All posts by Tara McAdams

Spoiler alert! Replenishing based on prior demand is shrinking your profit

Grocery Dive
By: Planalytics


Up to 5% of a grocer’s sales are lost to shrink in perishables as over-inventoried stores are forced to throw out spoiled and unsaleable products.

Shoppers make purchasing decisions because the weather is affecting their meal preferences or the forecasted weather is affecting their upcoming plans, activities, and events. Sales are typically most sensitive to weather changes in produce, meat, and other fresh departments.

Weather-driven demand analytics reduce shrink/waste costs by 10-35% when replenishment volumes at the critical item/store/day level are adjusted for stores where unfavorable conditions will lead to reduced sales.

In a quickly evolving landscape in which the move to online purchasing is accelerating ever faster, the fresh departments around the perimeter of the store remain a key asset and growth vehicle for supermarkets. Research shows that perimeter department sales growth is two to three times the rate of center of the store, so it is an area food retailers are focused on and where the desire to avoid lost sales is the strongest. And perishables continue to be one of the primary reasons a shopper wants to go into a store, with quality, selection, and availability being key differentiators that drive loyalty to a specific store or retail chain.

The challenge, as always, is finding the right balance between having enough product on the shelves to meet customer expectations without needlessly increasing inventory costs. With the additional factor of shrink in the fresh equation, getting this balancing act is even more important.

Profiting on Perishables: Shrinking Shrink with a Better Demand Forecast

Grocery retailers generally acknowledge that the weather has an impact on consumer demand, affecting everything from overall traffic levels to the sales of specific products. Ahead of a warm and pleasant weekend, a shopper may plan to barbeque and put steaks, burgers, or hot dogs in their cart. Hot and humid conditions may make salads or fresh fruit more appealing. A turn towards chillier conditions may mean that ingredients for soups or stews find their way onto the weekly shopping list (while at the same time, the previously mentioned products are left on the shelf).

Recognizing that the weather matters because it changes consumer shopping behavior is an important “start”, but improving profit can only be achieved when weather impacts – both negative and positive – are quantified and leveraged to make demand forecasts more accurate.

When grocers integrate Planalytics’ weather-driven demand analytics into replenishment systems – whether traditional or ML/AI-based solutions – and volumes are either adjusted higher to take advantage of an upcoming sales spike or adjusted lower to account for a dip in sales, the profit impact is immediate, measurable and significant – and requires no weather impact interpretation on their part.

For example, one grocery chain that works with Planalytics was seeing elevated shrink costs in pre-packaged salads when unfavorable conditions depressed demand.

• Prior to incorporating weather analytics, stores could end up with too much inventory in one week because replenishment forecasts based volumes on sales trends that had been strong in recent weeks or the prior year.

• By ingesting weather-driven demand analytics into their replenishment system, volumes were trimmed for stores that would be experiencing a negative weather impact.

• In one week for just this one category, the retailer was able to reduce perishable shrink by over $110,000 without hurting availability and risking lost sales.

It is important to note that using raw meteorological forecast data is not sufficient. While some businesses initially try this approach, it quickly becomes apparent how challenging it is to effectively integrate temperatures, precipitation amounts, etc. into demand forecasts, replenishment solutions, and data warehouses. Even today’s ML/AI technologies that rely on weather data alone do not come close to matching the accuracy improvement generated by weather-driven demand analytics.

The opportunity to grow profit is very real and very achievable. When weather-driven demand adjustments are implemented at scale across hundreds of categories around a store’s various perishable departments, the bottom line returns add up quickly. Utilizing weather analytics to proactively optimize inventories as demand patterns change presents grocers with an effective and endlessly repeatable tactic (after all, the weather never stops changing) for shrinking shrink in fresh categories.

“Waste Not, Want Not” – Using Weather Analytics to Improve KPIs

Higher customer satisfaction and loyalty levels, increasing sales and market share in high margin categories, reducing shrink costs on short shelf-life products, and other key corporate objectives can be served by better understanding and operationally addressing the weather’s influence on consumer demand.

Analyzing past sales to understand exactly when, where, and how much the weather affects a product’s sales is the starting point. Going forward, knowing how weather-sensitive sales are for any given product by location and time period provides replenishment processes and systems with informed adjustments that correctly balance availability with shrink.

