Twenty years ago in suburban Auckland, New Zealand, I awoke excited about what the day had to offer having just completed a two week induction for my first job since completing university working for a national retailer. After battling the morning rush hour traffic, which was as thick as the fog that had descended upon my route, I arrived to a warehouse in the heart of a cold grey industrial site. Armed only with a pair of measuring calipers, a laptop (which back then was the size and weight of a microwave oven!) and the youthful exuberance any new employee fresh out of academia, I unlocked and opened the roller door to reveal a treasure trove of products, shelves and fixtures.
I was now officially a space planner and for the next six months this warehouse, that the HQ execs proudly called our “merchandising lab”, would be my solitary working home. Each day I would measure products and shelves to then input into a space planning software the dimensions to create databases that would then enable me to ultimately build planograms. Each week new products would arrive from suppliers and the warehouse creaked as the piles of items, packaging and fixtures continued to increase.
Now this was not a particularly difficult task, albeit incredibly monotonous after the novelty wore off somewhere around day three, however the challenges with working in this way were many.
- Working by myself in the merchandising lab away from the category team meant numerous phone calls and weekly meetings onsite
- Category team threw me the assortment and property estate team told me how much space was available in the stores and I was told to make it fit
- I was one person and the time it was taking to manually measure and then create planograms was impacting our speed to market
- Being fresh out of university my background was theory rather than supported by practical experience yet I was effectively having to make strategic space and assortment decisions
At that time merchandising was not necessarily the “glamour” department of this company, rather a third cousin twice removed who a family reluctantly tolerates. Whilst I had positive working relationships with employees from the different departments within my organization, the differing objectives of each and agendas of their management meant that a framework for effective internal collaboration was not necessarily in place.
Step forward 20 years – has the technology underpinning category management really changed?
As I look back at that early period of what would shape my career, there is a sense of frustration that companies today still face those challenges despite technologies and best practice approaches now being available that can address these problems. While the competitive landscape for category management applications is broad, many vendors within it tend to focus on point solutions to meet specific elements of the processes involved rather than taking a holistic approach to category evaluation, planning and retail execution. Traditional approaches have not necessarily kept pace with the broadening of responsibilities that are now expected to be addressed by category management including category strategy, floor space allocation, financial budgeting, assortment planning, planogramming, development of own label, joint business planning with suppliers.
Add this together with today’s shopper who is highly informed, likely to shop across multiple retailers and has high expectations of availability; it’s imperative that retailers invest in category management software solutions that connect their enterprise to the customer. By adopting a more holistic, employee integrated and customer connected category management perspective, expect value from, but not constrained to:
- Workflow enabled applications that have the capability for a potential reduction in administrative costs associated with process improvement
- Assortments that are guaranteed to fit into the relevant assigned space available, which significantly improves shelf stocking efficiency, product availability and on-going forecasting/replenishment.
- Reviewing the allocation of space given to products – an important opportunity to increase availability and decrease lost sales
- Fine-tuned store clusters by category that reflects shopper behavior generate sales uplifts
Solutions for category management have to step beyond just data and software integration
What is important for organizations to recognize is that their approach to tasks within category management, such as space planning, should not just focus on integrating data and solutions but rather how they connect them to the relevant processes and people within their ecosystem to elevate category management as a strategic differentiator.
What retailers and CPGs should be demanding is:
1. Hosted cloud based platform that acts as a central repository for all information (transaction, performance, loyalty, space, fixtures, customer preference etc.) that can inform the planning and execution tasks as they relate to category management. This delivers an opportunity for effective collaboration both internally (inter-departmental and store) and externally (suppliers and field teams).
2. Given the magnitude of data available to retailers and CPGs, leveraging a collaborative model increases the opportunity to build a cohesive approach to meeting customer demand and product preferences while effectively managing inventory levels and profitability.
3. The ability for employees and their working partners to access information relevant to them through a browser at anytime, anywhere and on any smart device. This also drives greater visibility across their organization by identifying the relevant touchpoints of each process as they relate to each department. Traditional approaches have resulted in one team completing their task and handing over to the next without necessarily understanding the effect on the overall goals and objectives of the organization.
If only this type of approach and the technology to support it was available back when I started out. Despite it being an exciting time in my life starting a career in category management, it was stressful, frustrating and felt very disconnected. Whilst I had the excuse of being naive and working in a dysfunctional part of that organization so many years ago, retailers and manufacturers of today have the processes, technology and best practice approaches right in front of them – but how many are progressive and forward thinking enough to embrace them?