brand

Is Category Management Ready for AI?

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AI Category Management

WITH THE ADVENT of Artificial Intelligence, Category Management is poised to get faster, more frequent, more connected and more accurate.

At least those are the promises we keep hearing from advocates of AI-powered decision tools: Your AI agent will access more and better data sources… Its decision tools will slash the duration of planning cycles… It will recommend actions in minutes that presently occupy countless hours for human merchants… It will plan and track personalized promotions with greater granularity… It will free human experts to focus more on strategy and less poring over spreadsheets.

If even some of this turns out to be true, CPGs could be facing some foundational changes in the way they collaborate with retailers to bring their products to market.

For Dr. Brian Harris, widely credited as the developer of the eight-step framework that solidified Category Management in 1997, AI holds the potential to re-animate a widely-used business process that has become a rote (plodding) exercise for many.

“Six months to develop a plan is no longer good enough. You need it within six weeks or even six days,” he said.

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As Retail Media Evolves, Brands Face Tough Challenges

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Shopper media experience

AMONG THE MANY CHALLENGES facing CPGs in their efforts to make sense of retail media networks has been a pervasive storytelling bias.

On daily basis, we encounter widespread published commentary and reports celebrating retail media’s headlong growth, along with advice on tech, measurement, and monetization for retailers. Much of it comes from solution providers, consultancies and ad agencies vying to cash in on the burgeoning media sales opportunity. Wall Street analysts have been a megaphone for this side of the story too.

This article is part of a series. Republished here by permission from CPGmatters.

The bandwagon effect has been so powerful, the lure of “new” digital revenue so enticing, that critical thinking is too often abandoned by analysts and bloggers. Spending forecasts are frequently represented with “hockey stick” charts. With each new quarterly release, it seems as if proponents keep expanding the definition of “commerce media” to help drive the forecasts to new heights.

Meanwhile, for brand marketers (the lion’s share of all that juicy ad spending) pragmatic guidance about RMN strategy and practices seems relatively hard to come by.

Balancing the retail media story

As we have been documenting here in recent months, retail media is just now emerging from its nascent state. The digital network side has been dominated by early adopters who pioneered search and sponsored product advertising – Amazon Ads, Google Ads, Walmart Connect, Albertsons Media Collective, Kroger Precision Marketing, Instacart Carrot Ads, and a few others.

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Retail Media Network Gaps Hold Peril for Brands

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Retail Media Networks Mind the Gaps

JUST WHEN YOU THOUGHT the retail media conversation couldn’t get any hotter, we hear high-profile executives from the largest Retail Media Networks (RMNs) and their technology suppliers on podiums and podcasts talking up a glorious future for brand advertisers.

RMNs were a recurring theme at last September’s Groceryshop event in Las Vegas and this month’s NRF ’24 Big Show in New York promises no fewer than 24 sessions on “Retail Media” topics. No wonder – the take from retail media sales this year is projected to reach $52 billion in the U.S. market alone, according to Coresight Research.

RMNs are retailer-owned digital and in-store channels which convey messages and offers to shoppers from CPGs and other third-party businesses. They have exploded in popularity over the past few years, due to the added revenue they can attract for retailers and the personalized audiences they can deliver to advertisers.

Right now, big RMNs wield heavy clout when it comes to scooping up those alternative revenues. The most prominent – Kroger Precision Media, Walmart Connect, Albertsons Media Collective, Target Roundel, Dollar General, Instacart – can deliver audiences in the tens of millions or more. These certainly boast wide geographic coverage that is important for brands.

It’s easy to be dazzled by the scale of those audiences and the purported advertising efficiencies and targeting capabilities of their networks. Savvy advertisers must also recognize that sheer, provable reach is only the first piece of the puzzle.

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Do CPG Companies Get Online’s Potential?

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shopping-cart-buttonCONSUMER SURVEYS FROM Deloitte and others consistently report strong intentions by households to purchase more of their grocery and packaged goods online. This has been true for many years. I suspect there’s some response bias in play.

A recent Retailwire.com discussion raised this issue in the context of a gap between measured shopper interest in online CPG purchases and the less-than-dynamic efforts by most CPG companies to take full advantage of the opportunity. Are they missing the boat? Or are they just taking a prudent approach in the face of greater complexity?

Here’s my take:

Until the perspective shifts from, “How will we sell our products online?” to “How will we help households better manage their pantries?”, I believe this business will continue to be “just around the corner” for CPG, as it was in 1997.

Certainly, splintering the grocery shop into dozens of weekly decisions, transactions and deliveries is no way to help shoppers streamline their consumption routines. This was then and remains now the fallacy of the “consumer direct” concept. Disintermediation is bunk.

A re-consideration of the grocery basket and how it arrives to the home is another story. That requires a solution orientation on the part of the service provider (the retailer). Never-run-out tools, bulk shipments of high-consumption items, and secure unattended delivery have all been well-received in the past. Rapid delivery mechanisms from Amazon.com and others may add traction in areas with urban density, but the relevance will vary widely by location and purchase occasion.

Unfortunately for brands, these emerging concepts will not simplify the in-store shopper marketing imperative in any way. They do add, however, a whole new set of required practices for brand promotion and interfacing with online channels and shopper marketing outside the store. Set against the hard reality of somewhat inelastic total demand, that’s a very tough formula.

© Copyright 2013 James Tenser