95% of FMCG retailers say inventory optimisation is top priority for 2021

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Symphony RetailAI, the provider of integrated AI-enabled marketing, merchandising and supply chain solutions for FMCG retailers and manufacturers, has announced findings from its Category Planning & Assortment Optimisation Executive Survey, conducted in partnership with Incisiv.

In the survey, US-based retail executives demonstrated a short-term shift in priorities to deal with the pandemic, with 95% citing inventory optimisation as their top priority.

The study reveals a maturity gap between retailers’ intentions and capabilities for category planning and assortment optimisation. The survey also found how retailers plan to enhance their merchandising efforts in light of the pandemic, with a large majority declaring plans to invest in integrated and cloud-based category planning technologies. The research emphasises that achieving growth will require an upgraded capability set for both retailers and CPGs.

95% of respondents claim that improving on-shelf availability and reducing out-of-stocks are their top priorities. At the same time last year, the top priority, as indicated by 67% of retailers, was assortment optimisation to meet consumer demand. This shift indicates that near-term operational challenges will again give way to assortment optimisation, especially as countries emerge from the pandemic and consumer preferences change faster than ever before.

Category management and assortment objectives also include physical transformations to the retail store. The survey found that the majority of retailers (77%) are looking to dedicate more store space to support click-and-collect services. This will impact store layouts and physical shelf space devoted to categories, requiring retailers to effectively rationalise their assortments without disappointing shoppers.

When asked to rate the performance of their category management technologies, the majority of retailers surveyed (79%) said their current solutions were either average or poor. Furthermore, 58% say they have no integration, or only partial integration, of their category management systems, and 78% of those surveyed use either basic analytics in category management processes or no analytics at all.
An analysis of retailers’ forward-looking plans points to a desire to better insulate their capabilities from future disruptions, with 55% of retail executives planning to integrate category planning and supply chain data in the next 12 to 24 months. Grocers also indicated that they would like to perform twice as many category resets annually.  

“Grocers with greater analytics maturity and deeper integration lead the industry in terms of performance – these players see twice the basket size of less mature grocers, and 2.6 times share of wallet,” said Gaurav Pant, Chief Insights Officer, Incisiv. “Our study with Symphony RetailAI shines a light on existing merchandising roadblocks, and points to the benefits of upgrading technology to better execute on 2021 objectives.”

“COVID flipped the script for retailers in 2020, and that can be seen in the shifting merchandising priorities uncovered in this latest study,” said Chris Koziol, CEO, Symphony RetailAI. “COVID has shown us that retailers worldwide must be prepared for any disruption to supply and demand. Laying a scalable foundation based on integrated data and actionable insights is key to meeting these challenges.” 
Accurate, timely data is critical to improving category planning and merchandising decisions, as indicated by 81% of retailer respondents in the study. In order to optimise both assortments and inventory in a streamlined and agile way, retailers must leverage AI-powered insights, analytics, and recommendations to make optimal merchandising decisions. 

Survey Methodology

Symphony RetailAI commissioned Incisiv to conduct an executive survey covering North American retailers across fast moving consumer goods retail segments such as grocery, mass merchant, drug, dollar/discount, convenience and club/hypermarket. Incisiv surveyed senior retail executives during the fourth quarter of 2020. Eighty-seven percent of respondents were director level or above, and 42% are in category management roles. Executives from larger retailers (Annual Revenue >$1B) made up 58% of respondents, with smaller retailers making up the remaining 42%.