In a consumer-driven supply chain, preparing for drastic shifts in purchasing behavior is a must. Use this guide to anticipate these changes during the school year, when demand variables are sure to throw off sales and supply plans.
By Kunal Kohli| September 14, 2020 | Updated May 14, 2021
What will education look like this upcoming fall?
Across the U.S., parents, schoolchildren, teachers, administrators, bus drivers, coaches, custodial staff, security guards, guidance counselors and so many others are formally returning to the world of everyday learning. These groups of people are a core demographic during the back-to-school season, a time of great important for sales teams of CPGs brands alike. But this year, seasonality should be thrown out the window and the jury is still out as to what the future of education will look like.
For one, historical consumption patterns will almost surely change. Likewise, the environments in which back-to-school-related consumers fulfill their job functions — or in the case of students, where they learn and play — also play a vital role in how brands should manage inventory, predict demand, and implement other supply chain strategies.
While brands have already run the numbers, aligned on sales forecasts, and set up their supply chains to hit these KPIs there’s work yet to be done, because nobody quite knows exactly how the practice of education will play out in the coming semesters.
How do learning environments impact consumer demand?
Let’s begin with what we do. Some companies have the bandwidth to map out a plethora of what-ifs — financial scenarios that lay out various paths the business could take should a variety of factors influence the coming week, month, quarter, year. Others do not. Regardless, when it comes to the impact of education-related consumption, we have a few clues to work from.
First, it’s important to note that:
- Policies regarding school openings are inconsistent at best across the nation, sometimes down to neighboring school districts and towns (to say nothing of private schools and universities). This is a vital factor to pay attention to, as these policies will most likely have an impact on sales by region.
Another complicating factor is:
- The very personal parental responsibility of having to decide whether or not (or how often) to send one’s child to school (to say nothing of college students who can make their own choices). Again, this is a difficult variable to gauge.
Finally, there’s the complexity of each:
- Learning modality — in-person, hybrid, or remote.
Point is, the pandemic has ushered in an incredibly complicated risk-versus-reward scenario in the world of education. The same logic applies to CPG brands.
When the education landscape changes, consumption patterns change too
What affects the look of learning, affects the consumer. In other words, each learning modality will have various degrees of impact on consumption and therefore on brand sales. As a result, it’s mission-critical for CPG companies to anticipate, prepare for, and pay very close attention to the factors influencing the educational landscape.
To be ill-informed and unprepared is to put your brand at great risk.
As an exercise to help you think through various hypothetical scenarios, we’ve put together a list of discussion questions for the in-person and remote learning segments. And while applicability and relevance of each question will vary for each company, the intent is to provide the space to consider situations that may in fact have an impact. We know how great of an impact the pandemic has had (and continues to have) on consumption; now it’s vital to be prepared to tackle these potential changes head-on.
How will the new look of in-person/at-school learning impact my sales?
Scope: In neighborhoods and households where students attend class at school, face-to-face with their fellow students, teachers, counselors, and so on.
- Will families be more inclined to pack their kids’ own lunches instead of them buying lunch at school? If so, will more shelf-stable snacks and foods be consumed (rather than fresh)?
- Will students be discouraged from sharing food? Will college students still visit home (or be allowed to)? How will this affect consumption of my brand, if at all?
- Will school districts and families emphasize healthy eating / better-for-you foods that are typically at a more premium price point? Or will parents buy more products from legacy brands that are less expensive?
What will parents, school districts, and students buy to address safety protocols and other considerations? What products will parents turn to in order to make the world a safer place for their kids, whether they’re learning at school or at home?
- Will the trend of buying packaged products in bulk continue? If so, will consumers continue to stock up on “essential goods” or will that buying mentality expand to other categories as well?
- Will students have jobs during the school year? If so, will they be remote or in-person, and what functions will be required of them?
- How will transportation change as it relates to coming and going from school, such as carpooling, taking buses, or traveling via a more individualized mode? How will this affect purchasing patterns and/or sales volume?
- Which extracurricular activities will continue, if at all, and in what way? How will this affect the seasonality of certain packaged goods, such as products related to sports, music, or other academic pursuits?
- What will happen to brand sales if COVID cases start to rise again as a result of school interaction?
