Study urges shopper-centric category management approach
Through a special arrangement, presented here for discussion is a summary of a current article from the monthly e-zine, CPGmatters.
A new study by the Food Marketing Institute (FMI), Deloitte Consulting and Winston Weber Associates finds that 85 percent of retailers have made either “no change” or “moderate change” to the initially-prescribed eight-step category management process that arrived with the ECR (“Efficient Consumer Response”) movement in the mid-nineties.
Overall, the study found that 100 percent of retail and consumer packaged goods respondents believed some degree of change is required; a quarter of respondents believed that nothing less than an entire redefinition and transformation is necessary.
The study offers a roadmap to a more insightful shopper-centric way of doing business.
Some key insights:
1. Category management has too many limitations for a retailer to produce the desired results. When asked to select the biggest shortcomings of category management, most respondents (54 percent of retailers and 64 percent of manufacturers) cited reasons related to its narrow focus on single categories and a deficiency in factoring in shopper perspective.
2. Decision Support is still a fragmented, unstandardized function for most retailers. The Shopper-Centric Retailing Survey indicated broad variations in how the Decision Support function is performed across retailers, from having no formal function at all (25 percent), to providing some form of a consolidated function (30 percent), to providing a separate Decision Support function for each merchandising process (40 percent), such as pricing and space management.
3. Very few retailers and manufacturers have tapped into the significant potential of digital-based insights. Across the manufacturer-retailer landscape, 63 percent of companies responded “none” or “limited” when asked to what extent they apply digital-based consumer and shopper data while developing insights for category planning.
4. Both sides are satisfied with CPG-retailer joint planning; both sides also see an opportunity for more shopper-centric collaboration. On a 1-to-4 scale (i.e., 2.5 being average) retailers collectively rated supplier-provided category-level insights at 2.8, banner-level insights at 2.4, and qualitative shopper research at 2.1. On the other side, close to half of the retailers (45 percent) provide minimal to no POS or loyalty or shopper insight information to suppliers.
- Study Urges Shopper-Centric Approach – CPGmatters
- From Category Management to Shopper-Centric Retailing: It can be done — here’s how – Food Marketing Institute (free for members)
How do you think the category management process needs to be transformed? What are the biggest shortcomings of the current category management process?