Future of Category Management: New capabilities needed to remain competitive, relevant and indispensable

August 27, 2020 | By HIVERY

We often hear that the future of Consumer Packaged Goods (CPG) and retail sectors begins with Artificial Intelligence (AI), and that technology is disrupting the industry today.  But how exactly can AI shift category management? How can it improve different stores with different requirements? To help you learn about how AI is optimizing your shelf space utilization, here is everything you need to know about it.

What makes AI powerful?

AI, or Artificial Intelligence, is augmenting “domain expertise” in every industry. 

This isn’t a surprise anymore considering that we’re getting glimpses of AI around us – from digital payment advisers in banking and chatbots in customer service, to highly accurate forecasting in the logistics of different companies.

However, what makes AI relevant to various fields and industries is not just the increased efficiencies it provides, but more of its capacity to open up next-level solutions to different challenges. 

In fact, some of AI’s advantages include:

  • Growing data sets – 90% of the data we have in this world has been created in the last two years. There’s too much data, variables and noise far beyond what humans can process. Through AI, we can utilize these growing data sets to get more helpful insights efficiently.
  • Unlimited capacity – Humans have 86 billion neurons, while machines have unlimited capacity. This makes AI more adept at detecting complex patterns.
  • Speed and agility – AI is capable of generating actionable insights in minutes, rather than months. Because of this, it’s more reliable when testing various hypotheses.
  • New, creative thought – While humans like us have biases that hinder us from identifying creative thought, AI is good at learning from previous actions and developing its own insight or creative strategies.

Check out this video from an ex-Autodesk executive on how AI has improved their ability to think and imagine. This example in industrial design however this is happening in category management today. Planograms creation software or category management software is being reset.

How about AI in category management?

Breakthroughs in technology have paved the way for AI in retail.

Advanced machine learning methods like “Deep Learning” algorithms allow category managers to uncover large amounts of data and simulate various assortment scenarios that can help determine the right shelf space utilization, enhance customers’ experience and maximize profitability. 

For instance, if we instruct AI to maximize revenue, it will then analyze all granular data points out there – from macro-space level to individual store levels. Once category managers proceed to introduce constraints and rules such as limitations in prices, seasonal shopping behavior and location factors, AI will also consider these in optimizing revenue.

What’s powerful about AI in category management is that it focuses on enhancing the human element, not eliminating it. The approach works by combining human insight and strategy to AI’s unrivaled and unlimited capacity in order to identify the best space allocation and product assortment for any retail business.

An example of AI in category management is HIVERY Curate.

HIVERY Curate is a category management tool which utilizes AI techniques and operations research to achieve space and assortment optimization for CPG companies and retailers.

It generates compliant planograms for different convenience retail outlets, while taking into account the merchandising rules and constraints at a national, channel or store level. HIVERY Curate runs multiple assortment scenarios in a span of a few minutes to help category managers like you see the impact of each possible decision in real-time.

Despite being a smart AI-driven category management application, HIVERY Curate is intuitive and user-friendly, to ensure users will get the most benefit with minimal training.  

So, what does this imply for category management in general?

It means that there will be an 80% reduction in Planogram drawing time. Category managers can also spend less time on data collection, analysis and planning, which then allows you to pay more attention to things you’d prefer to do, like critical thinking, strategizing and implementing.

With AI tools such as HIVERY Curate, category managers can become more like category consultants - delivering more accurate recommendations that are beneficial in driving business growth.

Case study: how AI is impacting Category Management

Contrary to what most people expect, AI enables more than just labor savings. It provides operational, financial and strategic value for both suppliers and their retailers.

In fact, one of our partners achieved the following benefits through the AI-driven HIVERY Curate:

  • $50M incremental annual sales from its one retailer, and $150M sales over 3 years
  • Points Of Distributions (POD) becoming #1 in the category
  • Awarded as “Sales Driver of the Year”

Back in 2016, some of this customer’s retailers had cut category PODs by 22% and promotional support by 50%. Fortunately, through AI technology, they were still able to curate the perfect assortment in each store and consistently grow their PODs, including their category. This was made possible even though the rest of the market in that category had declined.

It’s also important to take note that our customer had been able to achieve the same positive results in 2017 and 2018 - the times when PODs and promotions fell flat compared to 2016 numbers.

All of these points prove that AI plays (and will continue to play) a big part in growing retail and CPG businesses

How can HIVERY help you?

HIVERY is the pioneer of hyper-local retailing, combining artificial intelligence, optimization and design to help CPGs and retailers generate an increased return on physical retail space investment. 

Our product, HIVERY Curate, is the world’s first truly hyper-local category management solution, offering the simultaneous optimization of assortment and space for each unique store. It’s powerful and continuously learning AI-driven engine optimizes generates rapid category strategies, insights and actions to take around product assortments, space and planograms generation.

More information about HIVERY Curate and other HIVERY solutions

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