What is the main purpose of category management in retail?

The main purpose of category management in retail is to optimize sales and inventory by grouping products into categories. This approach allows retailers to view products as part of a larger consumer need or behavior, rather than just individual items. By managing products based on their category, retailers can enhance the shopping experience, streamline inventory management, and strategically negotiate with suppliers. This method ensures that stores are stocked with the right products to meet customer demand while minimizing excess inventory, leading to improved sales performance and efficiency in operations.

In contrast, the other options focus on different aspects of retail management. Pricing based on market competition addresses how retailers set prices but does not involve the grouping of products for sales optimization. Direct communication with customers about promotions is related to marketing strategies rather than the categorization of products. Similarly, managing employee performance pertains to human resources, which is separate from the categorization and merchandising focus of category management.