Podcast | How to Make Things Better: Solving Category Management’s Biggest Problems

[00:00] [Becca]:
Hello and welcome to our second episode of Category Management with dunnhumby: How to make things better, solving category management’s biggest problems. I’m Becca and I’m the Insight Client Success Director here at dunnhumby. In today’s episode, we’ll be discussing what life is like for category managers. We will get a view on their day-to-day frustrations and where they wish they were able to do things better. We will be hearing directly from category management experts working with some of the UK’s biggest brands and we will also have the pleasure of being joined by Tesco. David and Tommy from Tesco Commercial will share their views on the challenges facing category managers and how tools like Planogram Publisher can really start to solve them. Let’s kick off this episode with what it’s like to work in category management today. Helena and Andrew, thank you for being with us today. Please could you introduce yourselves to our listeners?

[01:06] [Helena]:
Hi, I’m Helena. I work at Danone. I’ve been in category management for many years and great to be here.

[01:12] [Andrew]:
I’m really excited to be here today. So my name’s Andrew. I’m currently a category manager at Reckitt and likewise I’ve had far too many years’ experience in category both in the UK and in New Zealand where I’m originally from.

[01:27] [Becca]:
Thank you both. To start with, could you tell us what best in class category management looks like to you?

[01:33] [Helena]:
Best in class category management really considers what is best for the shopper, what the manufacturers need, what the retailers need and ultimately how we’re going to grow sales for all three. Best in class category management would consider operational issues as well as what the customer needs so that things are right for the in-store environment, um the people filling the shelves as well as then the shoppers who are purchasing. So thinking wider than just products on shelf but actually how is it going to get there and are we meeting every need for every shopper?

[02:08] [Becca]:
And Andrew, what’s your approach to achieving best in class category management?

[02:12] [Andrew]:
For myself, I personally have a bit of an internal checklist I use and ask myself some of the following questions. So if I’m trying to see if something is right for the shopper, I’ll ask myself questions such as, is it going to make their shopping experience easier? Is it going to make it more enjoyable? And ultimately, are we helping them to find something that they may take home, they’re going to be really happy to use and be happy to come back to this retailer or come back to this product. From a retailer perspective, is it going to drive the category? Is this in line with their strategy? Is it going to support them to outperform their competitors? And again, is it going to support to drive loyalty? So are the shoppers within this category going to be happy to come back to this retailer based on the experience they had in store today? And if you can kind of tick all those boxes, I think it’s kind of a win for all.

[03:06] [Becca]:
Brilliant. Sounds like a really great approach, Andrew. Expanding on your approaches to best in class category management, what role does data play for you?

[03:15] [Helena]:
Data is fundamental to getting the best category management outputs. Um we’re lucky to have a huge amount of data through the Tesco system and then we can add that to our own shopper research to really strengthen the insights and build the best category plans for Tesco and for ourselves.

[03:27] [Andrew]:
Yeah, very similar to Helena, like as category managers, data is kind of our fundamental. We use it to make every recommendation. We use it day-to-day to understand what’s going on in the category. So I think it’s hugely important. One of the challenges is sometimes we have too much data at our hands. So it’s finding the data that’s going to really support your story or support to grow the category.

[03:52] [Helena]:
Just to add to that, I think we often need to go beyond the data to actually think about what’s the forward long-term view. Um obviously the data we have is always looking at the past. So how are we using that to predict the future? And then really engaging with our shoppers to understand what they want and what they see as the future for themselves as well. So forward looking from the data is best in class.

[04:17] [Andrew]:
Yeah, I definitely think Helena raised a really good point there. So like while we use data day-to-day and day out, um the data alone, you can’t rely on that 100%. You’ve kind of got to — there’s a lot of nuance in it. Often, there’s a lot of background information. Um so it’s really like I guess that’s where we come in to add to that data, add another layer on top of it, or bring it together with different sources of data whether that’s research we’ve done, other insights we have access to. It’s really about bringing it all together to make sense of what is going on and what is going to help support category growth.

[04:57] [Becca]:
Totally agree. Really agree with the value that can be created through bringing together those multiple data sources to really support growth. We have identified that data is fundamental to the success of your roles. But how important is really understanding the fixture and what the shopper is actually seeing when they’re in the store?

