Category Management Is Due for Radical Change

February 10, 2016, 03:34 pm By John Karolefski,

In 2006, I co-authored a book called "Consumer-Centric Category Management." In the forward, Steven M. Schmidt, then president and CEO of ACNielsen, wrote, “Reports of category management’s death have been greatly exaggerated.”

Today there are serious calls for that death – or at least a radical transformation of one of the most successful business processes of the 20th century. A stunning new study by the Food Marketing Institute (FMI), Deloitte Consulting LLC, and Winston Weber Associates (WWA), claims that the traditional process is stagnant, too product-focused, and too narrow in approach.

“We are calling for an industry transformation to adapt to today’s new consumer,” states Mark Baum, FMI’s chief collaboration officer.  

Win Weber, chairman and CEO of WWA and co-author of the analysis, notes, “Our research strongly suggests that change is necessary, especially since no major upgrades to the ECR-prescribed category management process have occurred in the last two decades. Supermarkets are facing tidal pressures from shoppers who want their stores to evolve with their tastes and habits, so businesses need to resist the urge to remain complacent.”

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. Conversely, 85 percent of retailers have made either “no change” or “moderate change” to the initially prescribed, eight-step category management process.

Clearly, there is a consensus for change, which I agree is long overdue. The traditional process was developed to focus on products, but the focus today needs to be on the shopper.

The good news is that for the last year the Category Management Association (CMA) has been working on transforming the process via input from a diverse committee consisting of world-class retailers in different classes of trade, major CPG manufacturers, and solution providers. CMA is about to release CatMan 2.0, which is a major white paper and a searchable database with embedded best practices across the 16 work streams. Gordon Wade, the trade group’s director of business practices, told me that CatMan 2.0 is precisely what the study from FMI is calling for.

Both trade groups acknowledge that shopper insights are under utilized and need to be incorporated via the wealth of new data and analytical tools available today. It's interesting to note that FMI’s study and recommendations go beyond category management per se to focus on the overall shopper experience. The association calls it Shopper Centricity.  

I have long recognized the nuanced difference between consumers and shoppers. Insights from the former are gained via surveys, panels and focus groups, while insights from the latter are gained by focusing on in-store and online purchasing by shoppers. In the end, consumer-centric category management of a decade ago is evolving into shopper-centric category management.