How is AI changing the “category leader” position in category representation in a hypermarket?

Traditionally in a food retail business, the retailer always consulted the category leader for their category assortment mix planning.

The category leaders were termed “category captains” in the retail terminology.

The leading brand had a significant influence over how their products were displayed in the aisle of a hypermarket vis-a-vis competing brands within a category.

For example, a leading brand in the refined sunflower oil segment would do the assortment planning for the “refined oils/cooking oil” category for the retailers and ensure that their brand was significantly visible on the shelves.

Now comes the AI-powered Vision tech.

High-tech methods such as video surveillance and customer walk rate analysis — gauging the customer’s patience in finding an item before abandoning their search — are employed.

The AI code is now sitting in the CCTV feed can evaluate the trolley movement of the customers and segment the aisles as HOT, Warm, and cold zones.

Vision tech can also monitor, the time customers spend in a particular aisle, the engagement rate with the brand or product on the shelf, and finally what items were put into the cart.

As we see in the reality tv show “Big Boss”, every customer's movement is tracked and is even useful in reducing the shrinkage or even food wastage.

Data-driven insights, rather than brand recommendations, are driving such decisions now.

Retailers are using their data-driven insights to ensure that hot zones/shelves at eye level deliver high volumes at better margins to the retailer.

Retailers are promoting their Private label brands more aggressively on the aisles which delivers Value for Money proposition to customers and are most of the time priced lower than the power brands in that category.

Retailers have realized that having a huge assortment does not result in profitability, Instead, studies show?that consumers are more likely to make a purchase when they have fewer choices.

This is called the “Paradox of choice”.

Author Barry Schwartz in his book?The Paradox of Choice summed it up beautifully.

Learning to choose is hard. Learning to choose well is harder. And learning to choose well in a world of unlimited possibilities is harder still, perhaps too hard.        

According to?Bloomberg, Nestlé reported that a third of its more than 100,000 product versions contributed to just 1% of sales.

Future of food retail

I foresee a smaller format – a more express kind of format, similar to Aldi, Lidl which carries limited but daily use assortments to grow their retail footprints.

To read my case study on Stew Leonard – smart food retailer, click here

Hypermarkets would face the challenges of driving margins amid thousands of items that they carry in their stores.

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