Adapting in the battle for the Stay-At-Home economy
There is no doubting 2020 has broken old habits and formed new ones. This is particularly true for traditionally-minded consumers who are being forced to embrace the wide variety of platforms available to them. From online ordering of dinner, groceries and pet care; to work and personal communication; to the way they consume content.
As demand patterns change and people's behaviors centre around the home, it has created a seismic shift in focus to the share of wallet – as the CEO of ABinBev put it: “occasions have migrated to the homes”. This has created the battle for the stay-at-home-economy, most clearly seen in the blazingly fast acceleration of e-commerce, where early on in this pandemic the total online spending in May hit $82.5 billion, up 77% year-over-year. Out of necessity, more and more people have had to become comfortable with technology to access their everyday items. This shift is unlikely to go back to pre-COVID-19 levels as consumers form lifelong habits (in certain categories).
Not only has this dynamic demand shift increased forecast error in core operating models, but it has also created even more competitors. A short supply of typical “go-to” brands, plus curiosity and the ability to try something new has allowed lesser known brands to gain exposure to a new audience: more than 34% of U.S. shoppers are adding new brands to their consideration set.
Understanding the changing patterns of demand
As I have said before: demand is like energy — it hardly ever just disappears, it gets transferred. The transference in the current environment can be seen in the shifting demand patterns triggered by consumers being at home more, with a restricted radius of travel (both self-imposed and government mandated).
This rapid change in the past 10 months has created a battle for the stay-at-home-economy where the winners will be the ones who adapt to the changing patterns in demand to gain new and loyal customers. This requires companies to tap into the catalysts that drive at-home purchasing such as sports games, which drive food, beverage, apparel purchasing and more. That's why we built Live TV Events, to enable our customers to better predict demand surges at store (pre-game) or delivery area level driven by the broadcast of Live TV Events such as sports.
Along with a vast amount of historical data to help train models, we have also pioneered a world first predicted viewership feature. As crazy as it sounds, there is nothing currently in the market that produces forecast-grade data of predicted viewership (that can adapt to the changing viewing environment week by week). This allows demand planners to further improve forecast accuracy days, weeks and even months in advance!
Tapping into perfect storms of demand
Let’s look specifically at occasions or events that drive surges in demand within households. At a macro level you can see government mandated events such as lockdowns driving massive surges in the viewing of streaming content with Netflix alone adding 15.77 million paid subscribers globally in the first quarter of 2020. Yet entertainment subscription services don’t have unlimited shows, so this also had the inevitable adverse impact of people running out of quality content to view (the downstream ramifications on streaming content is likely to get worse given the wider disruption to content production).
Enter non-attended but widely broadcast live sporting events. New content for passionate fans craving escapism with their favorite team. Although it should be noted that sport viewership in itself has been changed by COVID-19 (something we took into consideration when building Live TV Events, but more on that later). Given that some of the available eyeballs have – for the first time – had a choice to watch their favourite NFL, NBA and NHL teams all at the same time.
This context creates specific conditions that impact demand. The companies that will win the battle for the stay-at-home economy will know about these in advance so they can prepare, which means seeking out high quality, contextual data to vastly improve demand forecasting. So how do you understand and leverage the tens of thousands of major sporting events being broadcast every year? What is the scalable opportunity which would give companies a competitive edge?
Seize the opportunity to adapt
This perfect storm is an opportunity for businesses such as QSRs, CPG, on-demand/delivery, retail and many more to adapt the way they predict demand. Just like many of our customers train their models on our demand causal factors such severe weather, school holidays, conferences, politics and the other 10+ categories (and counting), they can now do the same with live tv events. By taking these dynamic anomalies into their models, they can further reduce their forecast error creating immediate options to target revenue gains or cost optimization.
The gains made through ingesting external intelligence like Live TV Events are not one-off either. They create immediate value for optimizing labor or better predicting supply chain needs, but also shift models from being relatively static to more continuous by default. This adaptability within forecast models creates a level of resilience that businesses are quickly realizing is mission critical for thriving in the next normal and beyond.
Certainty in a time of great uncertainty
This year has been marked by severe disruption. While a number of effective vaccines are looking increasingly likely for mass distribution, this will only make 2021 even more dynamic as recoveries will be hyper-localized and fragmented. In a time of great uncertainty and anxiety around the ability to forecast accurately, companies need to stop simply relying on their internal data to shape their future. They can find greater certainty and adaptability by including intelligence from external data.
While many businesses are adapting to the new battles raging for consumer dollars, it’s also true that when looking at China, Vietnam and New Zealand the next normal looks a lot like the old normal. We also know that the recovery is different based on country, state, and even city, but no matter what the recovery may present, we have you covered.
I also hope that despite the horrendous suffering endured by many, we can take some of the potentially positive elements from 2020 such as; spending more time with our kids, not taking things for granted, focus on health and well being (not just individuals but governments), greater working flexibility and a better understanding of the impact we have on the environment.