These demand forecast accuracy improvements ultimately translate into lower perishable shrink costs:

• For fruit, typical waste savings are 10% to 25%

• For vegetables, typical waste savings are 10% to 30%

• For meats, typical waste savings are 20% to 35%

Grocers would be hard pressed to find a more direct and rapid way than the incorporation of weather analytics to improve KPIs tied to optimizing store-level fresh inventories.

Learn more by downloading Planalytics’ Factoring the Weather into Grocery Demand Shifts.

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Through the retail lens: Weather’s impact

National Retail Federation

By: Sandy Smith, NRF Contributor


Planalytics’ Evan Gold on hurricanes, mild winters and what’s in store over the next decade

Evan Gold, executive vice president of global partnerships and alliances for business weather intelligence firm Planalytics, pays more attention to the seasons than most. He focuses on information technology, merchandising, revenue management, store operations and logistics.

Gold has more than 20 years’ experience in retail and wholesale, working at Macy’s and LakeWest Group before joining Planalytics in 2005. He spoke with NRF about the ways weather impacts retail and the supply chain.

Big picture: What are some key ways weather has impacted retailers in 2020?
In a typical year, the weather has a significant impact on retail. Of course, 2020 has been anything but typical. But this year, the impact of weather has actually increased, because the weather is one of, if not the, largest external drivers of need for seasonal categories. That’s what we’re shopping to.

The first full month of quarantine, we had the coldest April since 2013. We weren’t out there buying spring products. We were wanting to take care of our lawn and garden and Mother Nature said, “Not yet.” We didn’t buy a lot of those spring products until May.

The other thing I would say: A lot of major retailers have openly stated and started campaigning to move the spring and fall selling seasons to align with the climatological seasons. I’ve definitely seen this among the apparel folks, asking, “Why are we putting product out before the customers want to go out and buy it?”

Let’s talk a bit about the hurricane season: What are some unseen impacts it has had on retail?
With the hurricane season running from June through November, we have had 23 storms so far. That makes this the second-most active season, lagging only behind 2005 when we had Katrina. And we still have a couple of months to go.

A lot of people think about the impact the storm has, but from a retail perspective, people buy on the forecast of a storm. If customers are in the projected path of the storm, they will buy products to prepare, protect their property, regardless of the path the storm ultimately takes.

The savviest retailers are constantly, year-round, tuning their supply chains so they can proactively manage inventory around hurricanes or other events. They’re investing in technology, people and processes to make a more agile supply chain.

We’re not going shopping for a lot of things these days. But if I’m in the path of a storm and risking myself going out to protect my property, and worried about COVID-19, you’d better be sure that the product is on the shelf. Otherwise, they’ll go to another retailer.

Winter is rapidly approaching. What concerns you about its impact on retail for the upcoming holiday season?
We’re still living with the disruptions of COVID-19, and the shopping patterns are not what they were last year. When retail opened up, we saw consumers were willing to stand outside and do their shopping. As the weather turns colder, I’m not sure how much consumers are going to be willing to stand outside.

The holidays are going to come, and consumers will shop, but this goes back to how imperative it is that retailers have the right products on the shelves when the customer ventures out. Even though the percentage of retail done online is going up, the majority of spending continues to take place in the physical environment.

Have a plan in place to minimize disruptions around weather, such as buy online, pick up in store, reducing wait times, offering shopping assistance, setting appointment-based shopping — anything you can do to make it easier for shoppers. The weather is going to impact that trip. It’s also going to influence what they buy.

The National Weather Service seems to indicate a mostly warmer winter. In what ways can that benefit retail — and in what ways can it hurt?
You can get frigidly cold temperatures in February. Ask any retailer: They want it frigid in December. Last December, we had the fifth-warmest December in 125 years. It may still be warmer than normal, but it should be colder than last year.

It depends on when and where the warmth is. With that background in mind, in general on a very macro level, warmer weather in December can help store traffic. They may be more likely to shop if it feels warmer to them. When it’s warm in December, people may spend more on outdoor lighting and lawn ornaments because it’s more pleasant to put them out. If it’s warm, it’s a negative for all the seasonal apparel.

