Which factors will determine the growth opportunities for retailers and manufacturers in the next five years? Data reflect the past but not necessarily the future, the “godfather of category management”, Brian Harris, observes.
Why is it that strategic collaboration between retailers and suppliers seems to be much more advanced in the United States, while in Europe a conflict model often dominates, with retailers accusing manufacturers of greedflation? “These are two very different cultures. In Europe, the French model dominates, with retailers seeing it as their job to get as many pennies as possible from suppliers, in any form and by any means. This is unfortunate: it leads to wasted time and missed opportunities.”
Speaking is Brian Harris, who founded category management, the methodology whereby retailers and manufacturers enter into strategic collaborations to exploit new growth opportunities, in the late 1980s. He is adamant: “More collaboration leads to significantly better results. We know this from research by Advantage Group: that consultant measures levels of collaboration around the world and then looks at the results. Where there is no or poor collaboration, it reduces value for everyone: consumers, shoppers, retailers, manufacturers…”
Omnichannel and AI
There is no easy solution, he knows: “It comes down to mutual trust. It is also about what each party brings to the table. As a manufacturer, you have to have a clear vision of where the category is going in the next three to five years, and how you are going to exploit those opportunities for the retailer and its shoppers. You can’t keep coming in with the same story over and over again: here’s next year’s promo plan. Then the retailer simply says: give me more.”
Among other things, Harris devised the eight-step plan that still forms the basis for proper implementation of category management today. Not that nothing has changed in the past thirty years: on the contrary, category management is alive, evolving and growing, he stresses in an interview with RetailDetail. He refers to the implications of omnichannel and sees how technological evolutions like AI are opening up unprecedented opportunities.
Passing on knowledge more efficiently
“Artificial intelligence will make it easier for us to link large databases and discover patterns that we did not see before. This will allow us to spot opportunities faster and more accurately. It also gives us the ability to communicate those opportunities better: let ChatGTP very quickly and practically summarise AI analytics and pass that info on to the people involved. The ability to pass on knowledge much more efficiently becomes a powerful application. That will also benefit category management.”
The strong growth of retail media is another particularly hot topic. Harris sees major challenges: “Retailers are still mainly betting on retail media as a revenue source, it’s often power play, but in the end they don’t consider enough whether this will ultimately benefit the shopper. You need to integrate it more strongly into your category management and shopper marketing processes.”
“Use the data you have”
At LD&Co and RetailDetail’s Category Management Congress, on 19 October, Luc Desmedt will present the results of a survey on the use of category management among non-food retailers. After all, the method first originated in the FMCG industry. How does Brian Harris estimate the state of affairs at retailers in DIY or electrical, for example? After all, data in these sectors is limited.
“You have to be pragmatic: you use the data you have. Lack of data should not be an excuse for not doing category management. If you don’t have data, you still have experience, opinions… Manufacturers and retailers should figure out together what would be the most valuable data to improve category management processes: surveys, a panel, loyalty data, focus groups… You can’t wait for someone else to do it.”
“Categories are widening”
After all, data has limitations, Harris argues: it’s historical, you are always looking at the past. “The real opportunities don’t necessarily come from projections from the past. Historical trends may not continue, due to changes in consumer needs, in shopper behaviour, competition, tools and technology… It is more important to find out what factors will determine the next five years, than to know what factors determined the past five years. From brainstorming or redefining your categories, for example, new opportunities often arise. Categories get wider, not narrower.”
Should Harris be able to start all over again, would he take a different approach? “What I certainly wouldn’t do any more is, like for the past thirty years, sit on a plane every week to hold seminars and training sessions on category management all over the world. Today, I can make that knowledge available anywhere as a digital, virtual me.”
That is exactly what he will also do on 19 October: then Brian Harris will answer questions from moderator and audience via a livestream at the 20th Category Management Congress in Antwerp. Speakers from LD&Co, GfK and Coca-Cola Europacific Partners are also on the programme, as well as a panel discussion with non-food retailers. Book your ticket quickly via the link below.