AI as an Ally for Consumer Goods During COVID
In a matter of weeks, the COVID-19 crisis had wreaked devastating consequences on the retail industry. From forcing frontline workers out of jobs to leading legacy retailers to bankruptcy, the COVID-19 pandemic has had crippling effects on retailers throughout 2020 and 2021 thus far. Yet for all of the attention that the retail industry’s struggles have generated, consumer goods companies have been faced with massive hurdles as well.
Impact on CPG companies has been varied and nuanced, involving both the demand and supply sides of the equation. And sophisticated technology such as data science and AI are proving to be a key ally in helping the CPG category both work through the pandemic, but also game plan for the post-pandemic period as well.
Changes in Consumer Behavior
Numerous changes in customer behavior are likely to change the way the CPG category looks like in the months and years ahead. For example, given demand shortages, many customers that may have previously been looking for natural or organic cleaning products may have switched back to legacy national brands, raising questions among CPG companies around what product preferences may look like post-pandemic. Additionally, the mass shift to e-commerce has raised plenty of strategic questions for CPG companies moving forward as well.
These types of market movements have made understanding consumer behaviors and decisions more imperative than ever for CPG brands. That said, understanding consumers has always been one of the biggest pain points for CPG companies.
The good news is that CPG companies are now taking a much more scientific and data-driven approach to consumer behavior analysis, enabling them to make highly informed decisions about both individual shopper desires and also broad organizational decisions based on these insights as well. Nonetheless, CPG brands are going to have their hands full moving forward and need to lean into their technology tools as best as possible to make the best decisions.
Supply Chain Uncertainty
Once the COVID-19 pandemic began to grip China, CPG retailers immediately began to feel a crunch as suppliers began to go offline. This was compounded once lockdowns began taking shape and a rush on products resulted in product shortages and empty shelves across the globe. Fortunately, as prevention strategies reduced infection rates and vaccination levels began to climb, CPG companies have been able to find alternate production sources.
However, what happens when we “return to normal” and how do CPG retailers build safeguards to prevent these kinds of disruptions moving forward? Simply put, traditional manual labor-based forecasting isn’t going to work.
Instead, CPG retailers have once again begun leaning into their technology infrastructures so that they identify any disruptions early and intervene in real-time to mitigate any fallout. Moreover, using advanced technology such as AI can help CPG companies run hypothetical scenarios to stress test their infrastructure to make sure that they are as prepared as possible for any future supply chain issues.
Crisis Operations
Most companies have some sort of crisis operations plans and strategies in place. However, this pandemic has pushed these plans and strategies to the test and in many cases required CPG brands and other organizations to amend them on the fly as more information about the pandemic became known. For example, businesses need to quickly institute social distancing friendly work measures, procure PPE, develop and deliver contactless shopping options, and more.
This has obviously been challenging for CPG brands to tackle — especially given how fluid the situation is. However, by tapping into data science and AI though, CPG companies have been able to keep tabs on developments at their facilities to make sure that employee and customer safety are maintained and that they have the agility to adapt their operations as situations evolve and new guidance is issued. Additionally, technology has made it much easier to aggregate and synthesize data around crisis actions and responses to better prepare for the future as well.
With vaccination rates continuing to climb, there is finally a small bit of positive news to cling on to as the world moves through the COVID pandemic. However, we are not out of the woods yet, and CPG brands need to remain vigilant. By embracing technology and synthesizing learnings that have come out over the past year, CPG brands can continue to navigate the pandemic successfully and better position themselves for the post-COVID period.
Prithwish Dev is principal, retail, at Fractal Analytics.