Amid Pandemic, Consumer Products Can’t Lose Sight of the Future
In a time of great uncertainty, the consumer products industry is seeing increased unit volume and revenue, with sales rates for some products jumping by more than 70%. But today’s challenges and the pace of new information are unprecedented. Some existing trends are intensifying, and new ones are likely to be short-lived. How should your organization react?
As shoppers load up their pantries for an emergency, sales have climbed 10% across outlets (whether grocers, drugstores or convenience marts), according to the IRI COVID-19 Spending Tracker. E-commerce rates are rising too, and downloads of home delivery apps are surging by triple-digit percentages, according to Apptopia.
In the short term, consumer products companies must remain focused on maintaining enterprise resiliency and taking specific actions to recover and grow, particularly in:
1. Supply chain. Demand for certain products is soaring — not just spray disinfectant (up 543%) and toilet paper (up 235%), but also pasta (up 230%). But for other products, demand is slumping. Amid this volatility, manufacturing and logistics are paramount.
2. Enterprise risk management. Consumer products companies will be scrutinized not just for their ability to manage their business, but also for their ability to validate the quality of their goods and the safety of their workforce.
3. Technology. Maintaining secure operations, communications, productivity and resumption is critical.
What matters most right now is leading your organization and enabling employees to make decisions quickly — through the right lens.
Think Beyond Right Now — Think “Right Later”
As questions arise, a simple three-part filter can demystify challenges and bring clarity and focus.
Filter no. 1: Today vs. tomorrow. If one of your main business units is experiencing demand spikes, maintaining fill rates is a today question. However, what your Q3 promotion plan should look like in light of the current pantry-loading behavior, is a tomorrow question.
Filter no. 2: Control vs. influence. Can your organization control a decision, or can it influence a decision? This is perhaps the most important filter for demystifying the current environment.
Filter no. 3: Risk vs. opportunity. Your organization is likely viewing current questions through the lens of the potential negative impact (risk). But encourage your organization to consider the positive impact (opportunity) that may exist across the longer term.
Leading consumer products companies that “think later” and not just right now also recognize that trade funds management used to support brand equity investment in store, needs to be a focus area. While they’re already committed to plans and financial agreements for the upcoming quarter, they are looking beyond today to when shoppers and consumers return to the marketplace.
Recommendations for Today
Even before the current COVID-19 outbreak, the consumer products industry was changing. The marketplace demands new commercial capabilities.
Area no. 1: In responding to the COVID-19 outbreak, all aspects of your commercial business processes — such as channel and customer development, sell-in, contract management, funds management and governance — are being tested now.
Recommendation: Identify multiple commercial business processes and assign a small group of employees as monitors during the coming 90 days. They should apply a structured approach for monitoring all aspects of execution — including process adherence, technology use and data flows — to identify, document and prioritize potential enhancements. This isn’t a focus group, end-user experience interview or time-motion study — it’s real-life learning.
Area no. 2: Demand planning becomes consumption planning as the outbreak slows, with the current demand spikes in many categories smoothing out. Now is the time to analyze the categories in which you compete and start business planning for 90 days from now. Today’s volume, revenue and share results don’t fit into traditional modeling.
Recommendation: Many are focused on supply chain risk today, as it relates to commercial. And marketing and sales must continue to work closely with supply chain to understand how they are constrained and adjust as needed. But also consider the lens of modeling trade promotion management a quarter from now and through the end 2020, based on your interpretation of how the current demand spikes will translate into consumption. Depending on which model is used in forecasting the return, it is important to analyze and model category, sub-category and brand-specific promotion planning that reflects what is happening now at retail.
Area no. 3: Certain shopper attitudes, habits and practices may not return to “normal.” While retail traffic, e-commerce and shopper adoption of contactless payment methods are spiking to unprecedented levels, will they settle back to new norms that are higher than before, given that a new normal for shoppers has been created?
Recommendation: You are already developing and implementing marketing, sales and service capabilities that are fit-for-purpose in the digital age, but there is no better time to test and learn. How can you leverage the increase in consumer online engagement, including shopping, as part of a fluid media plan and budget during Q2?
In the next blog post, we’ll discuss three changes that industry leaders are making to fuel growth in the face of uncertainty.
This publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Member firms of the global EY organization cannot accept responsibility for loss to any person relying on this article.