What CPG Companies Can Learn from a COVID-19 Thanksgiving

At this point, it's too late for unprepared companies to pivot in time for Thanksgiving. Here, Ronen Lazar examines what's likely to be a rapid rise in excess CPG inventory.

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The next curveball of 2020: The Year of the Unprecedented will be here in just a couple of weeks. As COVID-19 case counts continue to reach record highs across the United States, a steep decline in traveling for large Thanksgiving gatherings is expected to ensue. Typically, almost 50 million Americans travel at least 50 miles for the annual holiday, but only 29 percent of American consumers polled in a recent IRi market research study said they will be sharing a Thanksgiving meal with extended family this year — a drop from 48 percent in 2019. 

It’s important to look at how Thanksgiving during a surging pandemic will directly impact the way grocers, food manufacturers and CPG companies approach the holiday. An uptick of smaller gatherings with smaller portions around the table will exacerbate unpredictable demand volatility and shifts in consumer spending behaviors. And since CPG products typically move through the supply chain 30-45 days in advance of major holidays, it’s already too late for unprepared companies to pivot in time for Thanksgiving. As a result, there will likely be a rapid rise in excess inventory throughout the market that, unfortunately, will end up as food waste.

Thanksgiving Trends

First, let’s take a look at the situation from a fulfillment perspective. Consumers have already started purchasing mainstay cooking items in anticipation of potential shortages caused by the next wave of COVID-19 cases. There has also been a higher priority from food manufacturers and sellers to supply more products that align with small gatherings and value-based shopping. For example, grocers are focused on acquiring higher volumes of small turkeys, by-the-pound options and to-go meals that are better suited for 4-to-6 person gatherings in order to meet shifting demand. Because of this, farmers that started harvesting traditional-sized Turkeys in the spring, without any foresight of how the pandemic would affect Thanksgiving, are now stuck with too many big birds and not enough small ones — a challenge that directly compares to the obstacles CPG companies are facing.

The Cause-and-Effect of Stockpiling

Traditional CPG forecasting models and inventory planning based on historical Thanksgiving consumer behaviors are useless this year due to unpredictable demand. Grocers are scrambling to stockpile essential products to avert similar shortages to March, and while stockpiling high volumes of inventory may seem like a valid solution to combating this unusual holiday season, it also presents a major risk. It’s true that extra inventory will allow grocers to withstand periods of holiday panic-buying or supply chain disruptions, but it will also create high volumes of excess if lockdowns are re-instituted and demand suddenly drops. Then, both grocers and the CPG manufacturers will be left with an array of wasted products and raw materials that hurt profits, brand reputation and the environment.

The Alternative Solution

CPG companies have an alternative solution to mass stockpiling — to prioritize back-end operations through investments in digitization. Innovative technology solutions like blockchain, advanced analytics, automated intelligence, machine learning and IoT can provide companies with the increased visibility needed for enhancing the agility of their operations. Visibility provides CPG companies with actionable insights in real-time, empowering them to conduct accurate short-term forecasting, direct-to-consumer distribution and just-in-time delivery of goods — all of which are methods that streamline the supply chain and cut down the need to overproduce amid periods of volatility.  With the added visibility, CPG companies can also develop supply chain resiliency that will be vital to withstanding future pandemic-related disruptions.

The Final Word

Ronen Lazar Headshot (1)So on a positive note, successfully navigating the rest of the holiday season isn’t a total lost cause. In order to act on lessons learned from an unusual Thanksgiving, CPG companies should begin (or expand on) leveraging advanced technology to adopt a more agile approach that can limit waste, meet demand and preserve profit margins during the December holidays.

Ronen Lazar is the chief executive officer of INTURN, a platform helping companies sell their excess inventory remotely and more efficiently.

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