The next logical step for category management
Recent radical changes in shopper behavior are putting pressure on category management practices to further adapt to the new dynamics of retail.
Amazon.com and other online retail players are now undeniably on brick-and-mortar stores’ competitive radar. Further, new smaller and more efficient physical store competitors — from limited-assortment grocers to dollar stores — are on the march with aggressive growth plans. So how do these new competitive dynamics affect category management practices?
In my view, the answer to that question is threefold:
- Under the new shopper behavior paradigm, complete with online retailing, traditional categories such as detergent, canned vegetables, pet food and the like become increasingly irrelevant to shoppers who are now focused on the specific items they buy, not the categories they reside in.
- As brick-and-mortar retailers become increasingly vulnerable to new formats, channels and customer touchpoints, their in-store categories must adapt to improved shopper efficiency.
- As shoppers reorganize how and where they buy various items, retailers and brands must re-organize their categories from “how they are procured and merchandised” to “how shoppers acquire them.”
For example, from the shopper’s perspective, certain categories and products now lend themselves to being purchased on a subscription basis, as their consumption is consistent and periodic. Conversely, many items are purchased frequently for more immediate consumption, which are more likely to be purchased in-store, on a fill-in shopping trip. Still other items and categories fall into a seldom-used segment, implying they may not need to be merchandised in the same way or same location in the store as more frequently purchased items.
This new “overlay” of what I call “shopper choice” would extend the disciplines of category management to include organizing and merchandising both categories and items according to how the shopper buys them, not just at their specific stores, but across all retailers (online and physical) that are included in the shopper’s consideration set.
As retailers adapt to new shopper dynamics, so too should their practices of categorization and in-store organization.
DISCUSSION QUESTIONS: How should retailers adapt their traditional category management practices to the greater influence of online shopping as well as greater competition from the likes of limited-assortment and dollar stores?