Memorial Day, Hot Dogs, and The Forecasting Conundrum
Let’s talk about hot dogs. And Memorial Day. In the United States, they go together like flags and parades on Main Street. So, it should be easy for a CPG company to forecast how many Americans will flock to stores and stock up for the Memorial Day weekend barbeques in the backyard and how many will gobble their favorite dogs at a baseball game. Right? Well, not exactly.
For CPGs and retailers alike, forecasting the demand for a product like hot dogs is like trying to slather a perfect blend of cheddar and chili on a Cincinnati cheese coney while walking backward blindfolded. The pandemic alone wreaked havoc with demand forecasting in 2020. As the pandemic took hold, demand surged unexpectedly. But then, as summer sporting events got canceled left and right, demand became uncertain at a time when sales should have surged. It’s a whole new ball game.
Let’s say you’re a national retailer like Target or Walmart or a manufacturer like Oscar Mayer. You need to carefully plan Memorial Day promotions and estimate how many hot dogs you’ll need across hundreds and thousands of stores. There is a lot riding on that forecast – including how much relish, buns, mustard, paper napkins, and many other adjacent products you’ll need to plan for.
Consider the enormous number of fast-changing conditions you need to consider in 2022:
- Inflation. How might the rising cost of everything affect demand for hot dogs from one area of the country to the next? Will the rising costs of more expensive food products create a spike in demand for hot dogs? Will the rising cost of gasoline cause consumers to adapt their food budgets... what relation does that have to hot dog consumption?
- Weather. How might rapid changes in weather conditions across 1,900 Target stores in every region affect demand? How might an unexpected cold front in Detroit affect outdoor barbecues while a heatwave takes hold in Houston? Each store potentially represents 1,900 micro-climates, all of which could vary.
- Events. By Memorial Day, CPGs can usually plan for an uptick in demand thanks to the Major League Baseball season – not just because people love to eat hot dogs at stadiums, but also at home while they gather around the TV. But until recently, a labor dispute threatened the season, making it harder for CPGs to forecast demand. And then there are the local events that often fly beneath a demand planner’s radar screen, such as, say, the inaugural hot dog eating contest in McHenry County, Illinois. How can a CPG or retailer know about a hyper-local event that will trigger a demand for the humble hot dog?
- The pandemic. We started the year wearing masks and hunkering down as the Omicron variant surged. Weeks later, our masks are coming off, literally. But what if a variant emerges to wreak havoc with social plans again? It is not an unreasonable question given the two major variants we have experienced in 2021-22. We may be weary of the pandemic. But it’s not done with us.
Now consider all the stakeholders affected:
- Supply chain managers need to understand how much product they need to ship. But the supply chain manager is likely operating in a silo, with zero visibility into how demand might be changing at the store level because of a weather event or other variant.
- Marketing teams need to understand just how much to invest in a Memorial Day promotion. No one wants to leave perishable hot dogs unpurchased on the shelf, but who wants to get caught unprepared for a surge in demand?
- CPG sales teams need transparent and timely data to negotiate with retailers.
- Manufacturers need to forecast demand to make sure they have enough workers to make the hot dogs
- Retail store associates need to manage stock levels at the store.
They all have something in common: they’re not getting the data they need to make accurate decisions. Their first-party data is too limited and difficult to manage to be useful. Increasingly, businesses are augmenting their internal data with third-party data and artificial intelligence. Each offers advantages but also challenges:
- Third-party data such as search data and weather trends gives brands real-time signals into consumer intent. For instance, as the pandemic took hold in 2020, Google noticed an uptick in searches for “candle-making kits” (a 300% increase). Searches for “patio heaters” increased by 600% as people moved to eating outdoors. But this information is hard to track down and expensive to get.
- Artificial intelligence offers scale. AI can assimilate vast amounts of data, including third-party and first-party, to find those emerging consumer purchasing behaviors before your competitors do. But it takes enormous effort and a lot of time to train AI to do what businesses need it to do. And AI has another problem: AI-based forecasting tools are often based on historic data that can become worthless when consumer behavior shifts suddenly.
This is where the right resource can help you. To overcome forecasting and investing challenges, businesses are turning to platforms that manage AI, first-party data, and third-party data cost-effectively. That’s why we created Meerkat.
Meerkat is an all-in-one demand, pricing, and promotions planning platform from Centific that gives users the ability to deliver the right product, at the right moment, at the right price while simultaneously delivering financial value for your stakeholders.
Meerkat leverages state-of-the-art, pre-trained AI models that are fueled by your own company data, alongside a broad range from our extensive data partner ecosystem, to solve challenges such as forecasting and demand planning, pricing, and promotion planning.
Our solution allows organizations to jumpstart better decision-making by seamlessly integrating with existing enterprise platforms. Not only does this allow you to leverage and maximize ROI on past investments, but you are also able to scale rapidly, regardless of your organization's readiness level.
Want to have enough hot dogs ready on Memorial Day – with relish, onions, and mustard on top? To learn more, contact Centific.