Future-proofing category planning: Why old technology and processes just won't cut it

02.15.2021 | By Mark Speyers

Disruptions are a way of life in retail, whether it’s an environmental disruption like the on-going COVID-19 pandemic or a structural disruption like changing consumer habits in an omnichannel world.  Legacy category planning tools that have been around for 30 years are preventing Retailers and CPGs from having the flexible infrastructure and actionable insights to manage these disruptions.  Luckily, there’s no better time than now to invest in established, innovative technology and analytics Retailers and CPGs need to thrive for the next 30 years and beyond.

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Retailers need to innovate to achieve sales growth – old ways and methods are not enough today

Gina: When I talk to retailers and CPGs I find that, by and large, the reason that they’re unhappy with their solutions’ performance comes down to the fact that they’re using technology that was created 30 years ago and, though it’s gone through periodic upgrades, it’s reaching the point where it can’t go any further. Five years ago, we sat down and said, “Yeah, we’re one of those solutions, so what should we do about it?” We set about building something new, integrated, and future-ready – that’s our focus and the ideals that we communicate. Other technology providers are often talking about what they’re planning to do or how they’re going to innovate, but then they look at the short-term options and realize they’re too far behind to make real, sustainable, long-term changes, leaving their clients and partners behind the innovators.

Julian: That’s a good point. If you then want to take it one step further and say, if you’re trying to cobble together a pseudo-hybrid model or patch something together, that’s really just providing short-term fixes and not set up for the next 30 years, right?

Gina: This takes me back, Julian, to days when I would have conversations about changing their status quo operating models and asking, “What does technology innovation mean for you?” I spoke to a lot of people who weren’t sure, and I think the market just wasn’t quite ready to dive into that conversation, but I think it’s more than ready now. Right?

Julian: I’d agree with that. I recall conversations that I’ve had in the past that would be completely different today. Today, we’re not just talking about swapping one solution for another, but about true innovation. And, considering all the changes in our industry over the last year, I think it’s definitely the right time.

Gina: Yeah, good point. We’ve also seen some statistics that back up the innovation argument. When we asked about the maturity of software, we found out that a large percentage of respondents feel they only have access to basic analytics today, which just isn’t going to help keep pace with major disruptions like COVID-19 or online retailers who can more easily change their assortments to meet individual consumer demands.

Julian: Yeah, this is interesting. So, no analytics or basic analytics. There’s a way to fix that, isn’t there?

Gina: Absolutely, and it should be fixed. With the research we have here, 80% of these retailers have no or only basic analytics. So, from a value assessment standpoint, what could their incremental sales growth be by enabling investigative or predictive analytics? It could be as high as 5% by embracing a higher level of analytics and taking them into a top-performing bracket.

Julian: One of our current retail customers uses analytics pretty rigorously. And they use it principally to understand product substitutability and transferable demand. It’s all about saying, “I can take out this brand or item, and naturally all of these sales will transfer to these other products.” And they use that in building out the optimized assortments, which is certainly a good use of advanced analytic capabilities.

And at the end of the day, if retailers and CPG suppliers are collaborating to build the best consumer-centric assortments, then it’s a win-win for both sides.  Rather than focusing on negotiations, they can focus on driving mutual sales lift that benefits all three parties – the retailer, and CPG, and the consumer.

Avoid siloed systems – an integrated platform reduces data corruption risk and increases productivity

Gina: So, when we’re talking about analytics and innovation, we also want to raise the critical topic of integration. We intentionally built our cloud platform to allow for all modules to be fully integrated, so that data flows cleanly and without manual touchpoints throughout the platform. There is a difference between a traditional legacy database environment and what we’re doing with the cloud platform. In that database environment, there is a greater risk of data corruption because there’s no check-in point to that data going back into an on-premise database.

In legacy systems, users can manually override data in a planogram on the desktop, and I can upload that into the database, and it would store it in the tables and there would be no check-in point. These manual workarounds would defeat the purpose of using analytics altogether. There’s also just this dis-aggregation/re-aggregation that occurs within that on-premise environment. But, with an integrated cloud platform, those processes are done inherently.

Plus, I think people get frustrated with systems that are not integrated because they have to manually touch the data. And when users have to manually touch data to execute a process or move it from one process to the next, what happens?  The process becomes susceptible to human error, it gets corrupted and it’s time-consuming. So, in the end, integration is really about increasing productivity, in that you truly are much more productive and have a better clean data source when you have a platform that is fully integrated.

Coming up in part 2 – intelligent assortment practices and success through change management partnership

In the next part of our conversation, Julian and I will discuss how to approach assortment optimization, clustering and localization with intelligent eyes and how a fully integrated system does the heavy lifting for you. We will also discuss how an effective partnership for change management takes the stress and uncertainty out of new implementations, and how an up-front understanding of business needs creates a clear path to success for all parties.

Learn more insights from the category planning and assortment optimization survey by downloading the infographic and executive summary.

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