Companies have a difficult road ahead. Economic profit growth was 1/3 of the previous decade, and continuous cost pressures, supply shortages, and a changing consumer are creating a dreadful atmosphere. Worse, this will be the norm for the next 12-24 months. Hence, CPG companies are finding improvements using Revenue Growth Management.
Few things dramatically change society. Before the automobile, most people lived their entire life within 20 kilometers of their birth. The tractor, not the option of industrial labor jobs, made it possible for people to leave the heavy labor of farming. And the internet has also changed many facets of life, including allowing people to work from home. Now, AI and computing processing advancements have made the thought-intensive exercise of a single, demand-driven forecast (a Unified Demand Signal) a reality.
The old paradigm of trade promotion investments has failed. Companies that continue to reinforce the process will realize short-lived, incremental improvements. CPG companies will never achieve the transformational results necessary for being nimble and growing in the new environment without a broader, strategic consumer-focused strategy.
After last year's record holiday sales growth (Yes, record – except for fashion retailers), this holiday is heating up to be another great year, with US sales expected to grow by 7.4%. Even clothing and other discretionary spending are expected to rise. But if the correct amount of inventory is not placed in the right locations, all that opportunity is lost.
Retailers in the back-to-school space experienced a once-a-century year in 2020, and as the season comes to a climax, companies selling school-related products, like apparel and electronics, are using the learnings from the last year to better forecast the actual demand, determine assortment and optimize inventory levels. They are taking sales and other financial statistics from only the most immediate past periods and applying AI and machine learning to optimize their assortments and sharpen their pricing strategies.