Navigation customization

Hello everyone,

I just recently becoming a full member after a saw how great all of the pluggins and themes are. I am currently setting up an online presence of my retailing business however, I'm a bit confused on how to customize the navigation. I'm new with wordpress so my questions might be elementary:

- Does the categories in the sidebar corresponds to the "product categories" or post "categories". I tried to change it in either one of them but it doesn't show up on my website. Do I need to have a product with that category for it to show up on the sidebar?

- Is it possible to have my product categories on the top navigation bar just like the picture? In the demo there is Test Store 1, Test Store 2, etc. What I want is to have "Women", "Men", "Shoes" on that top navigation bar.

Thanks