Embed Size (px)
Citation preview
The elevated role
of the shopper in
omnichannel category
management
Jonathan Young, Executive Vice President
JANUARY 2020
CMA Webinar
AGENDA1
New Dynamics Impacting
Category Management
2Evolution of the Category
Management Framework
3Elevated Role of the Shopper on
Category Definition & Assortment Planning
4 Key Takeaways
2
What do we mean by
Category Management?
Industry Definition
Category Management is a shared
economic model and retail management
process between retailers and
manufacturers built upon the premise that
maximizing the (topline) growth of a
mutually defined category will benefit both
parties by generating the ‘largest pie’ of
category sales
It has been largely designed for optimizing
the Brick & Mortar retail environment
33
What’s changed and why does category
management need to evolve?
Most notably, digital/ecommerce has introduced many new dynamics:
• Algorithmic, search driven retail enables a more bottoms up,
shopper-driven concept of category
44
• New economic models have emerged, with retailers generating revenue
from sources beyond selling products (e.g. media) as well as incurring
new costs (e.g. fulfilment), creating less aligned incentive structures
• More executional variables to manage on a more dynamic basis
• More complex and interconnected omnichannel/fulfillment ecosystems
require more holistic planning
• Greater cross-organizational coordination required, with more
internal and external stakeholders
The category management framework still applies but must be expanded
There are now more variables to manage across more expansive retailer ecosystems
Source: Kantar
PLANNING EXECUTING MEASUREMENT
Category
Definition
& Segmentation
Category Role &
Investment
Strategy
Category
Assessment &
Performance
Analysis
Pricing &
Promotional
Strategy
Assortment &
Spacing
Shelving &
Merchandising
Shopper
Communication
Measurement &
Evaluation
NEW/MORE VARIABLES TO MANAGEACROSS MORE RETAIL MODELS
The category management framework still applies but must be expanded
There are now more variables to manage across more extensive retailer ecosystems
Source: Kantar
PLANNING EXECUTING MEASUREMENT
Category
Definition
& Segmentation
Category Role &
Investment
Strategy
Category
Assessment &
Performance
Analysis
Pricing &
Promotional
Strategy
Assortment &
Spacing
Shelving &
Merchandising
Shopper
Communication
Measurement &
Evaluation
NEW VARIABLES TO MANAGE
Search, Content,
Taxonomy, Site
Navigation
Item/Basket
Profitability, Search,
Traffic, Conversion
Shopper (Need/
Occasion/Trip)-
Based
Fulfilment,
Substitutability,
Keyword Strategy
Media, Content,
Occasion/
Basket-Centric
Product/Store-
Based
+Media &
Search
Investment
Trade
Promotion
+On-Going
Tracking And
Optimization
Periodic
Analysis
+Dynamic, SKU-
Level Pricing &
Promotion
Static/
Regimented
Promotion
+
Store Navigation,
Flow, AdjacenciesPOG,
Placement,
Space
Sales, Category
ProfitabilityPOS, Category-
Centric
+ + + +
The category management framework still applies but must be expanded
There are now more variables to manage across more extensive retailer ecosystems
Source: Kantar
PLANNING EXECUTING MEASUREMENT
Category
Definition
& Segmentation
Category Role &
Investment
Strategy
Category
Assessment &
Performance
Analysis
Pricing &
Promotional
Strategy
Assortment &
Spacing
Shelving &
Merchandising
Shopper
Communication
Measurement &
Evaluation
ACROSS MORE RETAIL MODELS
Physical
Store
Ship to
Home
Restock /
Subscription
On-Demand Click & Collect Grocery
Delivery
From Dominos to Chess
Source: Kantar, retailer website
Multi-dimensional, holistic planning
Omni Category Management Framework: Cookies at Walmart (ILLUSTRATIVE EXAMPLE)
Fulfilment
ModelPhysical Store Ship to Home Grocery Delivery & Pick-up
Category
Definition &
Segmentation
• Trip Type:
• Regular item fill-in
• Special Occasion
• Occasion:
• Indulgence/Treat
• Entertainment
• Trip Type:
• Monthly Stock-up
• Occasion:
• Snacking
• New product discovery
• Trip Type:
• Weekly stock-up
• Regular item fill-ins
• Occasion:
• Weekly meal/lunch planning
Assortment,
Spacing &
Fulfillment
Promotional
StrategyItem Focused Trade Strategy Basket Building Incentivize Trial
Bringing it to Life: Category Definition & Assortment
Source: Kantar
PLANNING EXECUTING MEASUREMENT
Category
Definition
& Segmentation
Category Role &
Investment
Strategy
Category
Assessment &
Performance
Analysis
Pricing &
Promotional
Strategy
Assortment &
Spacing
Shelving &
Merchandising
Shopper
Communication
Measurement &
Evaluation
ACROSS MORE RETAIL MODELS
Physical
Store
Ship to
Home
Restock /
Subscription
On-Demand Click & Collect Grocery
Delivery
What Category
Do You Play In?
If you were a Yogurt
Shopper, and were at the
store here’s what you
might see
12
If you were a Yogurt shopper online, this is what you might see
Yogurt, Frozen Dessert, Protein Shakes, Snack Bars, Supplements?
