Next-gen category management needs to start to blend buying journeys into the mix of product/sales considerations. You have to know the customer and what they want. You have to know the product and what it can deliver. You have to estimate both to come up with forecasts, merchandising plans and all the details with it. However, today’s multi-channel and omnichannel shopping also needs category managers to figure out how best to market and sell their portfolio of products across these channels.

Is it more conducive to m-commerce, e-commerce or the full blend — including brick-and-mortar? This drastically affects forecasts, SKU plans, inventory volumes and placement.

It’s a brave new world. All of it comes right back to the shopper’s preference and a shopper-based approach.

Category management can seem like a square peg in a round hole. The simple beauty of category management is that it is selling-focused. Retail continues to be challenged to be customer-centric, which is needs-focused. The chasm of planning and operations between a product push approach and the fulfillment of needs and wants is not about to be bridged too quickly. In fact it will be exacerbated as product manufacturers move more fully into the retail offering of their products, because CPGs and OEMs are truly sales-push focused.

Category management helped identify some low-hanging fruit for store improvements. The process has some fundamental errors that will produce misleading recommendations when it is pushed to its limits. Academics have listed many problems with the process, but the industry still needs to apply the fixes. We need to move to category management 3.0 to get those improvements into the system.

Category management started out as “consumer-based” merchandising (we didn’t say “shopper” back then). What sent it off the rails is simply that we ignored the consumer part of the process because it was too cumbersome, too amorphous and we had too little actionable data. So category management became a template-driven real estate grab (if you are a manufacturer) or a template-driven assortment optimization tool (only one step above the old “spin reports” if you are a retailer). All this discussion of reinvention and 2.0 sounds like returning to the original premise to some of us original believers.

I was one of Brian’s partners who “invented” category management. I did all the metrics that knit the process together in 1993. Last year I led a consortium of 17 companies including Walmart,P&G, IRI, Kantar Retail, Ahold, Mondelez, etc. in creating CatMan 2.0, a 330 page digital document posted on the Category Management Association site. It would be interesting to read these comments after people have plowed through the document. Suffice it to say that we have made remarkable strides in data and analytics. I have subsequently written a white paper called “how e-com will change CPG marketing and the retail experience.” It touches upon some of the comments made on this page. The most important change will be the capability of the retail e-commerce sites to suggestively sell other items (categories) in a need state triggered by a specific purchase in the need state (shopper-centric need state marketing). This is easily done in the digital world but impossible to do in a brick-and-mortar environment. Meanwhile, shopper targeting capabilities increase by the hour as do… Read more »

The true innovators are now collaborating, not just transferring the burden of category management from the retailer to the CPG supplier. Yes, they supposedly have been “collaborating” for decades, however in the majority of cases, “The fox has been watching the hen house.” Now we are seeing suppliers and merchants optimize the category assortment mix to the best possible intersection of revenue, velocity and margin. This is taking into account both internal data of product movement, etc., along with external data that follows sources like social sentiment, long-term weather patterns, events, etc. to capture true shopper journey components.

CatMan 2.0 is still the traditional Category Management 8 step process with enhancements to step 4 and step 7 plus an updated vocabulary. That is all it is. The new beyond category management Shopper-Centric Retailing business model, and core component Shopper Solutions Planning, addresses the many limitations of category management and more. The Shopper Solutions Planning component is specifically designed to translate insights into shopping enhancement solutions at the category, aisle, department and total store. The Shopper-Centric Retailing model includes restructuring the management structure of the store to address the age-old execution problem, it breaks down the silo between Merchandising and Operations with a new senior management function, it restructures merchandising to a more solutions focused structure, breaking down the silos between Center Store and GM/HBC, it creates a common shopper solutions focused vocabulary throughout the organization from senior management across function down to the bagger. The narrowness of the word category management is eliminated from the vocabulary. Yes, this is the beyond category management model. It is the future. Several retailers are at various… Read more »

This is a good and timely discussion and I’m delighted to be part of it. What has amazed me is that the Category Management idea is over 25 years old since I first made reference to the idea in 1989 at a CIES conference in France. Very few ideas and methods have lasted that long in our fast paced business. Its longevity, in my opinion, has been the result of its simple philosophy and principles. If we understand and think like the consumer (now the shopper and consumer) and share the best possible insights about these ultimate targets of all our work we will make better decisions about how to best meet these needs. What has changed over the years of course are two things. First the availability and quality of information and insights into consumers and shoppers and how consumer and shopper behavior are connected in an integrated journey. We can now have a clearer understanding of how consumer needs (always the starting point) ultimately end up in category and product purchase decisions made… Read more »

Great points Graeme! I would say that even though analytics and category management methodologies have developed rapidly over the years, other execution systems have lagged. What this has resulted in is a highly difficult ability to scale strategy around the consumer-centric analysis. A large portion of FMCG retailers in the US still have many mainframe systems in place which pre-date category management origins. What this results in is a lack of capability to execute around a shopper/consumer dimension and general system disconnects across stakeholders in operations/supply chains, etc. This is why we see category managers still spend a lot of their time chasing fires over implementing new strategies. It’s almost akin to the strategy/planning systems talk one language e.g. French and the execution systems talk another e.g. English. What the industry needs is someone to develop these translation or reconciliation methods as much as more advances on the strategy side.

No doubt the Category Management model has evolved, probably faster than a single person or company could contribute alone, the new CatMan 2.0 model implies a paradigm shift of how problems must be solved, based on a collaborative process, evolutionary and alive. That is why I am convinced that a group of companies are required from different angles to address the issue and propose what is most appropriate for the retailers, manufacturers and solution providers community, and this is achieved through the process of the Association of Category Management. Additionally, a dose of reality between theory and practice is always very relevant, so I invite those who actually live and implement the process (manufacturers and retailers) to participate in these comments. In my experience I have had the privilege of being working uninterrupted at the retail (more than 20 years) in various channels of and also collaborate in the process of CatMan 2.0 and we are not talking about just the change of two steps; we are talking about a market where banners and value… Read more »

The next generation of category management, equipped with more data, analytics, and insights, will be best enabled when we can see it as the basis for CPG supplier, retailer, and consumer collaboration – with both supplier and retailer sharing data more freely to better understand and facilitate the customer journey. It’s not so much re-inventing as it is evolving, and making better use of, and sharing the data that we now have available to us. Those mutually derived insights will become the foundation of of collaboratively developed long-range strategic growth plans.

I think Category Management needs an overhaul with a new generation of thought starters and though leaders. Data is vital, but we need a comprehensive approach to bringing all data from all channels in together to view all opportunities together. I.e., it is not just looking a Nielsen and IRI data any longer.

We need all eCommerce sales, social media sales, and other online channels due to the largest growth rates coming from online sales vs. traditional brick and mortar stores.