[05:13] [Helena]:
The fixture in store is fundamental to driving performance, sales performance. So really understanding what it looks like in store in all of the different store formats and regions is really important. Not just for what the shopper sees, but again looking at how operationally efficient it is for the retailer. Is it working for the online pickers as well as just the shoppers who are purchasing from the fixture?

[05:36] [Andrew]:
Yeah, similarly. So I think for shoppers, the fixture is kind of more often than not, the place where they make a decision whether they’re going to purchase, what they’re going to purchase or if they’re going to walk away. So as category managers, we spend a lot of time optimising the fixture because we want to make it as enjoyable and easy for the shoppers, but we also want to support the retailers to ensure that the fixtures are set up to optimise their sales and category growth.

[06:03] [Becca]:
Really great points on both balancing that shopper but also the operations of the retailer. Thinking about best in class category management and specifically about that fixture, how has using Planogram Publisher really changed the way that you’re able to inform those fixtures in Tesco?

[06:18] [Helena]:
Well to start with, before we had access to Planogram Publisher, we would look at PDFs of most common plan or look at store photos from our field teams to get an understanding of what the fixtures were looking like across the estate. But now we have access to all of the clusters and we can see the variety and the differences in the planograms for regions and store sizes and fixture different fixtures, which gives us a lot more understanding of the drivers behind performance and we can really drill down straight into analysis rather than spending time trying to figure out what is the fixture looking like, but actually go straight to analysing and supporting Tesco on optimising it for the future.

[06:53] [Andrew]:
Yeah, really similarly. Some of the past, we didn’t have access to clear information around the planograms. So a lot of our decisions and recommendations were made around a store photo of what we thought was the most common. So we would spend a lot of time, but we might only be optimising or improving 20% of the stores. So with Planogram Publisher, we can now see all the different cut downs across the estate and we’re able to look at these in isolation, compare them with each other and make recommendations to improve all stores, not just a small cluster.

[07:24] [Becca]:
So tools like Planogram Publisher are really helping both improve that accuracy but also drive a lot more efficiencies. Could you talk us through how the data set has helped you really save time and focus on the big things that matter?

[07:36] [Andrew]:
In the past before Planogram Publisher, the process to understand the share of space and how the flow or the planogram was in stores was very manual. We had to take photos, we then had to somehow replicate this on whatever platform we chose, whether that’s Excel or creating a planogram on another tool. That took quite a lot of time. Whereas now, once the planogram goes live, within two weeks, we can go online, download the planogram and we’ve immediately got it there in front of us. There’s still a bit of manual work to be able to link the data with it, but I think it’s got us to a really good starting point and taken away a lot of the manual leg work whereas we can now actually get to work on starting to understand what’s happened and make recommendations, which is where more of our time should be spent.

[08:17] [Helena]:
The Planogram Publisher tool also saves time for Tesco because we’re not requesting information in terms of chasing for please can you share planogram examples or please can you share lists of stores that have each planogram size. All of that information is now in Planogram Publisher that we can just access quickly for ourselves. So we go straight from getting the information to actually looking at recommendations rather than spending time understanding the here and now. We can be much more future focused.

[08:46] [Becca]:
Thank you both. If we think about the retailer, which for us is Tesco, how does this sort of information really enable you to work more closely?

[08:56] [Andrew]:
I think having access to Planogram Publisher has really helped because now we have, we’re aligned with the information that’s available and it’s clear we’re talking one truth as opposed to in the past if we were reliant on a store photo, we might take something to the retailer or to Tesco that was completely misaligned to what they viewed as the truth. So I think that’s really crucial now that we’re speaking one truth and again it helps to show that we’re credible and actually supporting them to grow the category.

[09:25] [Becca]:
Absolutely. And later in this episode, we’ll be touching base with Tesco. What frustrations or asks would you be keen to share with your Tesco contacts?

[09:35] [Helena]:
Getting clarity from the Tesco team on what they want to achieve would be really helpful so we can almost scenario plan different recommend category recommendations that really drive shopper recruitment or whether they drive shopper retention or whether they’re looking at more about the operational challenges. So if we can really get that insight from Tesco of what their key objectives are, that will help us sharpen the recommendations beyond just what we see is right for the consumer, but actually what’s really right for Tesco as well in terms of what they need to drive.

[10:05] [Becca]:
And Andrew, have you got any asks for the Tesco team?

[10:09] [Andrew]:
Category management, we use so much data, we use so many tools and in some ways it’s so advanced the amount of data we’ve got available to us, but then the way we use it is often so manual. So I think there is a massive opportunity to be smarter about category management and a tool to help us be able to act smarter, pull data together in a smarter way and not in such a manual way.

