7 tips to move faster than the speed of retail FMCG
AUTHOR
In today’s digital-first, post-pandemic world, nothing stays the same for long — and nowhere is this more apparent than in the fast-moving consumer goods (FMCG) market. Fundamental changes to traditional consumer behavior and constant macroeconomic shifts require faster, more accurate planning from retailers in the race to stay relevant.
According to a study by Accenture:
- 88% of executives think their customers are changing faster than their business can keep up
- 65% of consumers wish companies would respond faster to their changing needs
Let’s take a closer look at how two leading grocery and general merchandise retailers, Kroger and Asda, have accelerated their planning capabilities to be quicker and nimbler in the face of FMCG volatility.
1. Speed equals options
Consumer choice for brands is at an all-time high, while the cost of switching is at an all-time low. Businesses struggle to react to changes before the critical decision window closes because the level of forecasting and analysis required can take weeks.
To combat this lag time, Kroger and its data analytics arm 84.51 moved from spreadsheets to Anaplan’s ultra-rapid scenario planning software, providing them with:
- Forecasting in two days instead of two weeks
- Rapid executive decision-making
- More time on value-add tasks
“With speed comes the ability to iterate over and over again,” says Kyle Ammons, 84.51’s director of FP&A. “Where Anaplan has helped with these uncertainties and headwinds is being able to navigate all those potential scenarios at pace.”
2. Use AI for heavy lifting
Strategic work is frequently sacrificed for the planning time required to simply keep up with the rapid pace of FMCG. Being able to “do it all” traditionally requires a large team — or an overworked one.
Kroger and 84.51 implemented AI automation to help flip their proportions of time spent on tactical versus strategic work.
- 80% of their time is now spent on strategic work
- 20% of their time is now spent on tactical work
“Now we have time to do more value-add tasks, more strategic asks, more one-off asks that businesses need instead of just keeping our head above water,” says Ammons.
3. Know the value of your data
Deeper analytics are crucial to stay competitive, and retail media have become more sophisticated in demands. This requires businesses to spend more time providing better analytics, not only to drive effective decisions, but to prove they deliver value.
Retail media wants to know:
- Are you hitting the right customers?
- Are you driving value for those customers?
- How can you show they’re getting a return on the money being spent with you?
Conversation is also intensifying around what it means for consumers to own their data. Legislative actions such as CCPA and GDPR give consumers a better hold on their data, potentially limiting the ways companies can monetize around it.
For Kroger and 84.51, this means getting a better understanding of what data pieces are most relevant now to generate similar insights in the future if data is more restricted.
4. Predict profit through planning
Anthony Chou, Asda’s senior data and analyst manager, says one of the biggest shifts in Asda’s profitability margin was a change in strategic thinking, from “What is the promotion?” to “What is the promotion trying to achieve?”
To maximize profitability per square foot of each store, his team analyze internal and external data in one shared decisioning space platform, aligning planning, execution, and delivery around three key influencers:
- Space elasticity
- Price elasticity
- Customer loyalty
5. Align teams to align profit
Waste and availability problems are two of the biggest drains on margins. If teams are siloed, conflicting decisions are easily made and often not realized until it’s too late.
Asda minimizes these risks by using Anaplan as the master tool for budgeting, which allows them to connect visibility through:
- Low maintenance, self-sufficient budget models
- Internal and external data feeds
“We brought together the finance forecasts with the supply chain,” says Chou. “Only by bringing those two things together do you actually identify the risk and realise, ‘I’m walking into a problem.’”
6. Fit the solution to you
Connected Planning is clearly a must for retail businesses to remain ahead, not just afloat, in FMCG. But transformation doesn’t have to mean starting from scratch or losing carefully developed and refined processes, it should be flexible enough to enable both.
“We have some very bespoke processes that we were able to pick up and put in Anaplan very easily,” says Ammons. “They didn’t tell us: you have to adjust your process so that it fits with what Anaplan can do.”
“When we went through our integrated business planning journey, we started the same as everybody else,” adds Chou. “Once we realized the capabilities of Anaplan, we almost did the opposite. We went back to our fundamentals and said, ‘What are the key business decisions that drive value to us as a company?’”
7. Plan for the future
Even if you can’t predict the future, you can — and should — plan for it.
For Kroger and 84.51, transformational planning is part of an evolution that is building momentum across the business, with the digital media and advertising team currently carrying out testing, while the FP&A team focus next on workforce forecasting.
Across the pond, Asda is building out a robust project to evolve their pricing execution model to include all legal and compliance checks required of price changes, so that Anthony Chou’s team can continue to respond to consumer demands faster, and with total confidence.
Learn more about these FMCG retailers’ Connected Planning journeys by watching their full, on-demand Anaplan Connect sessions: