Interview with Melissa Muckel who presented on Hormel’s customer-centric research and category growth at the 2018 Xcelerate Retail Forum in Boston, MA.
What do you see as the biggest challenge that CPG category managers face in today’s marketplace?
In today’s consumer-centric market, I think the biggest challenge for retailers and manufacturers alike is the power of the customer. Today’s customer can access endless information. It’s made shopping easier. Easier to find what you want, to compare pricing etc. The consumer has the power and that’s created challenges for category managers in finding their path to purchase. The path to purchase has always been important for category managers to understand. It helps to drive strategy in so many different areas in the CPG world.
While technology has helped consumers gain power, it’s also provided a new level of granular data to category managers, whose go-to-market strategies have become very complex. Since there’s a massive amount of customer data, using the right technology is really the only practical way to fully understand the customer and their path to purchase. It’s about how quickly you can develop an informed strategy and execute on that strategy. To do this, you need to integrate so many different data sources that can sift through millions of data point to find the insights to develop the strategy. But there’s only so much time in the day and a lot of pressure on delivering ROI on the data you purchase. Focusing on delivering valuable insights that lead to action is critical.
What do you think is the most significant business trend or disruptor that you face as a CPG today?
The simultaneous consolidation and fragmentation of the industry. For traditional grocery retailers, growth is very low and it’s hard to find. We’ve seen a lot of mergers and acquisitions over the last decade. In just the last few years we have seen some mega mergers such as Albertsons and Safeway, Amazon and Whole Foods. To remain competitive in the retail landscape, traditional grocers are merging together, consolidating. At the same time, the food industry has become more fragmented because of the number of ways/channels to shop. We also now have discounters in the mix. They’re all bringing their own unique offerings to consumers.
On top of this, technology has allowed people to have someone else shop for them, have their groceries delivered, have their grocery lists saved online. They can drive up and pick up their groceries, they can subscribe and save, and the list goes on. I think, historically, the food industry has been slow to change in comparison to some of the other industries, and this consolidation of the traditional grocery and the entry of the new competition from omnichannel is really disrupting the industry. You’re seeing traditional grocery stores competing with, in some cases, major tech companies like Amazon.
In order to stay relevant, there’s a huge sense of urgency, to change how we’re going to market. Historically, in grocery retail, execution was King. This is where I think good category management can really help in terms of thinking more strategically about business development.
What do you believe are the biggest opportunities for collaboration and improvement between retailers and CPGs?
Too often with CPGs and retailers there’s a built-in barrier where we are working against each other. But technology is helping us to improve our visibility to sales and customer buying habits. That should also change the way that we’re doing business. We talked about how the modern consumer has changed. We’ve seen a demand for transparency in many different facets of the food industry. For instance, customers want more transparent labels, they want to know where their food is coming from. They want to know everything about its sourcing. They’re demanding transparency.
For collaboration between CPGs and retailers, we need to demand the same type of transparency from each other. Gaining alignment around business goals and strategies will allow both sides to be more effective. It will enable the sharing of relevant, timely insights that can help drive the business forward. If we don’t do this, the business will suffer. This could be from focussing on irrelevant data or misaligned objectives. That is why we need alignment. As I said earlier, there’s limited time in the day, maximizing efficiencies on all fronts and getting an ROI from everyone’s efforts is critical. The retailers and CPGs who can embrace the data and act proactively to create strategies are going to be the ones that can find the small pockets of growth in this low-growth industry.
How do you see artificial intelligence playing into category management from a CPG perspective?
I’ve referenced technology a lot so far. AI is going to help with solving a lot of the challenges we’re currently facing with analytics within CPGs and category management. With the massive amounts of data that we now have access to, it’s helping to simplify some of that complex, omnichannel data that’s needed for CPGs to succeed in a consumer-centric marketplace.
AI can do so many things like identifying patterns through machine learning and predictive analytics. Category managers will be able to sidestep the weeks of sifting through data for insights and make proactive strategy suggestions very quickly. Even though category management has been around for a while, it’s going to be more critical than ever to make data-driven decisions and adapt to the consumer-driven analytics. The retailers and CPGs that collaborate and manage their data the best will be the winners in the new retail landscape.
Please share a summary of what you spoke about at the Xcelerate conference.
Our founder, George A. Hormel, said “Originate, don’t imitate.” This really applies to what we’re doing within our business analytics and insights team. We’re investing in consumer-centric research to understand all aspects of the consumer. We use this research to develop macro insights that fuel our internal innovation and selling strategies. We also use these insights with our retail partners to help them turn shopper behavior into category growth. Then, on our customer analytics teams, we overlay the macro consumer insights with retailer-specific data and shopper card data in some instances to help us understand how to effectively tailor the strategies at different retailers. We are customizing the strategies for the category to the specific customers that are shopping in each retailer.
This is a complex amount of work that requires numerous data sources, but we’re really focusing on simplifying our message and crafting the story with data to provide recommendations with clear action steps to retailers. So, I talked a little bit about how we do this, and how we tell the story with data, and discussed some of the success we’ve had in this area.
Tell our readers something fun about yourself.
My husband and I went on our honeymoon to South Africa. We did that so that we could go on safari. We also went great white shark diving. It was a pretty adventurous honeymoon!
Yes, I’ll say, and did you get up close and personal with any great white sharks?
Yes. The sharks ran right into our cage, they’re not really supposed to but one accidentally got a hold of the bait. We were right off Seal Island which is famous for great white sharks. On safari, we saw a mother lion and her cubs – that was a highlight too.
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