Predictive & Generative AI Are Advancing Rapidly, Improving the Value of Category Managers

Feb. 5, 2024
By Mike Troy

Major changes have come to the world of category management thanks to rapid advances in predictive and generative AI and the availability of copilots. Category managers can use powerful new tools and work in new ways to discover shopper insights, create planograms and optimize assortments.

This blog explores:

  • How a generative AI-powered copilot improves category manager performance.
  • Key uses cases to simplify and accelerate space and assortment planning.
  • New methods of discovering insights.

The world of category management and the construction trades don’t appear at first glance to have much in common. However, there are notable parallels when looking at the disruptive effects of predictive and generative AI and how the evolution of tools changed construction jobs and created a DIY boom.

Imagine being on a construction site in the early 1900s watching in amazement as a coworker used an electric drill to make a hole faster and with less effort. It was a breakthrough capability that changed how work got done.  Further advances came in the 1960s with the arrival of cordless drills. Workers didn’t have to hunt for power, run extension cords or risk tripping or falling off a ladder if a cord became entangled in their feet. The advent of the cordless drill and other power tools changed how work got done.

While cordless power tools increased productivity, the early nickel-cadmium batteries had drawbacks related to weight, their ability to hold a charge and lifespan. The big breakthrough in cordless technology came in 2005 with the introduction of lithium-ion batteries. Their lighter weight, fast charging and longer run times, helped lithium-ion batteries transform the world of power tools, construction and DIY home improvement.

Category management’s lithium-ion moment

Whether it was the need to drill a hole or cut a board, the nature of construction work didn’t change as tools evolved from manual- to corded-electric and then various forms of battery power.

It is the same with category management. The need to create category plans, develop optimal assortments and identify shopper insights to drive sales growth hasn’t changed. But the means by which those objectives are achieved is now aided by powerful predictive- and generative AI-powered tools to bring advantages of convenience, speed, accuracy, productivity and superior outcomes.

Think of it as category management having its lithium-ion moment. However, the catalyst for change is predictive and generative AI bringing disruptive innovation to legacy processes. It’s why category management should be at or near the top of every retailer’s list of predictive and generative AI opportunity areas. Here’s why:

  • The dynamics of category management have changed, and planogram creation is more complex. Consumer product trends shift quickly, shopper behavior is highly dynamic, and retailers are expected to offer localized assortments.
  • Data volumes have increased exponentially, creating new challenges related to the speed of shopper insights discovery and the use of those insights for strategic decisions in a marketplace filled with unforgiving shoppers and relentless competitors.
  • Assortment decisions are impacted by new variables such as the growth of e-commerce and the use of stores as fulfillment centers, private label growth, the importance of new product launches and even shrink.
  • Category managers’ time is best spent on higher value strategic activities than mundane tasks related to running reports and data analysis which are better suited to advanced technologies.

Category management has changed dramatically, new pressures abound, resources are constrained and increased complexity can be overwhelming. All of which leads to sub-optimal outcomes and job dissatisfaction – if advanced capabilities aren’t leveraged – among those (category managers!) whose efforts are crucial to business performance.

The new power source for AI value creation

In simple terms, a copilot is a virtual assistant that makes it easier to interact with artificial intelligence so users can be better at their jobs and achieve superior performance. What that means for a category manager is a copilot suddenly gives them superpowers to do things faster and easier with increased confidence and better results. Some ways that happen include:

  • A category manager can ask the copilot a question, get an answer and begin to act in near real time versus days or possibly weeks depending on the organization and processes related to accessing and making sense of business intelligence.
  • A copilot uses predictive and generative AI to query datasets and pull from AI and machine learning analyses, to organize information into a unified view that is shared in easily understood natural language.
  • Previously unknown shopper insights can be discovered by tapping the copilot’s ability to sift through data and perform complex, granular analyses with blinding speed. As a result, a category manager can obtain a deeper understanding of the factors impacting performance and perform scenario modelling to identify opportunities that analytics teams may not have known where to look or had the bandwidth to pursue.
  • Category managers can trust the copilot because there is sharing of underlying assumptions about different variables such as product margin, thus eliminating the so-called “black box effect,” than can lead to skepticism of AI-generated recommendations.

These capabilities form the basis of a new source of competitive advantage that make it possible to deliver on timeless sources of competitive advantage – speed and decision-making accuracy.

What makes category management fun

Running reports, attempting to analyze disparate sources of data and relying on legacy processes and out-of-date technology is no category manager’s idea of a good time. What makes category management fun is developing and executing strategic plans with internal team members and supplier partners that resonate with shoppers and deliver results for the business. That’s an oversimplification and “fun” is relative, but using generative AI and a powerful copilot gives category managers the ability to spend more time engaged in the aspects of their profession that are enjoyable and create value, versus monotonous, soul-crushing, time-consuming tasks.

Category managers aided by a copilot will still find the work challenging, but it will be different, more strategic, more rewarding, and yes, more fun, because effort is expended in ways that impact performance and growth. It’s a great time to be part of category management and be part of the predictive and generative AI revolution.