Category management has reached an inflection point. In a volatile context characterized by rapidly shifting customer demands and expectations, rising prices, strained margins, ongoing supply chain instability, and increasing fulfillment complexity, getting the right product into the right place at exactly the right time is more difficult than ever. But is applying Band-Aid point solutions to aging tech stacks the way forward for this critical discipline? Or is category management in need of a reset?
Category managers are under pressure
Category managers today are operating amidst a host of complex market forces.
Customer shopping patterns are changing. Shopping frequency, basket size, basket composition, and shopping channels are dynamic and ever shifting. The rising cost of living means consumers are trading down to private-label products to save costs, with over 95% of consumers planning to change their shopping behavior if inflation continues. Shopping channels are changing, too. Last year, 75% of global retail executives surveyed moved to invest in hybrid shopping experiences, which means stores are now required to support online and hybrid shoppers through in-store picks while maintaining enough stock to serve in-person shoppers.
Adding to the challenge, an ongoing skills crisis means labor is scarce and more difficult to retain. According to research by McKinsey, retailers continue to see a higher-than-average attrition rate within frontline forces. According to 2024 statistics from the United States Chamber of Commerce, the retail industry experiences the third-highest quit rate of all major sectors surveyed. A recent report found that 64% of hourly workers planned to quit their jobs between October 2023 and October 2024. This skills crunch is impacting in-store execution rates, with some statistics placing planogram compliance at less than 50% at a cost of billions across the retail sector. Without good execution, all the manual effort required by category managers to design, optimize, and load planograms is reduced to nothing short of “busy work.”
Additionally, elevated pressure to meet the need for go-to-market speed, localization, and cluster-based category management requirements is spreading an already thin labor force even thinner.
Category managers are forced to navigate these complexities and a chronically disconnected category review process with yesterday’s tools: labor-intensive manual effort, and lightly integrated category management processes and tools often deployed through a best-of-breed approach. While category management is the heart of any retail business, it remains one of the most technologically underserved areas of operations. The situation is fast becoming untenable. Something has to change — but what?
What’s the path forward?
To solve these issues and bring category management up to date with the level of efficiency and accuracy currently being achieved in other (often less critical) operational areas, there are three primary options open to the retail industry. The first is to compile a patchwork quilt of add-ons and customizations to connect key capabilities, applying metaphorical Band-Aids to ever-aging tech stacks. While this approach may deliver some of the desired results in the short term, it’s difficult to maintain, risky to deploy, and not guaranteed as a long-term fix.
The second option is to move toward the growing base of startups offering attractive, seemingly cutting-edge category management solutions. These solutions apply exciting levels of innovation to the function, and as such they hold a strong appeal. However, the inevitable outcome is that retailers end up relying on point solutions more and more, making it increasingly difficult to connect the entire supply chain successfully. Instead of a consolidated portfolio of technologies working together in unison, retailers find themselves managing more and executing less, and the outcome is the opposite of innovation.
The third (and most effective) option is to start with a solid tech foundation, and make it significantly better by deploying the right tools in the right places to create a connected, automated category management system. By injecting AI into core adaptive workflows, sharing data, not files, and deploying automation, an integrated category management solution can help retailers move from the siloed, bunkered systems that are currently compromising the retail experience to the seamless, optimized world of continuous category management.
A case for continuous category management
Successful category management is a constant trade-off between space and assortment, speed to market, and accuracy. To get it right, category management needs to be more tightly integrated with demand and replenishment functions to deliver faster, more effective, customer-focused category management decisions.
Historically, the category review process has been disconnected, with siloed, non-responsive data passing from one function to the next, from the insights team along to the supply chain department, with little to no feedback or opportunity for optimization.
Blue Yonder’s approach
Blue Yonder’s vision is continuous category management, where intelligent automation, shared data and seamless connectivity between stakeholders deliver more agile, more responsive category management decisioning and comprehensive optimization of both space and assortment from unique store to unique store.
Imagine a world where category managers can ensure total consistency, efficiency, and agility across their entire product range, where layouts can be quickly adapted to local market needs with absolute precision, and where complex workflows and fragmented tools are a thing of the past. This is the world that Blue Yonder has built for category managers, and it’s a world that some of the biggest retailers are already living in. Building upon a solid, tried-and-tested foundation, Blue Yonder’s live suite of category management solutions allows retailers to simplify and centralize category management processes and achieve local precision at speed, while growing at a tailored pace.
The tech is tried and proven, and the results speak for themselves: Dr Pepper Snapple Group, for example, achieved a 99% improvement in category management accuracy, and a 15X reduction in labor hours required to maintain and update planograms. Campbell’s Snacks division deployed Blue Yonder’s planogram generator to decrease new planogram generation time by 20%. Across the board, Blue Yonder’s category management model improves category manager efficiency by up to 50%, increases sales by up to 5%, reduces out-of-stocks by up to 25%, and increases profits by up to 20%.
By investing in the next generation of innovative category management tools, Blue Yonder is reshaping workflows and changing the way category management decisions are made. The result is a shift from managing the process to meeting the customer — where they are, wherever they are.
Today’s shopper demands more. Yesterday’s tools cannot deliver it. It’s time to bring category management into today, unlocking unprecedented efficiency, increased profits, and exceptional customer experiences in the process.