[10:30] [Helena]:
And to build on that, I think we can get too much data and get overloaded with too much information and really forget to look at what ultimately we’re trying to achieve. So it’s really making sure we always come back to what are Tesco trying to achieve and what do we need to drive category growth with shoppers? Where are shoppers, how is their behaviour changing? And really focus on that and getting the right outcomes for both shoppers, for Tesco’s and for the manufacturers rather than drowning in huge amounts of data around scenario planning. So in terms of optimizing category management is making sure we step back from the data as well as use the data.

[10:58] [Becca]:
This is brilliant. Thank you both for your honesty and openness in talking us through what category management means for you and where you feel developments have really been made to better enable you to work more closely with the retailers. We will now pivot to hear directly from the Tesco team. David and Tommy, thank you for being with us today. Please could you introduce yourselves to our listeners?

[11:24] [Tommy]:
So hi everyone. I’m Tommy Maier. I’m the category buying manager for beauty and personal care. I’ve been with Tesco for 15 years. I started my career at Tesco in working in stores in the operation side and then 12 years ago, the man to my left, David Beardmore convinced me to come and work in commercial and I’ve been there ever since. So a mix of working in the UK, working out in our Asia businesses. Came back to the UK in 2021 and I’ve been broadly managing big branded categories. When I say big branded, I mean categories where we’re over 90 to 95% branded trying to create value for us and our branded partners. That’s me. David.

[12:08] [David]:
Yep, I’m David Beardmore. I’m the Impulse Category Director here at Tesco. I’ve also been with Tesco 15 years. A number of roles predominantly in package food. I spent four years over in Asia running our Tesco Thailand package food business over there as well. Being the customer director. Prior to Tesco, I was a supplier for about 12 years, Unilever, SC Johnson and Premier Foods. All pretty much looking after either commercial category or M&A teams.

[12:37] [Becca]:
Excellent. Thank you both. Let’s kick this off then with our first question. So what is best in class category management and what does that look like to you?

[12:48] [David]:
I’ve come through lots of iterations of what great category management is. When I started my career, you know, TPG was really at the forefront of category management and the eight step process. I think we’ve come a long way since then and actually probably the tide has turned to much more of a retailer-centric version of category management. But I think good category management always is about making sure that we have a customer-centric focus on everything that we do. That would always be my number one. I think over time what we’ve seen is that we’re getting much more better data-driven decisions coming through and the use of technology in terms of some of the analytics that come through. The big part of it always is how you execute. Within that, between that kind of customer-centric and the execution piece, how can you answer the big category questions? For me, that’s a really important part of what I try and encourage my team to do here at Tesco, is to go look beyond the plan and actually ‘how do you look round corners?’ Because if you can see the stuff that other people can’t see that is coming, then actually it really benefits us as a category and we’ve done that pretty successfully over the last few years.

[13:52] [Tommy]:
To add onto what David said, the biggest change I’ve seen in maybe the last four years is to start learning the nuances between categories. So with us in the beauty and personal care team, you wouldn’t want category-led decisions that are the same way we trade baked beans. And I think understanding how we look at planograms, how our replenishment systems work has led to us being able to trade categories by their individual needs and it’s made a big difference. I mean, the amount we get away now on a beauty and personal care shelf, integrating education, integrating shelf trays, integrating regime building isn’t something we’d have done eight years ago and I think the more and more we develop that nuance of selling really complicated products very simply for customers in a Tesco way, the better.

[14:29] [Becca]:
Brilliant. And I think one thing we can definitely agree with, speaking to Helena and Andrew from CPGs, is how important data really is to underpinning decisions, but also how vast and how much data they actually have. If we really think about it through the lens of Tesco, what do you really want your suppliers to be bringing back to you in terms of those insights specifically around space and range?

[14:52] [Tommy]:
We don’t know what we don’t know. I think the data, to what David said earlier, is now best in class at looking backwards. And I think by having one version of the truth, we can talk that same language. What I look for from the supplier partners is what does the next one to two to three years look like and how do you overlay that insight trend based onto the science that we already know is projecting the next six months. So, we need to know what we don’t know from the brand experts.

