Autonomous AI is the Engine That Will Drive Category 3.0

Those who work in retail category management have seen their profession become even more complex and challenging over the past two years. As the pandemic upended customer habits, it rendered many traditional category management tools and approaches considerably less effective, but the profession is now starting to catch up with the shift to Category Management (CatMan) 3.0.

CatMan 3.0 is the most recent update to the industry-standard category management process created by the Category Management Association (CMA), which, critically, now includes an updated omnichannel view. The success of CatMan 3.0 in today’s retail space will largely be underpinned by AI automation.

The Lasting Effect of COVID-19 On Category Management

When COVID-19 hit in 2020, all merchants’ focus shifted to instore safety and supply chain challenges. That focus quickly shifted to their omnichannel offering and facing the challenge of creating an experience for customers that was seamless - whether they were shopping online, from a mobile device, or required same day delivery or curbside pickup.

Over the last two years, online sales grew unexpectedly fast - from a 5% to 20% share of shopping. In 2022, after just two short years, the vast majority of customers now use multiple channels in their purchasing journeys, with many even doing online research before going into a physical store.

Although retail had slowly been evolving towards omnichannel before 2020, COVID-19 accelerated what was likely going to take 10 years to a condensed two-year period.

CatMan 3.0: An Omnichannel Approach

Leading B&M companies like Walmart and Target had recognized the shift in consumer behaviour years before, and in answer to the considerable threat posed by Amazon, eBay, and AliExpress, had been busy acquiring the people and technology required to compete in a progressively omnichannel world - but even they had to scramble and accelerate that journey in 2020. Today, omnichannel proficiency is table stakes for future success.

Category management professionals rely on the CMA for guidance and organized advancement of their profession. In the fall of 2021, CMA was finally able to introduce CatMan 3.0, providing a much-needed new framework for blending B&M stores and the various eCommerce services. CatMan 3.0 is a great advancement for category managers offering a playbook for accomplishing a holistic omnichannel approach.

How AI is Driving the Success of CatMan 3.0

One of the biggest remaining challenges that needs to be solved at a fundamental level is the data complexity problem that has become exponentially more acute with omnichannel. This is a task that can’t be solved simply through more hires, with more spreadsheets, or by using antiquated big data tools. The sheer amount of data generated by omnichannel presents a substantial risk of retailers drowning in data and being paralyzed by analysis. It is this that makes AI solutions so critical, specifically autonomous AI technology.

Autonomous AI is a huge leap ahead from the traditional data and analytical approaches that supported CatMan 1.0 and CatMan 2.0. Autonomous AI keeps the strategic oversight in the hands of category management professionals while automating all the tactical and mundane decisions involved in merchandise planning. It does this while continually self-learning at extraordinary speeds. This is similar to the process of automated stock trading, where traders set their strategy and the AI executes the millions of decisions, tactics, and trades.

The best-in-class of this technology in retail is typically making successful decisions more than 98% of the time at lightning speed. As a consequence, category management roles have shifted to being more strategic, creative, and overseeing the AI - only jumping into situations that are new to the technology and setting the strategy.

The CatMan profession has played catchup over the last few years as the retail world became very complex very quickly. CatMan 3.0 goes a long way to help, but autonomous AI will be the engine that drives it.