Even in the most stable times, demand forecasting involves some uncertainty. But our current environment is characterized by more unpredictability than ever before — and requires a new approach. The days when CPGs could put together a demand forecast and then not worry about planning for another 12 months are gone.
An IRI report looks at the current landscape and highlights 10 major emerging trends that are affecting how brands need to think about their current scenario planning. It also suggests a “best way forward” using technology and data to inform better long-term planning and short-term decision-making.
- Consumers have been showing lower price sensitivity in response to inflation compared to historical norms but could crack if current inflationary trends continue.
- We are seeing a bifurcation in consumer behavior, with low-income shoppers buying less and shifting to value channels while higher-income shoppers remain open to premiumization.
- Changing macroeconomic conditions, durable work-from-home trends, lasting supply chain issues, shifts in e-commerce behavior and changes in media effectiveness are just a few factors that must be accounted for in scenario planning.
- It’s important to look back at longitudinal sales data to understand the impact of past decisions on sales, and also to revise forecasts in real time to respond to fast-changing shifts in consumer behavior.