[15:22] [David]:
I think also making sure that, how do you do a really good review process? And that review process for me is a really important part of that supply collaboration that we need to have. So, and then I think, you know, the bit that we, because we talk a lot of the top end of that process. The bit which is kind of the execution, the kind of the compliance, the how quickly have we implemented, how quickly can we review, how quickly can we make sure that we make tweaks and adjustments to make sure that it lands within the plan and the framework that we’ve got. I think is really important as well and that again that’s some areas where suppliers can really help us on the execution of category reviews.

[15:59] [Becca]:
One of the things that came through from talking to CPGs is really about the shift in focusing on fixture, not just on feature. And I think David you referenced it a bit there around that execution piece. What role do you really see suppliers playing, specifically on those fixture considerations and those recommendations?

[16:20] [David]:
Well, first of all, I’ll say it’s not just fixture. We have many channels which makes us the retailer that we are. If you only ever look at fixtures, I think you’re in all sorts of trouble because you’ll only ever think about large stores or convenience stores. You know, if you think about Whoosh, you think about, you know, Whoosh in a convenience store, you think about Whoosh in a large store. They’re very different propositions. They’re both rapid delivery but they’re very different propositions. If you look at our grocery home shopping, that’s a different proposition. You look at click and collect, it’s a different proposition again. So again, I know we talk fixtures and whether it’s virtual fixtures or real fixtures, we just got to be careful the proxy isn’t large store fixtures because I think that doesn’t give us the differentiation that we need. There’s lots of different areas that yes, there is always focus on fixture, does it make sense? It always comes back to is it sensible for customers, you know? Customers don’t have degrees in fixture maths, you know, are we making it simple for them to shop? Have we got a clear hierarchy how you move shoppers through those decision and those need states? Are we creating excitement in our stores?

[17:23] [Tommy]:
I’ll give the counter view, which is I agree with everything David said about the fixture – it could be a mobile phone, it could be in store, it could be however you interact with us, could be a computer. When you get to the actual fixture itself, what we’ve done quite successfully over the last two years, and you’ve seen it — we all joke about the branded mods becoming, you know, whether it’s too much or too little branded mods, or are we losing identity. What it has proven is where you add the right level of excitement, the right level of education, you can get significant uplifts versus control. And how do you take that from a branded mod element, which won’t be for every single supplier. It just might not be the right scale, might not be the right proposition in certain areas where there’s no real need for education, whether it’s a branded shelf, whether it’s a shelf tray, which works in many of our categories. What are the product SKUs that really need that little bit of extra education and what’s that driving? Is it regime build, which in my world makes sense — cleanse, tone, moisturize, of course you’d want to regime build across, being healthcare might be education. It might be to do with charity partnerships. That’s where that differentiation at fixture for the right product can make a real point difference. On the other side of that, if you just need volume at the fixture, make sure that’s the priority because education isn’t needed everywhere.

[19:08] [David]:
No, and I agree. As long as you know why you’re doing things, I think it’s really important. You know, we also have branded mods. But again, they’re big sign posts to certain categories, particularly in a HFSS world where actually more of the volume went down the fixture. Actually having big sign posts there to say this is confectionery and this is biscuits and this is crisps, snacks, and nuts were really important part. I think we’ve evolved since then as well and actually, if I look at our next stage of that, then we’ve looked at mission-based selling. Actually we’ve done a number of executions that we’ve got — a great execution that is a Lindt and Ferrero that sits in the cards aisle. Actually that was a really important part to get incremental purchase when customers are buying cards and gifting. Actually, this is our gifting confectionery range and actually it’s been hugely incremental in terms of the category. So that’s played a really important role. So you move beyond just sign posting. Now you’re in a place where you look at things like need states and core missions.

[20:07] [Becca]:
It definitely feels like there’s more growth in those kind of branded propositions and I guess excitement in store. If we really think about those that are partnered with you to go on that journey, what advice would you give to those big brands that really want to drive more excitement in store?

[20:23] [David]:
Be patient. Look, I don’t mean that because, look, it’s tough. I mean it’s tough to get consistency of equipment. I think when you trail blaze on a lot of the stuff, it does take longer. It takes longer in terms of how to deliver an execution that is safe and legal and it’s all of the touch points and gate stages that we need to hit. Some of those suppliers for us that have — I’ll use one in particular. I think Mars do it really well with us. I think Mars are particularly good at understanding equipment type and therefore how do you really accelerate that and they’re good on the implementation. I mean they really do kind of aid stores in getting it out there. How do you then maintain it? How do you make sure that you’ve got a long-term agreement that you’re not putting something out there that then doesn’t get filled. So I think there are some retailers that do it well. I think they are patient but they have a bit of patience with our process but they nudge us in a good way that kind of agitates us to get it landed in the business.