While we’ve talked a lot about the current weather conditions, what major shifts could impact retail over the next decade?
You have to first understand your exposure or risk to climate. Ask any retailer, “How much of your business is exposed to weather?” It will be different based on sector. Restaurants are different than home centers than apparel.

Analytics can help to not only better understand the size of the opportunity, but better serve the customer. We have more data now than we’ve ever had, so use analytics — whether it is weather or any type of analytics — to better serve the customer when, where and how they’re shopping.

The third thing goes back to that idea of closely aligning the shopping season with the climatological season. It’s a shift that we’re going to move forward.

The last thing I would say is the increased use of social with the improved supply chain. The customer has more access to information at their fingertips and the ability to shop whenever they want. As the weather becomes more volatile, the shopper is shopping based on need. If you layer in weather and can have an idea of what they’re going to buy, or do more prescriptive analytics, and be able to market and advertise into that, they’re more likely to buy from your brand.

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Planalytics Shares Insights on Gaining the Edge: How to Harness Analytics to Drive Sales and Profitability

The University of Arizona
Terry J. Lundgren Center for Retailing


Evan Gold, Executive Vice President of Global Partnerships & Alliances at Planalytics, presented an executive seminar on September 25 on the use and power of analytics in the retailing industry. This seminar is part of a series of similar events hosted by the Terry J. Lundgren Center for Retailing at the University of Arizona. Students and industry professionals learned from his talk about the many opportunities that come with collecting and leveraging data, using analytics to not only understand trends, but also to predict and enhance sales.

Planalytics, a pioneer in the weather data and analytics industry, was founded in 1996 and offers its clients and partners the ability to, “effectively assess and proactively address how weather impacts their business.” Planalytics uses its Business Weather Intelligence® platform – a data-driven tool for understanding weather’s impact on business decisions – to provide easily understood answers to a wide variety of challenges, opportunities and strategies.

Gold explained the difference between data and analytics with an analogy. He shared that, “Data is like crude oil – a raw material – and initially, companies were focused on getting as much of it as possible. However, oil has to be refined to turned into gasoline, just as data needs to be analyzed to be turned into insight.”

Gold framed the weather analytics advantage in today’s COVID-19 market where we are all seeing significant disruptions in the market. Many specialty retailers, specifically apparel, are facing enormous challenges and even closing stores while grocers and many mass merchants are seeing a huge increase in sales. With these kinds of disruptions, it can be a daunting challenge, for retailers to evaluate effectively and accurately their strategies without the use of analytics.

However, there are an overwhelming number of factors that impact business. Weather alone provides an ongoing and consistent impact on consumer purchasing. Weather is a key driver in determining the need for seasonal products and consumers are buying and shopping at their time of need. Through the power of analytics, we can view this unique year’s sales trends and record it as a “known impact.”

Gold also shared that these tools are not focused solely on large weather events like hurricanes but also on day-in-and day-out changes in weather. He shared that 90% of the volatility that weather brings comes from these regular daily changes in weather. This means that one cannot just look at weather data and see trends – one must use analytics and modeling to understand weather-driven demand or WDD.

This talk came at the perfect time as students are witnessing a significant disruption in the retailing industry as a result of COVID-19. Gold shared with students that the current need of business analytics market in today’s climate is expected to grow 20% by 2026. This talk also offered students another opportunity to consider upon graduation – a career in retail analytics. Today, many retailers have fully staffed data teams and Chief Data Officers. There are also many companies seeking support from data analysis technologies, which Planalytics provides.

UArizona Retailing and Consumer Sciences sophomore, Grace Jacobson, said her key take away from the talk with Evan Gold was, “Analytics is a rising industry that is becoming increasingly more relevant within the retail world. Having a skill set in retail analytics can greatly benefit any student or professional even if that person is not directly seeking a career within retail technology or analytics.” Jacobson also shared that while her sights were not originally set on a career in retail technology there seems to be many great opportunities in this field. “I find myself now more interested in the field. Evan’s presentation sparked a new interest in this field and taught me the importance of being knowledgeable about data and analytics.” Speakers from industry, like Gold, are opening her eyes to vast and diverse opportunities for a career in retail.

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Weatherize Replenishment to Increase Sales & Reduce Perishable Shrink/Waste

Join Oracle and Planalytics on October 13th to hear how supermarkets and other food retailers can better align store-level inventories with demand by quantifying and incorporating the weather’s impacts on consumer buying behavior.

