50 Shades of Demand Planning
How much basic instinct do you allow your Demand Planner? A common misconception about demand planning is that it can mostly be automated by IT systems without needing much human involvement. But I would argue that the nature of demand planning requires people to apply all five animal senses to garner meaningful insights. On the topic of animal instincts, unless you’ve been hiding away in a cave since 2012, you’ll no doubt be aware of the popular culture sensation Fifty Shades of Grey. This titillating bestselling novel has sold more than 100 million copies worldwide and the widely anticipated movie is now about to be released. What on earth does this have to do with Demand Planning you might very well ask? More than you might think.
Ahead of the movie release, the leading DIY retailer B&Q circulated a memo warning all staff to expect a rush by customers clamouring for rope, cable ties and duct tape. Okay, that memo turned out to be just a bit of fun from B&Q’s PR department but behind all good humour is an element of truth.
In July 2012, The Financial Times reported that the lingerie and sex toys retailer Ann Summers attributed considerable revenue growth to the book’s wild popularity (which admittedly is a more obvious tie). According to Lightspeed Research nearly a quarter of 3,000 consumers polled had read the book. Of those, another quarter of women had decided to buy new lingerie. So not a good time to for Ann Summers to get caught short on lingerie inventory!
And here is another example of market intelligence that needed human interpretation: with the crackdown on corruption in China, sales of some luxury goods in the region have gone through the floor. When officials were faced with having to buy their own goods, many switched to cheaper and imitation brands. Indeed, another FT article entitled “China’s crackdown on luxury gifts raises industry fears” bears this out.
So demand planning can be a bit freaky and wild! Let’s not give it all over to the number crunching machines. Contrary to the conventional wisdom in many businesses today, we have to get the Demand Planners out from behind their desks and into the consumer jungle, sniffing around for the source of the demand signals. Only humans can interpret these nuanced – dare I say ‘grey areas’ of consumer behaviour – and relate them back to the demand plan.
And I’m willing to bet a fiver that B&Q genuinely sees a small uptick in demand for certain items after the movie release of Fifty Shades!
Alain Vix, Account Director and Co-Founder, Hughenden Consulting