Is it time to reinvent category management?
Brian Harris, the “father of category management,” says that it’s past time to reinvent the effort and suggested there’s a need to move onto category management 2.0. Win Weber, another leading proponent, says the retail industry needs to change the way merchandising works because the concept of category management was formed before the internet was commercialized.
It’s not just the internet that wasn’t around when category management came into vogue. Data analytics capabilities were a fraction of what they are today. Data capture and the ability to deliver actionable information to front line employees are now several generations advanced. So how do we reinvent category management with technology that is geometrically more powerful?
The starting and stopping points must be the shopper. The tools are now available to better understand what motivations will drive buying behavior for individual shoppers, so customer-centric merchandising and personalized promotions should provide the pathways to both gain shoppers’ trust and yield proof points with C-level management to commit to a full revamp of category management.
From that base of understanding the customer, category management 2.0 or shopper-centric retailing, as Mr. Weber calls it (we at Precima prefer total store optimization) needs to marry customer insights with product data to create a personalized shopping experience across all customer touchpoints. This is much easier said than done, but companies making the investment in people and technology will see increased market share and profit improvements.
An example of how category management 2.0 works can be seen in the bottled water segment, where consumers see little variation among different brands and 12-pack and 24-pack sizes take up large amounts of shelf space. Armed with shopper-level data about product preferences, retailers can be confident customers will switch their bottled water purchase to the available brands/sizes without being disappointed. With that additional “real estate,” they can expand their assortment to include more facings of healthy lifestyle beverages, which offer greater opportunities for high-margin sales.
- A.B.A. told ‘category management is history’ – BakingBusiness.com
- Beyond Category Management – Retail Leader
DISCUSSION QUESTIONS: What are the most important factors for enabling the next generation of category management? Which do you think is more likely: Category management will evolve as e-tailers and suppliers make use of new data management tools or the practice will be replaced in favor of an entirely new, shopper-based approach?