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Customer-driven data science to boom in next 5 years

More than half of retailers and manufacturers to join in

By Peter Clark, Marketing Factbook


In today's customer-centric retail environment, the success of a company's assortment strategy hinges on its ability to leverage data-driven insights and deliver on the needs of the modern shopper.

The 2019 JDA Voice of the Category Manager Survey (conducted by JDA Software) questioned 131 professionals responsible for category management and merchandising activity in North America, and revealed that retailers and manufacturers have become more effective at mining data-driven consumer insights to deliver effective merchandising assortments.

To continue to ride the wave of customer demand, nearly half of retailers and manufacturers (43%) plan to invest in customer-driven data science in the next five years, a 16% increase since JDA conducted the first Voice of the Category Manager survey in 2017.

"Category management has transformed from being a tactical process to one of strategic importance. Assortment can no longer be viewed as a collection of products, but instead must be centered on how these products will enable consumers to have their evolving needs fulfilled," said Todd McCourtie, senior director, industry strategy, JDA. "Our survey found that in two years, there has been a 50% increase in the number of retailers and manufacturers that can effectively mine and leverage consumer data. While this is a tremendous improvement, category managers recognize that conducting a deeper analysis of shopper personas, patterns and trend behaviors will enable them to make even smarter and more strategic decisions for each store and customer group. As such, customer-driven data science is in high demand."

Technology innovation unlocks consumer insights
Companies are becoming increasingly more capable of analyzing customer data to build and leverage key insights into how their customers behave. More than one quarter of respondents (26%) feel they are very successful when it comes to mining consumer data to generate usable insights, a 50% increase since JDA conducted the survey in 2017. Nearly 72% of respondents on average feel that they are somewhat successful.

This is largely due to retailers and manufacturers becoming smarter about technology and more efficient when it comes to integrating it as part of their business processes. While 30% of respondents stated that it would take three to six months on average for their company to adjust to new store planning technology, 20% claimed that it would just take one to three months, a nearly 40% increase in two years.

In addition, having new technology in the workplace enables employees to do their jobs more effectively, making it a better place to work. More than three quarters of respondents (78%) believe that implementing new technologies helps retain talent.

Key investment priorities targeted at the modern shopper
Despite advances in the adoption and use of technology, changing shopper habits due to the rise of e-commerce has increased the need for deeper visibility into pricing and its influence on path to purchase, with the majority of respondents citing path to purchase (60%) and price sensitivity (49%) as the top two consumer behaviors they'd like to gain additional insight into. Similarly, when asked to identify which processes respondents felt they lacked the most proficiency in, 40% indicated that they are most behind on leveraging artificial intelligence and machine learning for improved pricing and merchandising and nearly 30% stated analyzing various data sources to gain insight into path to purchase.

In addition to optimizing their prices, category managers face increased pressure to continuously deliver highly personalized assortments that address multiple factors including localization, consumer preferences, loyalty, lifestyles, and more. As a result, retailers and manufacturers plan to prioritize increased adoption of digital technologies (60%) and personalization and localization (54%) in the next year. Category managers said that automation as a means to do more with less (58%), and consumer insights as a tool to support increased localization, dynamic pricing and improved merchandising (53%) were the top two priorities driving this need for these new technology solutions.

Consumer choices were once limited to what was available on the store shelf and influenced strongly by brand preference and promotion, but today consumers have virtually unlimited choices. Criteria like "organic" and "local" play more strongly for many products, and shoppers are becoming more intentional about what they want to buy. Recognizing this, 66% of category manager respondents stated that they plan to supply consumers with health and wellness information in 2019.

"Retailers and manufacturers are placing their focus and dollars on personalized localization to enhance the customer experience. By leveraging analytics-driven insights about shopper behaviors at the macro and local market level, they can develop localized, actionable, space-aware assortment plans for more profitable growth," continued McCourtie.

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Source: JDA Software
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