As an industry a great deal of time and effort is put into category reviews and creating category plans. Unfortunately, these category plans cannot always be implemented. Recent events such as COVID, extreme weather and war have highlighted the need for the industry to respond quickly to disruption in supply chains and shopper demands. The traditional category management process, with a 12 month category plan, may not be apt. The industry needs to embrace a more flexible approach to better manage disruption and meet the ever-changing demands of shoppers.
Tim Bowen
47 posts
Background ESG is an acronym for Environmental, Social and Corporate Governance. Some simple examples of ESG initiatives in FMCG would include: Environmental: removal of single use shopping bags Social: employing a diverse workforce Corporate Governance: banning all forms of bribery and corruption There are several other terms with similar goals […]
Shoppers have increasing power today. Logically then category metrics should focus on measuring shopper satisfaction. Unfortunately, many current metrics focus on the objectives of manufacturers and supermarkets i.e. maximise turnover, volume and profit. I suggest the industry will focus more on shopper loyalty as a key category metric. This will require a change in emphasis for the industry. The emphasis will be on what products and services drive shopper loyalty, not sales volume.
Omnichannel category management is an evolution in category management thinking. The fundamentals remain the same, but the thinking has changed because shopper behaviours have changed. The change in shopper behaviours is also driving change in how manufacturers and supermarkets best serve shoppers. The updated model places more emphasis on digital as digital influences buying decisions more now plus shoppers are buying more online.
Historically, much has been written suggesting larger companies, manufacturers and supermarkets, have power. Is this still relevant today? Is the market leader more powerful than a start up? Is Coca-Cola or Red Bull the category leader? Is Woolworths or Aldi driving change in supermarkets? Or does the shopper, via customer reviews on platforms like Amazon, now control the market?
Background Many manufacturers and supermarkets have made major investments into ‘big data’ to drive sales. For example, in April 2021 Woolworths bought a controlling stake in Quantium (from 47 to 75% shareholding) for $223M (AFR). In June 2021 Coles announced it would spend $2.5B on digital over 2 years […]
This brief blog explains the major differences in thinking of trading vs category management in the supermarket industry. For ease of use, Coles decision to sell 2 litres of P/L (private label) milk for $2, in 2011, will be used as an example. The same results are analysed with a different view to highlight the difference between a trading and category management mindset.
This quick blog highlights that range rationalisation does not always maximise profit. Retailers that have grown recently, including hard discounters and marketplaces, have up-ranged. Increasing shopper power, including the demand for personalisation, will continue the need to up-range. To maximise long-term financial results manufacturers and supermarkets should focus on meeting shopper demands, not range rationalisation.
What’s more important, one-on-one relationships with shoppers (personalisation) or the relationship between a manufacturer and supermarket (category management)?
This quick blog explains what, why and how manufacturers and supermarkets offer shoppers a personalised experience.
