CATEGORY MANAGEMENT SOFTWARE MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2024-2031)

Category Management Software Market Size and Trends

Global category management software market is estimated to be valued at US$ 1.71 Bn in 2024 and is expected to reach US$ 3.52 Bn by 2031, exhibiting a compound annual growth rate (CAGR) of 10.9% from 2024 to 2031.

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Category management software is increasingly being adopted by retailers and CPG companies to streamline category planning and optimization processes. The software helps organizations to extract valuable insights from large sets of structured and unstructured data related to customer purchase behavior, pricing, assortment, inventory and others. It assists merchandisers and category managers in identifying growth opportunities through analytics-driven recommendations. With retail industry undergoing significant transformation through e-commerce growth, evolving consumer preferences, and competitive pressures, companies are focusing on leveraging big data and advanced analytics to improve category performance. This can boost demand for category management solutions in the near future.

Focus on operational efficiency

Category management software provides retailers and CPG companies a centralized platform to manage their category operations in a more streamlined manner. The software enables them to analyze category performance, get insights into sales patterns, forecast demand more accurately, and make data-driven decisions regarding assortment, pricing, promotions and shelf placements. All of this helps optimize operations and boost efficiency. With category management software, companies can save time and effort involved in manual data collection and analysis. These no longer need multiple systems and spreadsheets to manage categories. The integrated platform automates tasks, brings visibility across departments and ensures category teams are working with the same set of information and KPIs. This paves the way for collaborative decision making. Furthermore, companies witness increased coordination between private brands and national brands team which enhances category development. Category management solutions empower retailers and manufacturers to operate with efficiency, be more agile and scale up their category management programs across multiple regions.

Market Concentration and Competitive Landscape

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Changing retail landscape

Retail industry is witnessing disruption due to evolving customer needs, growing importance of data and digitization. Shoppers expect high quality personalized shopping experiences across both online and offline channels. These want seamless omni-channel fulfillment and want to access information on-the-go through mobile apps. Moreover, these heavily rely on reviews and recommendations while making purchase decisions. This has put retailers under pressure to level their game and focus on customer centricity. Data usage is increasing in retail as companies recognize the need to gain actionable insights from customer transactions, social listening, location intel and more to stay ahead of competition. Category management software helps retailers to adapt to this dynamic landscape. The solutions come equipped with advanced analytics capabilities to tap into consumer behavior patterns based on comprehensive dataset. These also integrate with other systems to power omni-channel strategies. This enables companies to offer shopping experiences attuned to each customer’s preferences whether online or at physical stores. By leveraging technology solutions, retailers build deeper customer understanding and loyalty even as shopper demands evolve at a fast pace.

Key Takeaways from  Analyst:

Global category management software market growth is driven by increasing adoption of such solutions across retail and CPG industries worldwide. Category management tools help organizations to streamline operations, better plan assortments, negotiate with suppliers, and maximize revenues. The ability of these solutions to provide data-driven insights into category performance boosts their demand. Rising need to enhance process efficiency, improve margins, and gain a competitive edge can also drive the market growth.

North America currently dominates the market due to early adoption amongst retailers and CPG companies in the region. However, Asia Pacific emerges as the fastest-growing regional market due to growing retail sector and digitalization initiatives in countries like China and India. Security and data privacy concerns pose moderate challenges as often customer data is involved while using these tools. The availability of open-source alternatives limits revenue opportunities for commercial vendors.

Integrating advanced technologies like AI, ML and analytics into platforms can offer market growth opportunities. This enhances capabilities around demand forecasting, predictive analysis and real-time merchandizing.

Market Challenges: Lack of IT expertise

Lack of IT expertise can hamper adoption of category management software. Category management is a strategic, IT-driven approach that requires proficiency and experience with advanced technologies. However, many organizations, especially small and medium enterprises, continue to struggle with limited in-house technical know-how and trained professionals.

Deploying category management software involves a rigorous implementation process including system integration, data migration, customized configurations and ongoing maintenance that requires high level of coding, analytics and troubleshooting expertise. Without a dedicated team of skilled IT personnel, companies find it extremely challenging to fully leverage the automated data-driven capabilities of this software. These companies often grapple with basic installation, setup issues and interface challenges, which negatively impact user experience and return on investment.

Market Opportunities: Emergence of big data analytics

Emergence of big data analytics can offer opportunity for global category management software market growth. Category management software tools that are equipped with advanced big data analytics capabilities allow companies to gain deeper consumer insights and make smarter decisions.

