Consumers are tightening budgets in preparation for a softer economy, shifting how often they shop and what they shop for in effort to maximize their spending power. Pair this shift with financial market instability, ongoing supply chain pressures, and the continued need for an elevated omnichannel shopping experience, and it’s no wonder retailers are looking for ways to add greater agility and flexibility into their planning and operations in 2023.
However, talking about agility and achieving true operational agility are two very different things. In 2021, for instance, after a year of pandemic-related volatility, retailers around the world agreed that flexibility was key to resilience. But then 2022 arrived, and even the biggest brands found themselves scrambling to adapt their strategies and offload the excess inventory that ate into profit margins over the course of the year.
So how can retailers move from ideation to reality in 2023? Asking the following questions is a good place to start:
1. Are you using the right tools?
Using legacy solutions or even personal productivity tools such as Excel can weaken your ability to move quickly. These tools simply can’t handle data in sufficient volume for the daily insights that are required for nimble decision making. They often sit with individual users, are updated manually, and are — by nature — prone to human error and an overwhelming lack of version control. At best, you’re stuck with a monthly view because of the challenges of data management. At worst, you’re leveraging incorrect data to inform forecasts and plans that are outdated before they’ve even been executed.
Similarly, the inability to get granular with data hampers your ability to do much more than assess what’s happening with product lines at the category level rather than by SKU or with sales by region rather than specific location. Moving planning and decision making to the cloud however, where key stakeholders can work off a single source of truth using real-time company-wide data, enables more accuracy and more agility. And with the help of automation, critical planning exercises, like forecasting, can become a regular occurrence, without requiring hours of data consolidation across a variety of tools and spreadsheets.
Navigating a sudden interest rate hike or an unexpected closure of one of your key factories? No problem. You can use your real-time data in the cloud to reforecast and change direction quickly, keeping the unplanned event from eating into your margins or derailing your ability to meet demand.
2. Are you focusing on the right initiatives?
After a year of inventory nightmares — and with a recession on the horizon — it shouldn’t come as a shock to see retailers be more selective in what they buy. Similarly, we can expect to see CPG companies be more selective in what they manufacture as a softer economy pushes price-conscious consumers to trade in premium brands or shift to bulk purchases for greater savings. When that happens, product rationalization and price pack architecture will become a competitive differentiator for retailers and CPG companies.
At a basic level, this is how your organization goes about identifying the right products and getting them to the right consumers, at the right price point and the right time. McKinsey and other consultants have been talking about revenue growth management for several years now, but the next frontier will be the ability to execute the strategy at scale.
The Coca-Cola Company is doing this today with Anaplan, using our platform to collaborate with dozens of bottling partners on an optimal strategy. In fact, in its first quarter earnings release last year, The Coca-Cola Company announced that excellence in RGM helped it build “a competitive edge” and that the company “continues to raise the bar in integrated execution [with bottlers] to deliver value to its customers and consumers in an inflationary environment.”
3. Are you tapping into the right insights?
Plans are only as good as the data they’re informed by. For retailers, that means moving beyond historical data and tapping into new data sources to stay on top of everything from social media-driven trends to macro indicators and currency fluctuations. In an industry where loyalties shift quickly and every dollar counts, real-time data can mean the difference between maintaining profitability and losing opportunities to the competition.
As we’ve seen in recent years, planning needs to be an agile exercise if you want your business to be able to adapt in the face of dynamic or even volatile market conditions. In 2023, take charge of your destiny by ensuring you’re using the right tools, focusing on the right operational tasks, and leveraging the right insights to help you see, plan and lead with confidence.
Bob Debicki is the senior director of global CPG and retail industry solutions, Anaplan, a cloud-native, enterprise SaaS company, transforming how enterprises across industries see, plan and drive business performance.
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