[21:42] [Becca]:
Brilliant. Tommy, any builds on that?

[21:45] [Tommy]:
From my side, it would be just be honest with ourselves about why we’re doing any of these propositions. And it doesn’t need to be as purest always that it’s for a specific customer problem or customer mission as much as that’s the best case examples. Sometimes it might be you want to point people towards your brand rather than the other brand. And that’s fine as long as there’s a reason behind it, the space makes sense and we deliver it in a brilliant way. That makes sense for long-term growth of the category, long-term sustainable, profitable growth for us and our partners and the customer and it’s a great offer for the customer. But let’s be honest that we’re doing it for that reason. And then where we’re doing it for a mission-based reason, let’s make sure that mission is brilliant, exciting, solves a need. And we can do either, but where we get ourselves into trouble is where we try and dress one up as the other and that’s where we start over-spacing stuff. It doesn’t sustainably make sense sales-wise and in a year’s time, you’ve invested a load of money into activation that doesn’t return for either of us and it becomes a problem. So just always be honest with why we’re doing things. I would also say Tesco brand to us is as important as your brand is to you as a supplier. And therefore you have to be really aware that it has to fit in with our brand image and how we want to develop our stores and our brand. It’s not one or the other. It’s how do you do it together in a way that customers recognise that they are in a Tesco store and this proposition is different to that of any other retailer out there.

[23:45] [Becca]:
Totally agree. I’m going to change course a little bit now and talk more kind of about the future. So there’s a lot of kind of advancements in data, science and obviously we’re talking around kind of AI and how the future looks from a ranging perspective. Really thinking about that future then how do you see category management both evolving but also the role that suppliers can and will play? Presumably it might look quite different in the future.

[24:05] [Tommy]:
Well, I think we end up going full circle. It feels like we went — I mean I’ve not been in the game as for long enough where I’m probably citing this back to, but it feels like the buying roles when I started were all about building relationships, deep relationships with up and down supplier organisations. And as we’ve stepped towards using more and more data that wasn’t automated, it became more about managing systems between the two companies and getting them to integrate. When that all becomes integrated, we end up back at the start. So we end up funnily enough going back to probably how people were buying and selling in the 90s, which was deeper relationships up and down our integrated companies, which is great. I’m personally quite excited about that.

[25:11] [David]:
I think there’s some really good developments that are coming that will improve the way in which we build our assortments. So for example, how do you move much more to store-specific ranging? That can be done through AI and that can be done through machine learning but actually it does still require us to understand what types of segmentation do we want, what kind of audiences do we need to create in order to facilitate that work. So, you know, it doesn’t happen because you put a load of data into an AI system. Um I think things like personalisation of pricing and promotions, I think is going to be more important. So therefore how important is pricing and promotions as part of your category strategy. So again that will be quite an important transition and I think this whole thing about audience, how do you talk to customers in a more relevant way than the kind of mass communication. Shopping is still quite an emotional behaviour. And therefore as good as AI is, it does require us to be close to customers and understand customer behaviour. So I think there’s a real balance to be had, which is I don’t think it’s the answer. I think it’s part of the answer. But I do think the skill in category management will be really understanding customers and customer behaviour and the more emotional connections that customers have to products and brands in a way that then you can curate the right ranges, you can create the right demographics, you can create the right profiles to actually enable us to sell the right mix in the right stores. It’s going to be quite a big transition for some brands because when I was in branded FMCG, it was all about 100% distribution. You know, it’s like our brand needed to be everywhere. And the simple truth is, it doesn’t need to be everywhere. It needs to be in the right shops, right? Because again, we’ve got to move away from some of those old behaviours to free up our ability to sell the right mix of products to the right customers because that’s what they’re looking for.

[27:12] [Becca]:
Yeah, it definitely feels like with a lot of that kind of leg work done actually it really frees up time to really think about the customer but look for those white space, big bets, opportunities that actually because we’re so into the tactical day-to-day, we don’t have to do that anymore. So I agree Tommy on your building relationships. I think it’s really, really key for the future. So excellent. Well, thank you both Tommy and David for sharing your thoughts on category management and how suppliers can kind of really engage both today but also how they need to evolve for the future.