13
NOTE: This is consistent with our
first principle from the Initiative
for Real Growth
14
1. ABUNDANT
MARKETS
3. EVOLVING
EXPERIENCES
2. MULTIPLE
MODELS
4. OPEN
CULTURE
6. WHOLE-
BRAINED
5. ANTICIPATIVE
ORGANIZATION
7. HUMANIZED GROWTH
14
“GROWTH IS ABOUT WINNING MARKET SHARE FROM COMPETITORS”
15
MYTH 1
11%27% 3%
16
Overperformers think about Nielsen, Amazon, and Kickstarter
How does the concept of
category need to
change?
Formulate a category definition that expands into new occasions
18
ToFrom
Healthy, Protein-Rich Nourishment
Core
Yogurt
Non-Dairy Yogurt
Substitutes
Frozen Yogurt
Ice Cream
Smoothie Bowls
On-the-Go Oatmeal
Protein Powders & Drinks
Meal Replacements
Associated
Yogurt Starter Culture
Yogurt-flavored Snack Bars
Freeze-Dried Yogurt Snack
Greek Yogurt Shampoo & Body Wash
Granola
Fruit
Refrigerated, dairy-based breakfast
ILLUSTRATIVE EXAMPLE
Because these categories have already moved
quickly onto the same online shelf
19
Checkout Area
Yogurt
Frozen Yogurt Protein Powder
Identifying roles for product-defined categories and segments has become the first step of the
assortment process within category management
So, Category Definition has become as dynamic as assortment determination
20
EnhancersGreek Yogurt Ice Cream
SubstituteProtein Powders
Meal Replacements
Milk Modifiers —
Kids
Shakes
Milk
RTD Tea
Alcohol
SubstitutesGreek Yogurt Ice Cream
Smoothie Bowls
Kids Yogurt Pouches
On-the-Go Oatmeal
Granola
Protein Powders
Meal Replacements
AssociatedGreek Yogurt Starter Culture
Yogurt-flavored Snack Bars
Freeze-Dried Greek Yogurt Snack
Milk
Greek Yogurt Shampoo & Body Wash
Expand into Incremental
Occasions
Cross-Market into Potential
Regimen Solutions
Core
Yogurt
Non-Dairy Yogurt
Substitutes
Frozen Yogurt
Ice Cream
Smoothie Bowls
On-the-Go Oatmeal
Protein Powders & Drinks
Meal Replacements
Associated
Yogurt Starter Culture
Yogurt-flavored Snack Bars
Freeze-Dried Yogurt Snack
Greek Yogurt Shampoo & Body Wash
Granola
Fruit
Defend against Traditional and
Non-Traditional Substitutes
How should you think
about assortment in
an omnichannel
environment?
Online decision making and shopper preferences
can be different than in-store because…
22
Different shopper,
different preferences
Different habits,
routines
Fulfillment driven
behavior
Different online vs. offline behaviors can potentially
dictate different offline vs. online assortment strategies
Source: Kantar Consulting
Brick and Mortar CDT eCommerce CDT
Flavor
Brand
Organic
Pack Size
Non-Organic
Flavor
Pack Size
Fruit Snacks
Brand
Flavor
Pack Size
Brand
Organic
Brand
Flavor
Non-Organic
Fruit Snacks
Pack Size
eCommerce
Portfolio:
▪ 12 SKUs
▪ 8 organic fruit SKUs
in 2 pack sizes
▪ 4 of Flavor #1
▪ 4 of Flavor #2
▪ 4 Non-organic SKUs
Brick & Mortar
Portfolio:
▪ 12 SKUs
▪ 5 pack sizes in 2
flavors each
▪ 2 SKUs of organic
fruit snacks
Assortment planning now requires a holistic approach, reflecting more varied
shopper needs as well as new economic and logistical elements
24
Store
Only
SKU’s
Online
Only
SKU’s
Online +
Store
SKU’s
Site
Backroom
Item
Substitutability
Store
KEY
TAKEAWAY
2525
Category Management is as
important as ever but the
framework must be expanded to
encompass new retail variables,
models and economics. The
shopper’s role must be elevated,
reflecting their new influence and
autonomy in the retail process.
KEY
TAKEAWAY
2626
Category Definition now plays
a more foundational role, but
needs to be re-framed to
better reflect shopper
behavior. Usage/ Occasion-
based definitions are more
feasible in a digitally-enabled
environment and support
greater growth potential.
KEY
TAKEAWAY
2727
Assortment planning now
requires a more holistic
approach, reflecting varied
shopper needs as well as
new economic and logistical
elements, demanded by
ecosystem and basket
management.
Copyright © 2019 Kantar LLC. All Rights Reserved.
501 Boylston St., Suite 6101, Boston, MA 02116
T: +1 (617) 912 2828
Notice
No part of these materials may be reproduced or transmitted in any form or by any means,
electronic or mechanical, including photography, recording, or any information storage and
retrieval system now known or to be invented, without the express written permission of
Kantar LLC. The printing of any copies for backup is also strictly prohibited.
Disclaimers
The analyses and conclusions presented in these materials represent the opinions of Kantar
Consulting LLC. The views expressed do not necessarily reflect the views of the management of
the retailer(s) under discussion. These materials are not endorsed or otherwise supported by the
management of any of the companies or organizations discussed herein.
29