It is not uncommon for businesses to use replenishment processes that rely on recent sales volumes or historical trends but do not anticipate the upcoming demand shifts that continually occur due to changes in the weather. As a result, certain stores end up understocked for a variety of weather-sensitive products, while others are overstocked.

Too often, sales are lost and customer satisfaction takes a hit. In fresh categories, the misalignment of inventories with demand drives up shrink/waste costs.

Join us for the webinar to learn how integrating Planalytics’ Weather-Driven Demand metrics into Oracle Retail enables companies to optimize replenishment in a scalable and sustainable manner.

Webinar topics include:

• Introduction to Weather-Driven Demand (WDD)
• How Oracle’s attribute-based demand forecasting capabilities leverage WDD metrics
• Use case examples on improving availability, reducing inventory without degrading service levels, and better managing waste in fresh categories.

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Holiday Outlook and Retail Q3 Recap Webcast

Join Coresight Research and Planalytics on Thursday, November 12th, at 2 p.m. (ET) for an outlook for the 2020 holiday retail shopping season and a review of 2020 retail Q3.

Co-Presenters:

  • John Harmon, CFA, Senior Analyst, Coresight Research
  • Evan Gold, EVP, Global Partnerships & Alliances, Planalytics

Topics covered will include:

  • Outlook through the holiday shopping/ early winter season.
  • Discussion about the holiday retail shopping season & winter-sensitive categories that will be the most impacted by weather.
  • Examination of North America regions that experience opportunity and risk in the early fall season.
  • Review of weather conditions and business impacts during retail Q3.
  • Overview of retail environment and developments throughout the quarter.

Register for Webinar.

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Planalytics Holiday Homestretch

Join Coresight Research and Planalytics on Thursday, December 10th, at 2 p.m. (ET) for our annual Holiday Homestretch Webcast.

The webcast will provide an updated analysis of the holiday shopping season at its midpoint and an outlook on consumer spending heading into the final “homestretch”.

Co-Presenters:

• John Harmon, CFA, Senior Analyst, Coresight Research
• Evan Gold, EVP, Global Partnerships & Alliances, Planalytics

Topics covered on this webinar include:

  • A review of the first half of the holiday shopping season
  • How will weather play a role in consumer behavior?
  • What will the trends be for the remainder of the holiday shopping season?

Register for webcast.

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Analyze this everyday driver of demand to improve availability

Grocery Dive
By: Planalytics


Minimizing lost sales – and potentially lost customers – due to out-of-stocks is more critical than ever as customers spend more in fewer shopping trips and competitive alternatives expand.

The weather affects consumers and their purchasing decisions on a daily basis; no other external variable shifts store-level sales trends as immediately, frequently, and meaningfully.

Weather analytics help store managers, category managers, and/or replenishment systems better align inventories with expected demand trends, rather than restocking stores based on recent or historical sales levels.

While the COVID-era landscape has increased the share of overall food dollars being spent at retailers for in-home meals, it has also led to unplanned or greatly accelerated operational costs (e.g. online ordering capabilities, curbside pickup, labor, etc.), introduced additional supply chain challenges, and raised customer expectations. High levels of customer satisfaction are critical to protecting and growing market share, and nothing puts this in jeopardy more than empty shelves.

Improving availability is important but this goal must be pursued in a cost-effective way. Refining replenishment forecasts to account for key purchasing influencers enables grocers to smartly increase stocks ahead of demand spikes, while safely trimming inventories where demand is falling.

Demand levels fluctuate substantially due to changes in the weather for thousands of items on supermarket shelves. This is especially true for fresh, shelf-stable and frozen products. For many of these products, the weather alone can positively or negatively move overall sales by several percentage points. Larger swings (10% or more) are regularly seen on a day-to-day or week-to-week basis and in specific stores. Whether directly or subconsciously, the conditions outside continuously impact the products that customers purchase. And, because the weather is always changing, shopping lists and mix of items going through the check-out lanes or into online carts are also changing on daily basis.

