The Evolution of Category Management

Category management has long served as the backbone of strategic procurement, the discipline through which organisations rationalise spend, manage supplier relationships and drive business value. 

For decades, category managers relied heavily on manual research, price analysis and supplier negotiation to keep organisations competitive. Yet, as global supply chains grow more dynamic and complex, the traditional model is straining under pressure.

Kantar's 2025 Category Leadership Study confirms the discipline is "not only alive but thriving, evolving into a more strategic, AI-powered and insight-driven function." This evolution signals a powerful shift: category managers are moving from tactical execution towards strategic orchestration and customer-centric leadership.

Kantar 2025: AI as game-changer, not replacement

Kantar, defines category leadership as "the ability of both retailers and manufacturers to influence and shape category growth through customer centricity, executional excellence and organisational flexibility."

Their seventh annual study reveals both sectors are prioritising AI investments, with 79% committing resources and 82% of manufacturers ready to invest more in AI supply chain management.

James May, Executive Vice President at Kantar, states: "In today's rapidly evolving retail landscape, retailers and manufacturers are not just keeping pace but leading the charge. By leveraging advanced data analytics and AI, they are transforming category management into a strategic powerhouse."

Critically, AI is viewed as a tool to enhance, not replace, human expertise.

Shifting power dynamics and category captaincy

The Kantar study highlights evolving power dynamics: while retailers maintain influence (78% vs 64% of manufacturers view tariffs as 2025's biggest threat facing category management), manufacturers are gaining ground amid economic pressures like inflation. Category captaincy is also being reimagined, only one-third of retailers now offer formal roles, with both sides preferring flexible partnerships. Notably, one-quarter of manufacturers and retailers report growing category management teams.

Both sectors agree on strengths in performance monitoring, shopper insights and pricing optimisation, but gaps persist in trade promotion and shelf layout, areas ripe for deeper collaboration. "Strategic collaboration is essential," the study concludes.

An ‘omnichannel future, according to Kantar

Jeff Maloy, Senior Vice President of Retail Advisory at Kantar, says: "The companies that will lead in the next era are those that treat category leadership as a strategic engine, not a support function."

Lauren Winkler, Vice President of Category Insights, adds: "Category management is no longer just about planograms and shelf space, it's about strategic foresight, data fluency and omnichannel agility."

Retailers first flagged category definition challenges in omnichannel environments back in 2021, and this pain point endures. Kantar's roadmap emphasises treating category leadership as a growth engine through advanced analytics and flexible partnerships.

AI category agents: McKinsey perspective

McKinsey partners Luca D'Avino and Deepanshu Chawla describe AI category agents as intelligent systems combining generative AI, data aggregation and analytics. These "virtual partners" deliver 15-30% efficiency gains and up to 20% cost savings by elevating data quality, accelerating decisions and supporting execution from RFPs to performance tracking.

"The real question is not if procurement organisations will adapt, but how quickly they will embrace this change," say the duo in an article. Client examples include 4-6% cost savings for a metal manufacturer.

McKinsey partners Luca D’Avino and Deepanshu Chawla illustrate how AI category agents transform daily workflows: "Such capabilities promise to transform the typical day in the life of a category manager. These managers might, for example, start their morning with a review of AI-produced insights on market, spend and supplier news and finish it off by reviewing performance and setting actions for the following day."

This 24/7 virtual assistant replaces hours of manual spreadsheet analysis, market scanning and report compilation with instant, actionable intelligence – freeing category managers for supplier collaboration, innovation workshops and strategic sourcing initiatives that drive real business value.

Category management excellence is vital

The Coop Group demonstrates category management excellence in practice. Extending Blue Yonder's Category Management solution to its DIY chain Jumbo (125 stores), Coop now generates approximately 5,700 automated planograms annually for meat products and fresh bread, tailoring layouts to individual store needs while adhering to category standards.

Alexander Senft, Head of IT Merchandise Management Masterdata at Coop, highlights the strategic impact: "Coop acts with a deep sense of responsibility towards its people, regions and ecosystems, and we are committed to delivering both quality and a diverse range of brands and products we can be proud of. Category management excellence is vital for providing value to our customers, which is why we were excited to extend our collaboration with Blue Yonder and Strategix.

"This capability allows us to plan exactly where new items will be placed and determine the appropriate stock levels for each store."

Fredrik Prada, Vice President of Retail – EMEA at Blue Yonder, emphasises the partnership's value: "We take pride in our long-term collaboration with the Coop Group and are excited they chose to extend their category management footprint for their DIY division with us. Our Category Management solution provides Coop with the necessary speed and agility to keep up with customer demand and constant industry changes so they can stay ahead of their competition and meet business goals."

A redefined procurement paradigm

Barriers remain: data integration, cultural shifts towards AI trust, upskilling for hybrid human-AI teams and governance. Kantar's findings reinforce that success hinges on adoption speed and collaboration depth. Procurement leaders should:

1. Pilot AI in high-impact categories — aligning with Kantar's 79% investment trend.
2. Build data foundations — essential for omnichannel category definition.
3. Foster flexible partnerships — moving beyond traditional captaincy models.
4. Upskill for strategic roles — as one-quarter of teams expand.

Kantar's comprehensive 2025 study, McKinsey's AI agent framework and Coop's implementation prove category management is evolving from tactical support to strategic growth engine. AI investments (79% prioritisation), power balance shift and omnichannel challenges demand procurement professionals embrace data fluency, collaboration and automation.

The message is clear: organisations treating category leadership as "strategic foresight" rather than shelf-space management will lead tomorrow's competitive landscape.