With the abundance of consumer data now available from various online and offline sources, category management software powered by big data analytics can collect, organize and analyze large volumes of both structured and unstructured data from diverse sources like purchase transactions, loyalty programs, social media, websites and others. This vast and variety of consumer data when fed into sophisticated analytics models can provide invaluable insights into customer preferences, purchase behaviors, trends over time and across regions.

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By Component- Product innovation boosts solutions  dominance

By component, solutions subsegment is estimated to contribute the highest market share of 56.4% in 2024, owing to its ability to continuously evolve with the changing business needs of organizations. As retail and CPG industries undergo rapid digital transformation, the traditional services-based approach is no longer sufficient to address the complex category management challenges faced by companies. Customers expect highly optimized inventory and personalized shopping experiences across all sales channels at any time.

Solution providers have responded enthusiastically by investing heavily in research and development to rollout new capabilities at a fast pace. Advanced analytics, predictive modeling, and AI-powered decision support have become core features of modern category management platforms. Many solutions now offer out-of-the-box integrations with major ERP, supply chain, and ecommerce systems to provide a 360-degree view of the end-to-end category performance. This enables organizations to identify growth opportunities, optimize promotions and assortments, rationalize non-performing SKUs as well as forecast demand patterns with high accuracy.

Furthermore, vendors are focusing on delivering enhanced flexibility and scalability through cloud-hosted SaaS models. This allows customers instant access to the latest upgrades and innovations without additional infrastructure costs and maintenance headaches. The ability to instantly deploy centralized category strategies across global operations has transformed how multinational businesses optimize their portfolio. As a result, solutions have substantially improved operational efficiency, inventory turns, and category margin for many businesses migrating from legacy on-premise systems.

By Enterprise Size- Economies of Scale for Large Enterprises

By enterprise size, large enterprises segment is estimated to contribute the highest market share of 62.5% in 2024, due to their ability to leverage economies of scale advantages. Category management is a complex discipline requiring significant investments in specialized software, implementation services, data management infrastructure and ongoing training/support costs. This presents a substantial barrier for smaller businesses to adopt advanced solutions.

Large enterprises have considerably deeper pockets to devote large annual budgets towards category enablement initiatives. These can negotiate favourable enterprise licensing deals, often receiving additional customization and priority support services bundled in. For large retailers and CPGs with operations spanning multiple countries/regions, a centralized category management platform provides consolidated visibility and control over global operations. This drives further standardization, best practice sharing and optimization of efforts.

Large enterprises also possess the scale, data volumes and category portfolio sizes that allow them to generate maximum ROI from sophisticated machine learning algorithms and predictive analytics only possible with 'big data'. Furthermore, these employ dedicated category managers, data scientists and analysts who can extract deeper insights through continuous experimentation, modeling and reporting.

Hence, ready availability of financial muscle as well as mature category management functions enable large enterprises to derive maximum long-term value from tailored software, consultants and managed services.

By End-use Industry- Retail's Real-Time Responsiveness

By end-use industry, retail subsegment segment is estimated to contribute the highest market share of 47.3% in 2024, due to its need for quick reaction times. As the frontline battleground between brands and shoppers, retail operations require real-time visibility and responsiveness to optimize in-store merchandising and promotional strategies.

Shoppers expect ever-changing yet enticing product displays, personalized deals and recommendations tailored for their individual preferences and buying moments.. Category management software streamlines collaboration between stores, DCs and merchants to instantly evaluate sales trends, inventory positions as well as competitor activities. This enables responsive replenishment, modular resets, or temporary price adjustments to capitalize on fleeting opportunities.

Furthermore, retailers must optimize localized assortments factoring hyper-local demand patterns and competitive landscape variations. While national brands face uniform demands, retailers stock products from hundreds of vendors and own private labels. Intensive category reviews encompassing micro-level store performance details are crucial. Advanced software automates these highly customized, frequent reviews factoring shifts in consumer preferences, seasons and even weather changes.

This ongoing fine-tuning and customization forms the backbone of retail success. Distribution/CPG industries fare well with periodic, aggregate-level category insights but retailers require real-time command and control. Their highly perishable inventories, store densities and low margins warrant agile category execution powered by specialized software.

