Today's category managers are inundated with new sources of shopper insights, marketing methods, ways of collaborating and competitive issues. The fundamentals of category management as a business process remain intact as do some persistent challenges related to data management. However, the new age of extreme shopper empowerment and the now disjointed path to purchase opens up a new world of opportunities as well.
There are roughly 160 digital touch points along the typical shopping path where shoppers are giving off signals from the time they enter the market until they make a purchase, according to Kevin Hartman, head of analytics with Google. Every day, Hartman said, there are 4.5 billion Facebook likes, 4 billion YouTube videos watched and 3.5 billion Google searches, just to mention a few of the major sources where consumers offer insights into their behavior.
CatMan 2025 was the topic of a power panel discussion moderated by Michael Sansolo, far left, at the Category Management Association's annual conference. Other panelists included, from left to right, Scott Chencinski, Chief Director of Merchandise Financial Planning and Analytics, Meijer; Tasha Tandy, Senior Director for Health & Wellness and Consumables, Walmart; Andrew Nadin, Chief Marketing Officer, Schnucks; Dave King, Senior Manager of Store Environments, Walgreens; Michael Wiltgen, Director of Visual Merchandising, Sally Beauty; and Kerrie Lopez, Senior Manager of Category Management with Jet.com.
"All of these things are signals that consumers are giving out, information that is helping them along their path to the decisions they are making that marketers could use," Hartman said during a presentation in May at the Category Management Association's annual conference.
Hartman gave attendees plenty to think about, from mind-boggling descriptions of Google's processing power to machine learning's potential to the explosion of marketing technology companies. Thanks to a dramatic reduction in the cost of computing power, Hartman said there are now an estimated 3,500 companies participating in the marketing technology space compared to fewer than 200 in 2011. Because Google sits on a vast repository of data and insights, Hartman could have dazzled CMA attendees with gee whiz statistics all day. Instead, the one nugget of information he shared that had attendees buzzing throughout the even was reference to a recent report from the McKinsey consulting firm.
"We are 1 percent along the way to how technology will impact our personal and business lives," Hartman said in reference to the McKinsey report. "We are not even started. This hasn't even begun. We are going to experience things that we can't even fathom today."
Putting aside the fact that assigning a percentage to the impact that technology will have if the impact of technology is unknowable, Hartman's comment drove home the point that technology is dramatically affecting all aspects of retail, including category management. It was a recurring theme throughout an event themed as, "Bridging Traditional & Digital: Creating New Paths to Success." It was also the focus on considerable attention during a retailer panel discussion on the topic of, "CatMan 2025: Vision for the Future."
"All of these things are signals that consumers are giving out, information that is helping them along their path to the decisions they are making that marketers could use."
Tackling that subject were six executives from Meijer, Jet.com, Walgreens, Schnucks, Walmart and Sally Beauty. The diverse panel shed light on how they are thinking about the opportunities presented by the proliferation of insights from structured and unstructured data sources, optimizing assortments in an omnichannel environment and driving demand with consumers for whom transparency and authenticity are key motivators. As the group pondered the future, a recurring theme was data and the need for better standardization because data is the basis for strategy and execution, in stores and online.
"Product data needs to be more robust that what we have worked with in the past," said Dave King, Senior Manager of Store Environments with Walgreens.
He mentioned such things as product attributes, ingredients, interactions, usage information and even recipes as the type of information that needs to be accessible to shoppers and the retailer's analysts. The type of information that Walgreens has long sought for its own planogram development should be customer facing and much of it is already because Walgreens offers the capability for shoppers to scan shelf tags and obtain additional product info.
Improved data standardization is also something Kerrie Lopez, Senior Manager of Category Management with Jet.com, sees as a key enabler of future success.
"It's kind of insane how different data can be," Lopez said, bemoaning the amount of time she spends slicing and dicing information in the fresh categories she manages.
Getting the data right, so to speak, is only the first step in a future category management process that must be faster and yield shoppers insights that are actionable, according to Tasha Tandy, Senior Director for Health & Wellness and Consumables with Walmart.
"Whatever we are doing we have to do it quickly," Tandy said, echoing a point that has become a new mantra at Walmart. "Shopper insights are such a big part of what we do and there is a tremendous amount of information available, but the challenge comes from taking action on the information otherwise it is just an interesting fact or tidbit."
With so many new data inputs informing the category management process, the natural tendency to rely on what worked in the past to produce future results must be avoided, according to Andrew Nadin, Chief Marketing Officer of Schnucks, a St. Louis-based operator of 100 supermarkets.
"Some of the tools that we have are unbelievable, but we don't use them to their full capacity," Nadin said. Doing so in the future is a must to serve shopper who increasingly expect instant gratification. "The level of convenience that customers requires in this day and age is outrageous," Nadin said.
Inevitably, it seems, whenever a conversation turns to the topic of big data and analytics the phrases artificial intelligence and machine learning aren't far behind. The terms tend to be used interchangeably and are seen as key to extracting the type of behavioral information retailers can use to drive sales.
"Every week I am contacted by a solution provider that wants to demo a machine learning capability," said Scott Chencinski, Chief Director of Merchandise Financial Planning and Analytics with Meijer. As with others on the panel, he notes that data governance is a huge and growing issue that will have a tremendous impact on the application of category management.
With expectations high for what machine learning will deliver, it helps to understand what it is. And who better than Google's Hartman to offer a use case and definition.
"As consumers, we rarely do what we say we'll do. We don't know why people decide the things they do and when you ask them about the choices they made it rarely yields the right answer," Hartman said.
That's where machine learning comes in and Hartman makes a distinction from artificial intelligence (AI). He describes AI as an overarching term that refers to any technique that enables computers to mimic human intelligence using "if-then" type rules and decision trees. Machine learning is a subset of AI that includes statistical techniques so machines improve with experience and generate predictive analytics. Taking things a step further, Hartman described "deep learning" as a subset of machine learning composed of algorithms that allow software to train itself to perform tasks, such as speech and image recognition, by exposing multilayered neural networks to vast amounts of data.
The data-driven future of category management has arrived and Hartman encouraged CMA attendees to follow no one, develop partnerships and not look for a case study to show the way. Lastly, he said, "trust your instincts," a somewhat surprising recommendation from someone whose role as head of analytics at Google makes him one of the world's biggest data geeks.