What is a category killer?
The term category killer is generally used within the world of retail to describe a chain of stores or a product that is so successful it “kills” others of the same type.
Despite the term’s roots in the world of retail, the concept of a category killer can be applied more broadly to any brand or product that has a stranglehold on a market.
When a retailer builds a large competitive edge in a retail category, that is simply good business. This edge is generated through competitive pricing, extensive promotion, and impeccable availability. When a retailer further refines this edge to become so dominant in a single category that they push out the competition, they become a category killer.
Category killers are rarely single stores. They are most often chains that are able to leverage their numerous locations and advanced supply chains to keep shelves stocked with a superior assortment and enviable prices. This larger scale also comes with higher marketing budgets and higher brand magnetism.
Bed Bath & Beyond is a category killer in the home goods arena. Wal-Mart dominates the discount space. Home Depot is the only destination for DIY home improvement and contractors. In the online world, e-commerce giant Amazon is unstoppable.
In the same way that massive retailers have the ability to push competitors out of the market, so too do products that dominate a single category. While a variety of Apple products are very successful, the iPad is far and away the most popular smart tablet choice for many tech-savvy consumers.
Products that are category killers have a sustained presence. The market penetration and ubiquity of Apple’s iPad is so large that it is not uncommon for consumers to use the name iPad as shorthand for smart tablets in general.
The Implications of Category Killers
Category killers have a few key implications.
They are responsible for the shuttering of many “mom and pop” stores, or independent retailers. When faced with the threat of massive budgets, complex supply chains, and huge product assortments, many small businesses have watched their loyal customers dwindle.
As a result, new retailers have made a shift toward ultra-specialization and toward offering a personalized and unique experience. For some, this tactic has been successful. For others, it has not.
Small retailers must work harder than ever to earn customers away from big box category killers, and they must be more creative and resourceful than ever.
This is resulting in lower competition throughout the retail industry, as competitors lean into the categories they can master and abandon those that are mastered by another competitor. While we are a long way away from a monopolistic retail environment, retail companies have had to work harder than ever in the last decade—a trend that shows no sign of stopping.
In addition to stifling competition between existing players, category killers also stifle competition in the form of presenting high barriers of entry to market newcomers. This is true of both companies and products.
A new retailer knows that the hurdle will be high to produce a competitive offering. Likewise, a manufacturer knows that to compete with a dominant product they must find ways to circumvent direct competition within the retail space.