Historically, many retailers have tried to address these issues by depending on store personnel to make manual adjustments or by having measured and/or forecasted weather (temperature, precipitation, etc.) inserted into their existing systems. Neither approach has been sufficient. Relying on the intuition of store staff is inconsistent and unscalable across the business, and from a systems standpoint, weather information may be interesting but it does not easily translate into demand forecast adjustments.

Grocers should not overlook the weather, even in the face of the pandemic and the major shifts in retail that are underway. The linkage between weather and demand for a product has remained constant during COVID-19. The weather’s ability to drive demand up or down is durable, and the size of this weather-driven sales volatility (in units and dollars) has only grown as sales baselines for supermarkets have moved higher.

Capturing more sales by making replenishment smarter

Some leading chains are already effectively applying weather-driven demand metrics to upwardly adjust replenishment volumes for products that will see favorable weather impacts. Using weather analytics to get ahead of expected demand surges enables these grocers to reduce lost sales and the risk of losing dissatisfied customers to competitors.

Here are a couple of examples:

• A supermarket chain secured an in-stock improvement of over 20% by integrating weather-driven demand adjustments into their existing demand forecasting solution at the store/item/day level.

• A grocery/hypermarket retailer captured over €50k in incremental sales in a fresh category over just a 3-day period by increasing replenishment volumes into markets where the weather would be positive for sales.

Using weather-driven demand analytics to target when, where, and how much to boost store-level inventories generates increased sales without increasing costs. Simply over-inventorying stores could have, in theory, produced the results above but also increased inventory costs or shrink/waste levels. This did not happen in either case. In the first example, the grocer increased availability while at the same time reduced overall store-level inventories. In the second case, the retailer collected additional sales in high-demand locations while also lowering shrink for the category by trimming stock levels where unfavorable weather would curtail demand.

Optimizing inventories to account for weather impacts offers a great opportunity to increase the topline and add profit. Grocers can expect to gain a 50 to 200 basis increase in sales by improving demand forecasting accuracy and avoiding lost sales.

Integrate weather analytics to optimize demand forecasts & maximize benefits

Weather data and forecasts will not bring the demand forecast accuracy improvements needed to broadly grow sales and profit. The weather’s impacts need to be translated into SKU-level units in order to better highlight adjustments that are manually made for key items or automatically adjust replenishment system outputs in a systematic, scalable, and repeatable way.

Weather-driven demand metrics, developed through multi-year analyses of actual sales by product/store/day and corresponding weather conditions, transform weather data into quantifiable and actionable weather impact insights.

Better demand forecasts mean happier and more loyal customers, improved market share, and increased margins. Every extra dollar of profit is always great especially in the current environment in which grocers are investing more than ever to meet growing demand and the evolving needs of customers (e.g. online shopping capabilities, in-store safety measures, etc.).

Learn more by downloading Planalytics’ Factoring the Weather into Grocery Demand Shifts.

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Gaining the Edge: Harnessing the Power of Analytics to Drive Sales and Profitability

Retail is an ever-changing industry. Gaining and sustaining a competitive advantage is more challenging than ever. The webcast will discuss using the power of analytics to drive insights, understand performance, unlock opportunities, and propel your career and business forward.

Speakers:

  • Terry J. Lundgren, TJLC Corporate Advisory Board, Center for Retailing
  • Evan Gold, Planalytics, EVP of Global Partnerships & Alliances

This event is open to everyone – industry professionals and faculty, staff and students at the University of Arizona.

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Leverage Daily Demand Change Analytics to Grow Sales & Reduce Waste

It is not surprising that businesses which have replenishment processes relying heavily on recent sales volumes without anticipating upcoming demand shifts often find certain stores understocked while others are overstocked.

Too often, sales are lost and customer satisfaction takes a hit. In fresh categories, the misalignment of inventories with demand drives up waster costs. Since the weather is always changing, sales volumes vary considerably from day-to-day or week-to-week. Now, we can do something about it.

Join us on Wednesday, September 9th to hear how grocers are using Weather-Driven Demand insights to optimize replenishment for hundreds (even thousands) of their products.

Webinar topics include:

  • Introduction to Weather-Driven Demand Analytics – “Weather, Done Right”.
  • Improving Availability to Increase Sales & Shopper Satisfaction.
  • Better Managing Waste in Fresh Categories.
  • Reducing Inventory Without Sacrificing Service Levels.

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