In a post-crisis world, shopper-centric Category Management holds the key to a smarter future

This article was first published in Category Management Yesterday, Today & Tomorrow – An ECR Community Review of current practices in Category Management 2020

Navigating changes to shopper behaviour is a basic requirement for doing business today. Tastes evolve, trends shift, and – in theory, at least – stores and suppliers work together to try and meet those new and different needs. But what happens when behaviours change so rapidly and so radically that even fundamental aspects of the Retail journey are affected? How then should Retailers and Brands best respond?

For Category Managers around the world, these questions will have been part of their daily working lives during the last 18 months. No event in living memory has had an impact on global Retail as widespread or pronounced as Covid, driving the kind of transformation in consumer habits that would ordinarily have taken years to occur. And while many of those changes were short-term reactions to the spread of the pandemic, others have presented longer-term implications for the future of Grocery Retail.

Getting back to basics

Across several waves of consumer research conducted by dunnhumby throughout the pandemic, we identified five trends that are set to have an enduring impact: an increased emphasis on value; a greater focus on local shopping; shifting attitudes towards formats and channels; a rise in home cooking; and a heighted interest in personal and societal wellbeing.

The changes that have occurred in each of these areas require Retailers and Brands to rethink existing assumptions and take a back-to-basics approach to shopper understanding as the post-crisis landscape continues to form.

Naturally, Category Management has a substantial role to play here. As custodians of the Retailer-Brand relationship, Category Managers are primely placed to drive that reassessment and forge the future-ready strategies necessary to meet those trends head-on. Closer collaboration with CPGs is key to this, but so too is the ability – and willingness – to conduct a “from the ground up” review of categories and make informed decisions about which levers to pull in order to appeal to tomorrow’s shoppers.

Re-evaluating Customer needs

In Dr. Brian Harris’ well recognised and widely utilised eight-step model, Retailers gauge the potential value of a category by analysing factors that range from the role it plays through to the tactics used to promote it. As shopper behaviours change in the wake of Covid-19, that same model can also be used to help re-evaluate categories against new needs and demands.

Four of those eight steps warrant particular attention: definitions, roles, strategies, and tactics. In those areas, we believe that Retailers and Brands should ready themselves for some of the developments outlined below.

• Definitions

The way in which categories are defined and structured may need to be revisited as perceptions shift and different attributes become more (and less) important to shoppers. Product safety, health and wellbeing, and locally sourced produce are all likely to grow in significance over the months ahead, for instance. Elsewhere, shoppers’ willingness to substitute “favourite” products with alternatives may help Retailers broaden the definition of a category. Home cooking is one such example, the recent surge in food at home creating ample ground for Retailers to expand – a tactic that typically drives competitive advantage.

• Roles

Category Roles have already seen great disruption, with traditionally Routine lines such as cleaning, pasta, and tinned goods rapidly becoming Destination-level drivers in the early days of the pandemic. Further change should be expected, however – impulse buying falling away as economies contract, and highly focused shopping missions driving a decline in browsing. Retailers may need to consider the idea of a dual role for certain categories, one each for the varying needs of online and in-store shoppers.

• Strategies

Covid-19 was responsible for a huge surge in online grocery. With this growth having stabilised, ecommerce now represents a significant revenue stream for many Retailers. Strategies designed to retain the long-term custom of new online shoppers will pay dividends, and defend against the risk that they revert back to better established digital Retailers. Health and product safety-focused strategies are also likely to prove vital in numerous categories.

• Tactics

At a tactical level, one of the most pressing priorities for Retailers will be to pay close attention to changing expectations around assortment. Assortment was a major focus during the height of the pandemic, with many consumers re-evaluating their needs and realising that product breadth was perhaps less important than it had been pre-Covid. Retailers should use data science to consider a general reduction in assortment in the year ahead’.

Other tactics to consider should be a focus on private brand – an increasingly important differentiator for value-seeking shoppers – and the re-examination of the “just in time” supply chain model, something that proved to be unviable in the face of extreme demand.

Data-driven decision making

Across each of these four steps, the common theme is the need for granular, up-to-the-minute Customer understanding. While the issues highlighted above may serve as a guide to the macro-level trends driving Category Management, they can’t come close to reflecting consumer needs at an individual level. In the lightning-fast grocery market of today, behaviours and attitudes can change literally overnight, and Category Managers need to be armed with deep insights in order to process, predict, and respond to those new requirements.

In the majority of cases, the data to fuel those insights already exists. Retailers sit atop a treasure trove of Customer data that can be used to drive smarter, better informed Category Management decisions. The challenge for most is not procuring or sourcing that data, but sorting, analysing, and understanding it; unlocking the latent potential of an industry in which every purchase tells you a little more about what Customers really want.

As we move into a new year, one that is likely to see Customer behaviour shift dramatically once again, data-driven, shopper-centric Category Management holds the key to a flexible and more responsive Retail future.