Using AI as a Shortcut to the New Normal

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Using AI as a Shortcut to the New Normal

By Anil Kaul, Absolutdata - 06/30/2020

The COVID-19 pandemic is an ongoing seismic event in the economy, shaking up everything from global supply chains to consumer purchasing patterns. As the world reopens on various schedules and people confront the scope of the economic impact and the possibility of new regional outbreaks, uncertainty reigns. But consumer packaged goods companies who use artificial intelligence are finding a shortcut to the new normal.

CPG is faring better than many industries, but companies have faced unprecedented challenges over the past few months. Consumer demand for some products (flour, bathroom tissue, etc.) skyrocketed, and companies struggled to fulfill orders with broken supply chains. At the same time, demand collapsed for products used at restaurants, schools and universities. And consumers bought whatever they could find to stock up, breaking long-term attachments to brands.

Two Questions to Answer
As CPG professionals know, it’s not possible to reconstitute broken supply chains and switch packaging, distribution or other functions overnight. So how can you move forward with confidence in an utterly transformed environment? Getting to the new normal requires answers to these two questions:

  1. What will consumer behavior and profiles look like in the new normal?
  2. What will the demand pattern look like going forward?

To put it another way, you need to know what people will buy, where they will buy it, how they’ll buy, what quantities they’ll buy and how often they’ll buy. Prior to the pandemic, historical data provided some guidance. Now, all that manufacturing, logistics, pricing, customer engagement and general commerce data is obsolete.  

Therefore, you need answers to these two questions to help you predict what will happen. You need to prepare now for demand and channel changes so you can optimize your supply chains and be ready to meet consumers where they are. This is where AI can help.

Helping See What’s Next
If you’re pondering the first question and wondering what consumer behavior will look like in the months ahead, there’s good news and bad news — and then good news again. The good news is that there’s a ton of content on the topic — articles, whitepapers, blogs and webinars. Smart people have studied the subject and provided their thoughts — that’s the first good news.

The bad news is there’s so much content that it’s impossible for a person or even a focused team of people to sift through it all to surface what’s relevant to the business and product lines. That’s where the second good news comes in: AI can ingest massive amounts of data, find out what’s relevant, summarize it and provide insights that can help make better decisions.

AI has already discovered a number of trends to help CPGs plan their next move, including consumers’ “cocooning” behavior, which appears to have some staying power beyond initial lockdown periods. AI saw early on that people waiting out the pandemic in their homes were moving to digital-first buying habits, ordering items as varied as food, luxury goods and fashion online.

Another trend AI caught early is a new focus on frugality and quality in buying behavior. While an emphasis on frugality could be extrapolated from pervasive economic uncertainty, a consumer focus on high-quality experiences when dining out and spending on goods and services wasn’t something most human analysts saw coming. But AI was able to detect signals and provide insight.  

Trendlines and Demand Curves in Normal 2.0
Consumer focus on fitness and wellness is another trend with implications for CPGs, as is a growing preference for touchless delivery systems customers can trust to safeguard their health. But as you know, trendlines aren’t eternal. AI can monitor consumer activity for you, providing alerts as trends pick up or lose steam and giving you time to react.

In addition to using AI to pick up specific consumer signals, CPGs are building AI models to help them predict general demand curves. AI can evaluate multiple data sources, such as internal company data and publicly available information like anonymized mobile or text data. That way, it can predict when significant changes are imminent, such as accelerating or decelerating movement in regional infection rates that might trigger a shutdown or a reopening that could affect supply chains, production or demand.

Insights like this can keep CPGs nimble in uncertain times. The bottom line is that decision makers need fast access to data to get answers on changing consumer behavior as well as evolving demand patterns and emerging facts on the ground that may affect business. No one knows exactly when things will feel “normal” again, but CPGs that have turned to AI for answers have found a shortcut to the new normal we live in now.

About the Author
Dr. Anil Kaul is co-founder and CEO of Absolutdata. He has more than 22 years of experience in advanced analytics, market research, and management consulting. Prior to founding Absolutdata, Kaul worked at McKinsey & Co. and Personify. He is also on the board of Edutopia, a startup in the language learning space.