How to predict demand surges (and drops) you can prepare for in inflationary times
With high US inflation likely to continue for the foreseeable future, businesses are adjusting their plans and seeking efficiencies. The good news is there are easy-to-implement measures companies can take quickly to understand what drives significant surges and drops in their demand. Minimizing guess work - and aligning your staffing and inventory to incoming demand - is critical as inflation drives costs up and consumer spending down.
Because of the upward pressure on costs (especially fuel) and the impact the increased cost of living has, businesses are seeking ways to plan with confidence. In particular, companies are looking to:
Ensure their inventory management aligns with demand to minimize out-of-stocks and costly expedited restocks.
Identify when reliable demand surges will occur so you can plan your staffing or partner mobilization with confidence.
Have more insight into demand highs and lows for the industries that dynamically price their offerings, especially those that are impacted by high fuel prices such as parking, delivery, transport and domestic accommodation bookings.
Identifying which events impact your demand so you can factor these into your planning or forecasting is a valuable tool for all three of these problems, so let’s explore how to use events in forecasting so you can plan your inventory, staffing and promotions with confidence.
In an inflationary environment, people are more likely to limit their incidental spending but we’ve seen no impact to events being scheduled. These events become moments to look forward to for people and will drive discretionary spend towards, therefore represent even more meaningful drivers of spending on food, entertainment, transport and accommodation than usual.
Events drive billions per month in economic spending in the US: work out what kind of events impact your demand
The economic impact of events is massive, predictable and easily factored into your staffing, inventory and pricing plans. We recently conducted some analysis to identify the spending impact of events occurring in the USA in March 2022, and found more than 12,000+ events drove around $5 billion in spending for accommodation, dining, entertainment and transport. You can find out more details about this modeling here.
Whether you start with a deep dive analysis of your transactional data with our seven years of historical and verified event data (we assist with this), or you want to get started ASAP, using events to improve your planning accuracy has never been more important. We work with leading companies in the QSR, grocery, retail, on-demand delivery, rideshare and accommodation space, as well as the technology platforms that target these industries, so we can recommend a starting set of categories to get moving quickly.
Pinpoint which locations will be impacted and update your strategies
Let’s say you run a quick service restaurant or coffee and snack chain with eight locations across Chicago. We know from our data lake that the categories that most impact demand for these types of stores include:
Expos (and some conferences)
Most community events
But this impact will vary depending on store location. Your stores directly near college campuses are more likely to experience drops and surges as students go on break, return to college, hunker down to study for exams as well as when their families or alumni visit for bigger events.
Whereas your locations in the center of the city locations are less likely to see major college date related impact, but will be far more likely to be disrupted by expos and conferences clustered around their locations.
Most of our companies search by radius or location of each store. Some use this to create a list or calendar of impactful events for hotel, store or revenue managers to make decisions from, while others integrate this directly into their machine learning models.
Create more dynamic strategies that are real-world aware: flex up to meet surges and mitigate losses during quiet times
When companies become real-world aware, they can notice patterns they missed or thought were incidental. For example, it’s not just that demand at some QSR outlets and hotels is higher in March as people are out and about more as spring arrives - the return of college sports and spring break can drive significant (and predictable!) shifts in demand they can prepare for.
For example, one of our customers is a major coffee and snack franchise with thousands of stores across the US, many of which are strategically positioned near college campuses and stadiums. By knowing each colleges key dates (which vary by institution and are fiendishly difficult to extract and verify) and up-to-date college sports schedules, they were able to roster on the correct amount of staff for what had previously been frustratingly erratic demand shifts store-by-store, saving thousands of dollars each week nation-wide in overstaffing in the quiet periods, and thousands in understocking during the peak times.
Increased inflation will impact demand in a range of ways, so identifying overarching changes to your demand and the impact of events will enable more accurate strategies you can trust. This is particularly important when it comes to managing your workforce. No one wants to lose money on staff oversupply, nor do they want to risk losing staff in these competitive times with constant roster updates, sending people home early or overworking their staff.
Another customer in the accommodation space uses event data to understand when they should be packaging their rooms with deals that specify more minimum night stays to tap into incoming conference and expo demand surges, or when they should focus on sell-through or one-night deals for key sports games and concerts. This directly impacts not just their pricing, but also their front-of-house and food & beverage management in their properties and hospitality venues.
Use demand intelligence to re-calibrate your baseline and inform core operations such as labor optimization strategies
A key way how companies deepen their use of demand intelligence is by applying their understanding of event-driven demand fluctuations to create more accurate baselines for their staffing, inventory and pricing forecasting. Knowing their demand catalysts enables companies to plan with confidence, even during periods of change and pressure such as high inflation.
Being able to identify and attribute the increased and decreased demand events drive enables companies to better understand their true baseline, which is especially important during periods of social upheaval and demand pattern change. By identifying a new quantitative baseline for forecasting or honing your team’s decision making process for stocking and staffing, your team will not only ensure they are ready to meet demand, but also minimize inefficiencies.
For more on how companies use events to create far more accurate and responsive workforce optimization strategies, you can check out this report with a simple five-step process that our customers have used to drive down inefficiencies while ensuring customer needs are met without overworking their team.