Eight (8) retail trends every category management professional needs to know
Is your current category management strategy still relevant? Are you wondering if your retail shelf space investment is making significant returns, given that we’re facing an unprecedented pandemic today?
In an already crowded retail industry, we know that you don’t want to get left behind the innovations, initiatives and progressive changes your competitors and industry leaders are doing.
To help your business navigate these shifts happening in your field, we have compiled different trends affecting the Retail and Consumer Packaged Goods (CPG) environment.
What are the relevant changes happening in retail?
Part of your job as a Category Manager is being aware of the different trends that are occurring in the industry. Understanding these kinds of insights will help you organize the right product assortment and optimize shelf space to earn higher profits for your overall business.
There are the eight (8) retail trends every category management professionals need to know:
1. Increasing retail competition
Recently, there have been changes in the retail landscape. Discount stores like Aldi are invading the US market. In fact, this grocer aims to become the third-largest US retailer with 2,500 stores by the end of 2022.
Aside from that, online retail has become more prevalent than ever. It has been happening for quite some time, but the convenience it provides, and the impacts of COVID-19 have fast-tracked its growth.
This trend will surely modify the CPG brand - so you must also be ready to adjust in your category strategy.
2. Emerging new brands and categories
Almost 30,000 new consumer products are being launched every year. With these new entrants in the market, some products will eventually have to go.
Nevertheless, it’s also important to take note that these kinds of product innovations aren’t always a guaranteed success – 80% of them often fail to penetrate the market.
The trick to solving this problem is having the right technology that can predict what goods would positively influence shelf space.
3. Rationalizing Stock Keeping Units (SKUs)
Due to the effects of the pandemic, retailers and manufacturers have been eliminating their ‘little to no scale’ brands.
For instance, Coca Cola has announced that it will kill 400 of its “zombie brands” which make up only 2% of its total revenue. Mondelez is planning to do the same by removing a quarter of its snack products, mostly comprised of individual product varieties.
After removing these items, what will now happen to the spaces they will vacate? This is something you must consider.
4. Changing shopper behavior
The remote school and work set up we are currently experiencing is affecting consumers’ shopping behavior. Because most people are at home, they now tend to shop online instead of buying directly from the stores.
Seasonal category buying is also changing. Back-to-school shopping is expected to decrease this year, while the demand for products related to cold and flu season like medicines and vitamins are predicted to rise all year round.
However, when structuring your plans, it is also important to take note that the situation may not totally change back to what it was before.
5. Changing consumer behavior
Virtual is the new normal.
Research by the consulting firm McKinsey showed that an estimated $250 billion in healthcare spending could shift to virtual care models due to the COVID-19 pandemic.
In addition to this, consumers have become more concerned with their health. From being reactive patients, their focus now is becoming more proactive consumers to protect themselves against illnesses.
6. Evolving store formats
As a response to the ever-changing shopper behavior and growing competition, retail stores have been evolving, too.
For one, you can probably observe a lot of retailers opening more stores but decreasing their sizes. This is because online ordering, store fulfilment, in-store pickup and delivery have become far more popular approaches.
With all these changes in store formats, expect significant variations around how shelf space and product assortment will be optimized.
7. Accelerating COVID-19 trends
Due to the effects of the pandemic, some previously flat or declining categories are now growing.
Home-confined buying has led customers to purchase more essential supplies like frozen foods and beverages. Many people have also been trying new brands and product variations because their usual goods tend to run out of stock.
8. Emerging Artificial Intelligence (AI) advancements
Artificial Intelligence (AI) has been disrupting several industries like healthcare, customer service and banking. The retail and CPG industry, though, is predicted to be its next frontier.
Through breakthroughs in technology and machine learning, retailers and suppliers are expected to get more accurate information on how to optimize product assortment and shelf space.
To enhance retailers and suppliers’ internal processes and organizational structure, the possibility of running various category management scenarios in a short amount of time is also anticipated.
Let’s have a quick recap.
The trends that have been predicted well into the future are actually happening right now.
To succeed in the retail and CPG industry, you should think of them not as dire circumstances but rather as opportunities for growth that can drive your business forward.
Now is the time to re-organize and think differently. Just remember to keep these important points in mind when developing your new and improved category management strategy:
Major trends in retail that you need to know now.
- New competition - Retail competition is increasing with a shift to discounters and online shopping.
- New format - Store formats are changing in response to changing shopper and consumer behavior.
- New trends - Category winners and losers are emerging because COVID-19 is accelerating these trends.
- New normal - The future will be the new normal – likely a blend of what is now and what used to be.
- New technologies - AI will disrupt the CPG and Retail industries by changing and improving processes.
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.