get more direct reports and to get more revenue under their belts. And also probably to gun for like VP, Senior VP, I can only imagine.
All right. So, and that's within your company. If you were to leave the company, let's say you did not want to do category management anymore, for whatever reason, what do your options look like outside of that particular company?
I think most people who are CMs actually like to stay it seems, and I think transitions incur costs, you have to learn a new company's systems and strategies. I think it does happen, but not as often as you might predict for that reason. And I think some of the roles that people can do are obviously being a Category Manager for either different type of industry, different type of retailer, things like that. They could go into retail consulting, but I think since this is more of a sales role that I haven't seen that happen too often. Or sometimes they might just switch and go to the supplier side. And they build really great relationships that way, because they already know everybody from the retailers. And that's, I've seen that happen, and they've been great people to work with.
I just have a few last questions from the point of view of someone who might be interested in exploring category management as a career. So if let's say you were to replace yourself with someone else, what are the key qualities that you would look for in them?
I think the number one thing I would look for is passion and enthusiasm for retail and merchandising. If you have someone who just isn't really that into the role and just thinks that they can balance the p&l just keep the shelves stocked, that's not going to be somebody who's going to be particularly successful. I think somebody who is really gung ho, and just loves the industry is a great start. I think secondly, it's somebody who has any type of connection to retail or product development would go a long way, just because you have more of the instinct there to help guide you when you're learning the role. And I think lastly, it's somebody who is not scared away of the very meeting centric type of focus more isn't afraid to deal with two dozen vendors that are constantly calling you. And having appointments with everyone internally and trying to balance a lot of moving pieces. I think these would be key things that I look for.
It's clear that being able to work with a lot of people and managing all of these relationships is absolutely key, both internally and externally. Because across the three categories and all the products and SKUs, I'm guessing you're working with at least like 10/20 different partners, and then you have all the stakeholders internally, it's a lot of different people that you have to manage
I actually tried counting them the other day, just off the top of my head. And I'm pretty sure I missed at least a good third of them. I would agree.
Oh, I should add, it's actually very important not to just be able to generate the data, but to take away the key points from it, the way that if you're an analyst, and you think about how you would prepare data for your VP, and they're just like, tell me the key things I need to know in two minutes and move on, you kind of need to do that for yourself. And I think that's a very important skill that I learned in this role.
Absolutely. And have there been any instances that some Category Manager, either you or some other person really struck you as, Wow, he or she is really awesome at their role.
I think the ones that I had the most respect for, were not only the ones that knew what they were doing, and did it well, but the ones who took the time to mentor others, because it's really easy to just do a great job and keep it to yourself, but to share the knowledge and not be afraid to benefit someone else's category. Because we're all essentially graded against each other at the end of the day, I think to take the lessons learned, I think speeds up the process for a lot of people. And also, it just shows that they're collaborative, not only when they need to be but the in ways that they can be.
Also, if let's say someone listens to your episode, and they're like, hey, I really like this and I want to try it out, or I want to assess in some way, whether I would enjoy being a Category Manager or not, is there a way to do that?
That's tough, I would say the best thing to do is I used to go to LinkedIn, and just find my counterparts at different companies and ask them, Hey, do you mind if I just chat with you for a while, because I want to see what you think about this issue. And most people are pretty happy to do it, they might not be able to give you details, but it would sound a lot like this podcast. And I think another way to do it is to look up a day in the life of the CME for different companies. I think I saw something online about Tesco, which is a supermarket in Europe, and I did it mainly to see the differences in similarities between our roles. And I found that we actually had a lot in common. I think reading people's profiles of what they say would be immensely helpful as well.
Generally, if people have to apply for the role, either at CVS or some other company, what is the best way to apply?
Typically, in any company, I think the best way is to go through a channel for someone that I think, especially if you already have some type of retail background, most companies are really struggling to find a CM that they think can do the job. I don't think it would hurt to just look through the structure because you can find this easily on LinkedIn or on a company supplier website, because they'll have the contact with the CMS and just contact people and say, Hey, can we have a chat first and ask them after you decide it might be a good fit? Just ask them directly? I don't think it would hurt.
That's, a very good point. You brought up a couple of times that how reaching out to other people who are already in that industry or in that role, talking to them. either about potential openings or just a chat to understand what the role is about is a great way to learn if it's a good fit. How do you suggest someone should word that initial interaction? Because a lot of times, you might not hear back. What do you suggest someone should include in that initial email or message?
I think one great way is if you know someone that knows of somebody, you can get an introduction, that's a great way, I found that either emailing people directly or sending a LinkedIn message has done pretty well for me. And I think it's important to keep in mind that since this is a role that deals with so many supplier partners, if you get intimidated just by potential cold networking, then this might not be a great role simply because there's a lot of rejection that comes in with this industry. And I think this is actually very good training in the beginning, when you're building your network to get used to the process,
Let's say someone comes from a very different background, let's say they were in I don't know, technology, right? Like they were like a software developer for a tech firm. So nothing to do with retail. But they are interested in this. How do you recommend they go about it?
Well, I think if they come from a tech background, for example, and they were able to work on some retail, or some sales types of projects within their own company, I think that would go a long way in bridging the gap. And I think another thing they can do is look for companies that specialize in technology sales, for example, if you wanted to be a CM, it might make more sense to try and shoot for Amazon because they sell a lot of electronics versus CVS, because we're known more for CPG. So I think knowing your target is also a very key here.
Ariel, this was really, really helpful. Is there any other advice you'd like to share with listeners?
Not much, except Good luck, and I hope this was informative. Retail is really fun. I love it. I hope some of your listeners will too!