Regional Insights

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North America dominates the global category management software market with an estimated market share of 33.2% in 2024, owing to early adoption by retailers looking to streamline operations and gain efficiencies. The large and highly competitive retail landscape in the U.S. and Canada prompted many major retailers to invest in category management software to get a competitive edge through optimized assortment and pricing strategies. The presence of headquarters of leading category management software vendors in the U.S. also drives the market growth.

However, Asia Pacific region is emerging as the fastest growing regional market for category management software. Rapid growth of retail sector, rising disposable incomes, increasing penetration of internet and smartphones can boost adoption of new technologies across Asian retailers. In particular, China and India are displaying high enthusiasm to leverage category management software to manage huge product portfolios and satisfy the demand of vast customer base. Several large local retailers are implementing category management solutions to better understand changing customer preferences and tailor their private label offerings. Internationalization of Asian retailers through expansion plans also necessitates implementation of category management practices for overseas markets.

Key software vendors are focussing on the Asia Pacific region by establishing local offices, engaging channel partners for distribution and customizing products according to regional requirements. The pricing of category management solutions is also relatively affordable for small and medium retailers in Asia compared to developed markets owing to lower cost of doing business. The demand for category management is also supported by the import and export of consumer products within the region and globally.

Market Report Scope

Key Developments

• In July 2022, Board International, a leading provider of an intelligent planning platform that enables organizations to digitally transform their planning processes, announced that Cornerstone Building Brands, the largest manufacturer of exterior building products in North America, had selected Board's solutions to drive accuracy and efficiency across budgeting, planning, forecasting, reporting, capital expenditure planning, and tax provisioning. Board's platform will help Cornerstone standardize its financial planning and consolidation processes across its multiple acquired entities, providing greater visibility into projects and aligning strategy, finance, and operations.
• In July 2022, JAGGAER, a leading global provider of comprehensive source-to-settle and spend management cloud-based solutions, announced the release of version 22.2 of its JAGGAER ONE suite. This latest update includes enhancements across the entire source-to-pay spectrum, designed to ensure frictionless transactions and collaboration between buyers and suppliers.
• In May 2021, Epicor, a global leader in industry-specific enterprise software that promotes business growth, acquired KBMax, a provider of configure-price-quote (CPQ) and visualization solutions, to help customers sell smarter. By integrating KBMax's CPQ technology with Epicor's ERP platform, the combined offering provides customers with vital connectivity points across inventory, costs, pricing, and customer data, enabling them to create information-rich, immersive online buying experiences.
• In February 2021, Aptos, a recognized market leader in retail technology solutions, acquired LS Retail, a world-leading provider of unified commerce solutions for retail, hospitality, food service and forecourt businesses of all sizes. The combination of Aptos and LS Retail has created a retail technology powerhouse uniquely equipped to support retailers across all tiers, verticals and geographies with advanced and innovative unified commerce solutions.

*Definition: Global Category Management Software Market refers to a type of commercial software that helps companies manage their product categories and assortments more efficiently on a global scale. This type of software allows businesses to analyze category performance, optimize assortments factoring in global demand and supply, source the best products internationally based on price and quality, and collaborate effectively across geographically distributed teams, suppliers and partners when making category and assortment planning decisions that span multiple countries and regions worldwide.

Market Segmentation

•  Component Insights (Revenue, US$ Bn, 2019 - 2031)
  • Solutions
  • Services
•  Enterprise Size Insights (Revenue, US$ Bn, 2019 - 2031)
  • Small and Medium Enterprises (SMEs)
  • Large Enterprises
•  End-use Industry Insights (Revenue, US$ Bn, 2019 - 2031)
  • Retail
  • Distribution
  • Consumer Packaged Goods
• Regional Insights (Revenue, US$ Bn, 2019 - 2031)
  • North America
    • U.S.
    • Canada
  • Latin America
    • Brazil
    • Argentina
    • Mexico
    • Rest of Latin America
  • Europe
    • Germany
    • U.K.
    • Spain
    • France
    • Italy
    • Russia
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • Australia
    • South Korea
    • ASEAN
    • Rest of Asia Pacific
  • Middle East & Africa
    • GCC Countries
    • Israel
    • South Africa
    • Rest of Middle East & Africa
• Key Players Insights
  • Aptos, LLC
  • Board International S.A.
  • Cognizant
  • IBM Corporation
  • INTERACTIVE EDGE
  • Infor
  • Mi9 Retail
  • Microsoft Corporation
  • Oracle Corporation
  • Retail Insights
  • Retek
  • Revionics
  • SAP SE
  • Softvision
  • Symphony RetailAI