Book Report: "Category Killers"

Overview

In "Category Killers," Robert Spector [pictured much smaller than in real life] utilizes a historical and cultural perspective to describe how the retail landscape has evolved from mom-and-pop shops to what he calls big-box category killers. He describes the transformation from specialty stores offering a single product category to the formation of chain stores... And, how category killers have thrived "because of their enormous buying power, product assortment and sharp pricing."

"By definition, Category Killers are Specialty Hard Goods Retailers that dominate a particular segment of the market. Home Depot, Barnes and Noble, Best Buy, Office Depot, PETsMART, and Toys R Us are examples of leading Category Killers, representing the DIY, Books, Electronics, Office Supplies, Pets and Toy segments respectively. (Thank You MindBranch)

The Democratization of the Consumer Culture

Spector starts the lesson at the beginning. He describes how 'big-box' stores evolved in outlining the history of Toys “R” Us. He describes how Charles Lazarus, founder of Toys "R" Us, “began the trend of reducing once-expensive products to the status of affordable commodity goods... Reducing prices and putting most products within reach of the average consumer - this was the democratization of the consumer culture.”

Toys “R” Us basically invented the concept of “big box stores with an emphasis on self-service, big selection, low process, and lots of parking.”

Book Structure

Spector breaks his book into four key chapters to describe the key levers category killers have pulled to change the retail landscape: pricing, competition, growth and expansion...

Pricing - "...As consumer products continue to become low-priced... and as profit margins become thinner, only the smartest retailers, employing the best systems and technologies, will be able to survive."

Competition - Shopping malls themselves are facing challenges of consolidation "...department stores will continue to have a place in malls, but these traditional players will be joined by category killers, discount chains, supermarkets and warehouse stores."

Growth - "...Big retailers are faced with a growth imperative. In order to achieve growth... they must take advantage of the opportunities outside the United States. International growth is a much bigger challenge, but it cannot be avoided."

Expansion - "International expansion will become increasingly important as category killers cope with growing opposition in the United States."

Spector closes the book with an open-ended sketch of the future of category killers. He concludes with the thought... We will be left with the types of business that "...best capture the contemporary needs of the consumer culture."

Recommendation

"Category Killers" doesn't offer action steps or a suggested way to conduct business, rather it provides historical and cultural lessons for the reader.

I'd recommend this book to the product marketer who is interested in getting the back-story of today’s retailers. Because history tends to repeat itself, I would also recommend this book to executives at growth companies ... consider these as lessons learned.

Several of the reviews I have read about "Category Killers" spefically highlight a perceived conscious effort of ‘big box’ retailers to wipe out their competition with deliberate intention of killing the category. My take? Category killing has been a result, not necessarily a goal, of companies trying to offer more, cheaper and faster than their competition.

Take a read. What's your take?

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In Category Killers, Robert Spector explores how big box retailers have come to overpower department stores, regional chains, and mom-and-pop stores. He also discusses the societal and economic impact category killers have had on reshaping the retail industry.

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Brand Examiner's Note: In conducting research to gather links for this post, I found some additional characteristics of Category Killers that support Spector's findings. These are highlighted in an independent study by IHL Consulting Group these include:

Pricing - Lower prices are mainly due to direct mass purchasing from the manufacturer, but aggressive pricing policies are also targeted against smaller retailers who may lack sophistication and information. They win with lower prices and can achieve the lower prices due to better economies of scale than smaller players.

Promotion and Advertising - They rely heavily on print and TV advertising, and focus on integrating their websites and store sites together.

Product Line - More products means more choices for consumers. Most Category Killers have stores that are 2-3x the size of their typical competitors. The size of the store and the selection helped define the category.

No Stagnation - Category Killers seem to be in a state of constant investment in closing old stores, renovating and enlarging new ones and building challenging and imaginative superstores. They achieved their status through innovation and always seem to be reinventing themselves.

No Back Orders - Generally, the inventory policies and mass purchasing of these retailers ensure that a given product is in stock and available, thereby eliminating back orders. Many heavily rely on rebates and specialty financing, but they rarely give rainchecks for merchandise in the store.