For Primo and H-E-B, Weather Analytics at Heart of Accurate Merchandise Planning
Planning for weather-driven demand, weather sensitivity and weather volatility have become crucial for retailers in not only meeting consumer demand but also providing retail and brand inventory teams with confidence, according to a panel Tuesday at NRF's Big Show in New York.
Randy Bermea, senior product manager for inventory management at Texan grocer H-E-B, said that the retailer recognizes that extreme weather events are “critical moments for our customers and communities” and said that the company had been able to leverage demand analytics to “better understand behavior before, during and after” those events.
“We can, for example, use historical data and analytics to more accurately predict demand for specific items, helping us to better prepare in advance, which is important,” Bermea said. “It also means we can inform our supply chain teams so that they can prepare for spikes.”
Related: Learn more about using weather analytics to predict demand at Analytics Unite
As a result, H-E-B can provide insights and support to its partners in managing inventory, giving them confidence that the grocer is weather prepared so that both external and internal teams do not have to work on inventory management for weather events.
“We understand that weather doesn’t just influence shopping in extreme weather events,” Bermea added. “Weather can impact daily shopping and at a macro level we can use data to correlate how rainy days might depress demand across specific categories, at a micro level we can work out how unseasonably warm weather during the winter in Texas might get more people to buy, say, grill items.”
He stressed that it was very important to be able to use those insights to help with H-E-B’s replenishment process so that the grocer’s inventory matches what its customers are looking for all year round.
Joe Wright, senior director integrated business planning, Primo Brands, said that the greater sophistication in weather analytics is a relatively recent capability and stressed that “explainability” was key to how brands should approach the use of data and execution.
"We can try and explain what happened in the past and the actions we need to take in the future. We have seen some pretty big swings in demand, primarily around temperature, so it is a no brainer to get better at this,” he said. “At the same time, you need an annual operating plan, including the peak and shoulder months. Being able to leverage this information, and what other activities we need to do, is vital.”
Wright said that Primo Brands is also implementing demand sensing capability and had improved its forecast accuracy by about 20% over 28 day periods. It is also looking at how to leverage the 14-day weather forecast with three-digit ZIP codes.
“It’s about the right product, right place, right time,” he said.
See also: What's Behind Unilever's Supply Chain Partnership With Amazon
Chris Callahan, vice president and divisional merchandise manager, At Home, reflected that there can be “wild swings” going into the main outdoor products season depending on the weather.
“We have 250 stores, and we don’t have a large DC network, so on one hand it’s much simpler but on the other hand it’s not just 25% of your sales at risk, it’s everything,” he said of the challenges of weather-related demand change. “The expectation to get our weekly forecast right is high, if you are not factoring weather alongside seasonal flips like Easter, then you will have problems.”
Callahan added: “In season is where it gets fun and you don’t have much time to react. It’s really nice to have facts on weather and to be able to dissect facts from feelings.”
