Thursday, May 21, 2015

Category Management: Should Retailers have a lock on their Data?

Big data is emerging as one of the key trend in retail. With millions of customers and transactions, the retail business can be empowered by data analytics capabilities. Category management aim to leverage those data in order to make the right decision in the SKUs selection.

But the question of data is also a difficult one. In which extend can a retailer share with some suppliers some data about stores sales and customers. Obviously, the question is not that easy to answer, even though there are great opportunities to better understand customers and hence, improve categories.

One example from the pilot program was in the baby wipes category. BJ’s Wholesale Club felt the number of SKUs being carried was possibly too high. The “Assortment Module” in Self Serve was used to identify SKUs with both low sales and low member loyalty.
Buckingham: “You’ve got a very big and powerful CPG vendor who at first might have thought it’s not in their best interests for one of the products to be delisted… but actually through these detailed analytics we’re able to show that a very high proportion of the sales would most likely transfer to other items within the existing range. Therefore, the risk on category sales was very low and the risk on the CPG manufacturer sales was very low. So we did make that change and we found there was actually a positive effect.”

Two things to keep from this article
    • Datasharing empowers the discussion between retailers and suppliers in order to better perceive the category evolution. Nevertheless, it also requires quite an objectivity of both sides in order to make the right decisions.
    • Sometimes, as I have previously discussed in this blog, decreasing the number of SKUs represent an opportunity of sales growth.