How will the move to virtual/remote classrooms impact my sales?
Scope: In neighborhoods and households where students “attend” class at home or in remote learning pods with fellow students.
- How will parents build at-home classrooms and daily structure? What products will they need to build a quality learning environment?
- How will parents feed their kids daily? Will this differ from what they would consume if they went to school daily?
- Will parents continue to provide products that will invigorate productivity, such as coffee or other energy drinks and supplements?
How will parents shop on a regular basis? If they continue to shop primarily online, should I focus more on driving consumers to e-comm platforms? And, how should I re-allocate my seasonal digital marketing spend should things change?
- Will “playdates” or kids hanging out after school still be a thing? If so, how will this affect consumption?
- Will consumers elect for various types of subscription services that enable frequent replenishment of products that consumers need on a regular basis? If so, what sort of partnerships are available that let me reach more consumers (a one-to-many approach)?
- Will “the joys” of at-home cooking continue, or will parents tire and rely more on prepared or pre-packaged foods, like frozen dinners? Will nostalgia products or DIY kits and recipes continue to have traction?
- How often will parents shop? Will they buy in bulk, and what pack sizes will they purchase? Will they prefer to buy larger “sharing” sizes rather than single-serve?
- To what degree will parents and/or schoolchildren care about their hygiene if certain social pressures don’t exist?
- How will families find respite, both individually and collectively, if they’re cooped up at home all day? What will they consume outside of their homes to fulfill their needs for fun and a stress-free escape?
- How will families interact outside of television and their devices? Will recent trends like board games continue their newfound popularity?
- Will demand for certain consumer packaged products — such as toys, accessories, decor, and other material pop culture-related items — abate because there is less visibility and pressure on popularity? If so, what trends will take their place and which products will fulfill that commercial space?
What to do now: Upgrade your demand planning process
The aforementioned questions are only the tip of the iceberg. When certain variables impact the learning experience — parental preferences; unemployment rates; surges and hyperlocal infection rates; vaccine progress; testing capabilities; the national and local economy; weather patterns; category trends; industry trends (like SKU rationalization); social media mentions and sentiment; and so, so much more — brands need to be ready and able to transform raw data into actionable intelligence that results in benefits across the supply chain and business.
Without this information — and the ability to transform consumption-driven insight into actions across the supply chain — brands are putting themselves at great risk of tying up working capital and other dangers detrimental to the business, including:
- Loss of sales
- Lower profit margins
- Loss of distribution with a retailer
- Lower service levels
- Increased logistics costs
- Excess inventory — more write-offs
- Lack/shortage of inventory (pack size, e.g.)
- Misused marketing spend
- Bigger losses
No brands wants this. Any of it. When you don’t know, or cannot anticipate, dramatic shifts in consumer purchasing behavior, then you don’t know the consumer well enough. And because demand is driven by the consumer, it’s absolutely vital to have your finger on the pulse of these behavioral patterns. It’s also imperative to have the technological infrastructure to make this happen. So what’s the way forward?
The following articles are excellent guides, aimed at assessing your current demand planning process and capabilities, as well as helping you think about implementing the infrastructure you would need to get these upgrades in place.
COVID-19 laid bare just how quickly consumer demand can change. More than anything, however, it’s a lesson in the need to prioritize agility and automation in the demand planning process. How quickly can your brand recover from an unforeseen obstacle? What actionable insights are you getting from your demand planning research, and how well is it serving your decision-making needs? Is your demand planning philosophy outdated, outmoded, or ineffective? Chances are likely.
Consider the incredible changes that can occur during the school year this fall (and beyond). Dramatic shifts in consumer behavior are right around the corner, and having machine-learning models in place, as well as a Demand Planning AI platform, are essential towards shifting strategies mid-stream.
As a supplement to this all-encompassing guide, this list is hardly a list; it’s a tool every demand planning professional should use during good times, bad times, and business-as-usual times. And as the school year kicks into full swing, this is another guide to have at the ready.
Unioncrate is an AI-powered Integrated Business Planning (IBP) platform that delivers demand forecasts with unmatched accuracy, collaborative visibility, and actionable intelligence — enabling CPG brands to plan and execute agile supply chain strategies at the click of a button.