It’s time for a category management revolution
Category managers must live in the present and the future, making decisions today that will ripple across thousands of SKUs and millions in revenue as the days and weeks unfold.
Consumer preferences and market trends can shift almost instantly, especially when a product goes viral on social media. What was “in” yesterday might be “out” tomorrow or vice versa. Supply chain disruptions can reshape purchasing patterns in a matter of days. Customer preferences drift between digital and physical channels with increasing fluidity.
Yet most retailers are still attempting to navigate this dynamic landscape using outmoded practices and solutions, and the gap between conventional approaches and modern retail realities grows wider every day. With category managers having to make increasingly complex decisions in today’s ultra-fast-paced marketplace, relying on strategies and technology from the 1990s and early 2000s will not work.
The critical challenges that are reshaping retail category management
- Consumer demand shifts occur faster than ever, requiring quick responses to maintain relevance. By the time traditional category management processes identify and respond to a trend, the opportunity may have already passed.
- Rising costs stemming from labor, transportation, and supply chain constraints are squeezing margins, making efficient processes more crucial than ever.
- Managing international and domestic suppliers requires increasingly sophisticated coordination as category managers balance relationships with suppliers offering similar products while managing different lead times and requirements.
- Data overload and integration challenges have become overwhelming as retailers struggle to integrate and analyze data from multiple sources, including sales, inventory, and customer behavior patterns, into coherent decision-making.
- Omnichannel retail demands new approaches to space utilization, and traditional store-centric category management no longer suffices in a world where customers expect seamless experiences across digital and physical touchpoints.
- Cross-functional collaboration remains a significant hurdle, with internal teams often working in silos, creating communication barriers that hinder effective category management.
Three pillars of successful category management
Modern category management requires a fundamental shift in how retailers approach their space and inventory decisions. Leading retailers are embracing three key strategies that leverage technology to overcome traditional limitations while driving better business outcomes.
AI-powered localization and speed to market
For many businesses, implementing a category management strategy can take 6 months to a year. The sheer volume of data category managers must analyze makes manual processes impractical and time-consuming. Modern solutions leverage AI and machine learning automation to overcome these challenges.
Advanced analytics, provided by AI-enabled solutions, can rapidly process store-specific data and give retailers the potential to unlock capabilities such as identifying local trends to boost assortment optimization, localized space planning, and store-specific planogram generation. What used to take months can now be accomplished in weeks, enabling retailers to respond quickly to changing market conditions.
This acceleration ensures category strategies reach stores while opportunities are still relevant, driving better sales performance and customer satisfaction. Instead of getting bogged down by routine tasks, category managers can focus on strategic initiatives that drive business growth.
Eliminating manual planogram updates is particularly crucial, as traditional processes are time-consuming and often fail to reflect current sales trends, customer preferences, and seasonal variations. AI-powered solutions enable hyper-localization through optimized planograms that adapt to specific store needs.
Space efficiency for cost control
Rising costs across the retail sector demand smarter approaches to space utilization. The current environment requires the ability to evolve store-specific strategies for assortment optimization and shelf planning to satisfy localized demand requirements. The challenge then becomes executing those plans as efficiently as possible in stores.
Retailers struggle with unnecessarily high operational costs when staff are caught in a never-ending process of moving inventory from storage to shelves. They also risk losing sales when staff can’t identify empty shelves quickly enough, locate products quickly in the backroom, or if the supply chain team sends too little stock to fill the shelf to begin with.
Unified planning allows retailers to combine space, inventory, supply chain, and even workforce planning into a single unified solution to realize the benefits of store-specific strategies. It improves visibility into space plans and constraints, enabling supply chain and ordering teams to optimize both order quantities and how frequently DCs need to pick items. Space planning teams can build more accurate planograms from store-level sales forecasts, including weekday or seasonal variations and any planned promotional activity. The result is reduced handling costs in both DCs and stores, reducing products’ overall cost to serve.
