I’ve commented in previous blogs that I think the weekly standard for data is out of date and in fact, dangerous to both retailers and CPG companies that want to improve their relevance with shoppers and provide more realistic intelligence to drive consumer engagement, revenue and profitability. Given what we’ve faced with Covid-19, it’s time to really consider the disastrous effects of being caught with your supply chain down!
I couldn’t tell you how long ago it began, but at some point, back in the heyday of newspaper advertising media dominance, the term “best food day” applied to the day of the week a daily newspaper generally included the weekly inserts and print ads for the local grocery and supermarkets. Now, the national preprinted inserts were generally Sunday’s edition, but we’re talking local promotion here…trade promotion.
Depending upon the publication, the “Best Food Day” or “BFD” editions would traditionally be Wednesday or Thursday. Advertising in those issues was always sold at a premium rate over the standard rate card because everybody read it and cut out coupons for the various promotional deals you would find at your favorite grocery store for the next five to seven days.
Newspaper “clipping services” and other ad agency or research firms, notably The Advertising Checking Bureau, Bacon’s or other similar companies accounted for the majority of the research data showing what was advertised – product, pricing, store locations, etc. Once companies like IRI, Nielsen, NPD and GfK began to track, analyze and report consumer data, the technology of the day was limited; but because the need of the rapidly growing fast moving consumer goods industry required a higher frequency of planning, data began to synchronize around the weekly timeframe.
The entire industry focused on “the week” for promotion planning, category and brand management, retail execution, and store delivery. Supply chains created their demand planning platforms to generate “consumer demand” baselines on the basis of the Monday – Sunday tagged weekly timeframe. By the time the 90’s rolled around, it was a full-blown ingrained practice that, if you deviated, cost you misalignment problems from the trade promotions to the national coupon events.
And that is where we find ourselves today.
At Consumer Goods Technology’s League of Leaders conference recently, I discussed this issue with several executives, including a rousing discussion in a breakout we had on aligning eCommerce with trade promotion. eCommerce is built on immediate response – the mainstay timing for Millennials, Generation Z and, I guess the rest of us in the generation alphabet. Aligning trade promotion to the direct-to-consumer calendar and performance is a budding practice that CPG leaders are focusing on now – both in their re-engineering of new collaborative practices and the technology of planning, managing, executing and analyzing trade promotion.
Bur for managing demand planning and baselines, not so much.
Changing these horses in the middle of the stream is going to be difficult because every company in CPG uses either IRI or Nielsen and has some version of a demand planning tool set that is based on tracking incremental revenue, volume, and POS on a weekly basis. Even those more sophisticated systems that can track daily data, the tendency is to roll the days up to the corresponding weekly period structure to align with the trade calendar – every trade calendar. It is what the wholesalers use in shipping and logistics, the retailers use it to create their trade calendars, and of course, CPG suppliers are built on that model as well.
In a recent survey on trade promotion with Consumer Goods Technology Magazine, we asked two questions around the practice of analyzing trade promotions daily. Almost half of the respondents believe that moving to daily tracking and analysis of trade promotion performance would better align with eCommerce and direct-to-consumer promotions, while more than a third indicated that it would enable better alignment with social sentiment analyses – a fast-growing practice in consumer goods. Almost three-quarters of the respondents agreed it would heavily benefit overall market basket and retail shopper analysis as well.
Connected to this issue is the management of baseline. Almost every executive I have spoken with over the past couple of years believe that the next big problem to tackle is baseline accuracy. Advanced trade promotion optimization functionality, especially if it is anchored with a strong artificial intelligence and cognitive computing analytical foundation is continuing to shed a lot of light and heat on the way baselines are developed and maintained. A CIO for a large baked goods manufacturer had an interesting perspective on the impact of TPO on the baseline. “As we improve the accuracy of our predictive planning, we are finding that the methods we have traditionally used to create the baselines are making us question their accuracy,” he said. “We’ve treated the demand curve as a pure factor of price, but with advanced optimization, we are exposing that paradigm as less accurate because we can now tactically maneuver other factors like timing, activity selection, and even promoted product groupings as being effective drivers of demand.”
So, is the “tail wagging the dog?” With the advancements in AI-driven promotion optimization, there is no doubt that the industry is moving more talent, upper management focus and technology to the process of revenue growth management. But the major syndicated data suppliers still, for the most part, push the “standard” timeframe as a more infrequent analysis. It would not be surprising to see so many of the top CPG companies continue to get data monthly, much less weekly. If you talk with them about daily data, they will likely give you the excuse that they cannot work with that – their own people would have to change their planning and execution compliance paradigms along with much of their technology.
Yes, the tail IS wagging the dog.
Industry laggards continue to resist an all-out transition to daily data. Some of the reason is technology, but a lot of it is cost – cost of acquisition of data which would dramatically increase their subscriptions with syndicators. Given that little of the data is captured and reported daily, it would mean significant changes to existing analytics and perhaps even the internal trade promotion management and optimization solutions currently in place.
CPG Trade calendars are rarely set up to track data daily, even though the retailers have been doing it for years. There are still several TPM solution vendors that cannot track or provide daily trade calendars without a great deal of custom programming.
So, even if the company has a desire to track data by daily increments, the infrastructure of the day in TPx is often prohibitive. Yet, that is where we must go. We live in a real-time world, and if nothing else shows that in our own daily lives, how much angst did you have trying to figure out when and where the toilet paper stock was during the first months of Covid-19 lockdowns!
My two cents!