Inspiring a Customer-Centric Movement in Category Management

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Inspiring a Customer-Centric Movement in Category Management

By Pat Walsh, Chief Business Development Officer and VP, Supply Chain, Industry Relations - 03/01/2016

Imagine visiting a food retail corporate headquarters and asking the chief merchant officer who heads up millennial insights rather than the customary question of who is in charge of a particular grocery category. Since a scanner reads a product, not the shopper, how do companies truly adapt to today's new consumer?

Traditional category management may still be the norm, but it's no longer the most effective tool or business process if your company wishes to focus on the shopper. FMI is supporting a new movement encouraging the food retail industry to focus on shopper-centric retailing. To help mobilize this movement, we've performed the study and issued the roadmap with our partners at Winston Weber Associates and Deloitte Consulting LLP. FMI members agree that the industry is primed for a change.

Given the strong legacy of category management based on products and categories in the store, there will likely be resistance to this new direction, but our research shows that the traditional model needs to be flipped. Buying and selling behaviors formerly had an inverse relationship — and now it's about what the shopper wants to buy and when as well as how a company leverages business insights that point to intelligent sales patterns and trends. Predicting and influencing shopper behaviors are essential versus the traditional approach of evaluating product and transactional data.

The research reveals that the biggest challenge resides in that retailers and CPG companies are organized in silos; they are fragmented because, frankly, they are segmented around buying and selling of products. The path forward suggests that the merchandising, marketing and sales functions as well as procurement needs to adapt, involving the insights from other perspectives, in order to embrace a true shopper-centric way of doing business. Companies should embrace that customer service needs to be personalized, localized and customized, but they must also recognize that those same requirements apply to the store. Each store location should be personalized, localized and customized because the consumer today is different, more diverse and more information-rich than the consumer of the early 1990s — or the last time our industry went through such a transformational change.

There was 100 percent alignment in the study among survey respondents that retailers and manufacturers are neither tapping into digital capabilities nor recognizing the linkage between online and in-store purchases. This notion of when and where customers make buying decisions is not always isolated to a store environment and qualitatively, it's enhancing the shopping experience using mobile, digital and in-store strategies.

We aspire to expose FMI members to new ways of doing business and are planning pilot programs that experiment and determine better ways of serving customers. The study provides a roadmap, but we will continue to provide suggested routes to follow in how businesses can work collaboratively and better harness the wealth of information, data and insights to understand the shopper. Under FMI's Total Store Collaboration initiative, we want to fully assess category management needs across the entire buying experience and path to purchase both in-store and digitally.

At FMI Connect we will reveal a case study from a major retailer that focuses on business transformation from the perspective of the shopper and how organizations — both retail and CPG — can reorganize and better focus to meet the needs of today's shopper. FMI

The top-seven findings in the study, From Category Management to Shopper-Centric Retailing:

  1. Industry respondents agree that change must happen; most insiders believe it should be built on the existing foundation.
  2. Category management has too many limitations for a retailer to produce the desired results
  3. Decision support is still a fragmented, understandardized function for most retailers
  4. Very few retailers and manufacturers have tapped into the significant potential for digital-based insights
  5. The emergence and growth of new "food lifestyles" will compel a more shopper-centric approach
  6. Both sides are satisfied with CPG-retailer joint planning; both sides also see an opportunity for more shopper-centric collaboration
  7. The roadmap to shopper centricity is not built on theory; enablers to get there already exist in today's market.