Meeting omnichannel customer needs
Today’s customers expect seamless shopping experiences across channels. Legacy systems and siloed planning approaches make it difficult to maintain consistency and efficiency across different shopping channels. Advanced category management solutions bridge this gap through integrated planning.
Modern systems enable store-specific assortment optimization while maintaining consistency across channels. They can dynamically allocate space based on local demand patterns while maintaining harmonious online and offline channels. This unified approach improves product availability across all touchpoints, enhancing the customer experience while maintaining operational efficiency.
Key capabilities of modern category management solutions
Category management solutions must deliver specific technological capabilities to achieve the speed and precision demanded by modern retail. These core functionalities enable retailers to transform their category management from a periodic process into a dynamic, responsive system that can reduce implementation times.
Unified planning
The days of disconnected systems and siloed planning are over. Modern category management platforms integrate space planning, assortment optimization, planogram management, and store execution tools into a single, cohesive system. This unified approach ensures all components work together seamlessly, supporting the four pillars of category management: Product, Placement, Price, and Promotion.
Rather than struggling with multiple systems that don’t communicate effectively, retailers can manage their entire category management process through a single, integrated platform that connects supplier collaboration with internal planning and bridges the gap between IT and business user needs.
Cloud-native architecture
Cloud-based solutions offer significant advantages beyond technical specifications. They enable faster deployment and updates while improving security and reliability. The total cost of ownership decreases as integration with existing systems becomes easier and reduces the burden on IT for maintenance. This architecture also supports rapid response to market changes and swift implementation of updates, making it easier for retailers to stay current with technological advances while reducing strain on IT resources.
Automated workflows
Automation transforms key processes that traditionally consume significant time and resources. Rather than manually managing planogram creation, category reviews, performance monitoring, and store communication, modern solutions automate these routine tasks.
This automation includes supplier collaboration through dedicated portals where partners can provide direct input and share constraints. This helps manage domestic and international supplier relationships more effectively, giving category managers more time to focus on strategic initiatives and respond rapidly to market changes.
Data-driven decision making
Modern platforms enable retailers to process and leverage massive amounts of data from multiple inputs, eliminating guesswork in strategic planning and driving more effective decisions.
The ability to test planograms in a “safe sandbox” environment provides greater flexibility and control, helping retailers understand how space and assortment plans could impact category performance, sales, and in-store execution. Additionally, the ability to manage multiple simultaneous category or location reviews provides retailers with greater flexibility and control. This allows for more precise and tailored category management strategies, ultimately leading to improved sales and customer satisfaction.
Further, understanding transference is essential for assortment and category planning as it helps retailers proactively anticipate and respond to changes in customer purchasing behavior. Market basket analysis capabilities that leverage advanced technologies enable retailers to be far more accurate in understanding how a decision will positively or negatively affect the overall performance of a category by utilizing halo, substitutability, and cannibalization.
Implementation success stories
The transformative impact of modern category management is already evident across retail sectors. Here’s how two different retailers have leveraged the RELEX advanced category management solution to overcome their unique challenges.
DIY sector
Selco transformed their space planning through the implementation of store-specific planograms. This transformation improved product availability, reduced excess inventory, and improved the use of limited store space. By implementing AI-driven category management, Selco have been able to respond more quickly to market changes while improving operational efficiency.
Convenience retail
Circle K, an international convenience store chain, needed to improve inventory control and assortment planning. Through an internal review, the retailer discovered opportunities to improve order processes and planogram compliance.
Thanks to the RELEX platform, which unifies forecasting, replenishment, space planning optimization, and planogram execution, Circle K could generate and share forecast-based planograms and list and delist products effectively and accurately using real-time supply chain data. The company significantly exceeded its goals in all metrics while improving availability and inventory turnover.
Transforming category management for tomorrow’s retail
Modern category management, powered by AI and automation, represents a significant leap forward from traditional approaches. By embracing these new technologies and methodologies, retailers can accelerate speed to market, improve space efficiency, and better serve omnichannel customers while reducing costs and driving sustainable growth.
The key to future category management success lies in selecting the right technology partner and implementing a solution that can grow and adapt to your business needs.
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