Retail and CPG companies are now working overtime to maintain inventory supply and minimize shortages despite wildly erratic consumer behavior. Thanks to advances in planning and order optimization, real-time adjustments to major swings in demand, like nationwide school closings and shifts to online buying, are more easily executed. Nevertheless, this has meant long hours for everyone - from the manufacturer, to the planner, to store distribution teams - and every time a basic staple reappears on the shelf or online, we consumers appreciate it.
The question now surfacing on the minds of businesses and consumers alike is - what happens next? How long will this continue? Will there be a recession? Will it be steep but short, or long and prolonged? Will consumers go back to the same buying behaviors or will they develop new behaviors? At these times, it’s interesting to look back at forecasts of consumer trends coming out of the last recession. This 2009 Harvard Business School article, Understanding the Post Recession Consumer, reflects what the forecasters thought at that time about future consumer behavior based on analysis of trends following several major recessions.
Keeping in mind that the forces behind the 2008/9 recession were very different from those that may cause this pandemic-driven recession. However, there is one forecasted consumption trend, mercurial consumption, that stands out as likely to reoccur. Whether overall consumer confidence will be radically impacted in the next months, or not, there is a high likelihood that emergence from this pandemic will be marked by dramatic demand variability - where consumer demand, even in contiguous localities, may bounce back very differently depending on the impact of the virus in a specific locale.
By either having or putting in place the capabilities, now, to capture more data, better models, and apply more localized, AI-driven forecasts, Retail and Consumer Products firms will respond more accurately to what will be uneven consumer behavior in the months to follow. With help from the automation and accuracy that AI-driven demand forecasting can provide, the challenges to meet critical service levels will be greatly reduced - as towns, states and the country recover, each at their own pace.