Post-COVID-19, Retailers Must Get FMCG Demand Right

by Robert Hetu | June 11, 2020 | Submit a Comment

Fast-moving consumer goods (FMCG) retailers were deemed essential during the COVID-19 crisis and grew top-line sales. But now they face significant challenges from the aftermath. They must return to operational stability, while taking advantage of new business opportunities and shifting consumer preferences. As surging COVID-19 demand normalizes, grocery and FMCG retailers must address the impact of abnormal demand across automated tools for demand forecasting, replenishment, assortment planning, pricing and promotion.

Consumables retailers now face significant challenges from the aftermath, and business questions loom large, including:

Will consumers return to normal purchase patterns?
Will e-commerce sales remain at current levels?
Will fulfillment models like curbside and delivery be preferred?
How can the business continue to address the evolving consumer trends profitably?
How to normalize historical data to improve accuracy of future demand forecast?
How to ensure automated replenishment systems will not over or under order?
What can be done to improve the accuracy of perpetual inventory data?
How should to price to avoid gouging while accounting for legitimate costs increases?
How will promotions change post COVID-19?
How to be prepared for the next chapter of the pandemic without over-investing in inventory?

The future of unified retail commerce, and the resulting digital business transformation strategy, will require answers to these and other questions. However, the first order of business is to get the business back up and running, prepare it to be more resilient, and ensure efficient and profitable operations. For retailers in the consumables segments, this includes effectively deploying and managing the automated systems that support category management and supply chain activities. However impacts from Covid-19 on transactional and inventory data have compromised the ability of automated systems to calculate future inventory needs, determine correct pricing, identify future promotions and manage category review and assortment changes. Since many of these applications store data and resulting calculations in separate databases there are wide ranging risk implications from the data anomalies created by COVID-19.

5 Common Automated Applications Requiring Attention

Gartner June, 2020

Our latest research investigates significant issues, actions and impacts FMCG retailers should consider when dealing with each of these automated systems post COVID-19. A few high level recommendations include:

Evaluate the overall impact of COVID-19 on all the channels, in particular the store.
Segregate 2020 demand history that may be tainted by COVID-19. Leverage it for learning, but do not allow it to enter automated systems without oversight.
Audit application parameters to ensure they are set appropriately to support the recovery strategy without absorbing anomalies as relevant data points.

Gartner clients can download the PowerPoint research materials