Blog > Solutions for distributors to mitigate demand spikes
Valentine’s Day, like many holidays, creates a short-term demand spike in a number of categories that food distributors need to prepare for. And it isn’t just about flowers and chocolates, although along with jewelry these obviously figure largely in Valentine’s Day gifting. Reliable solutions for distributors with purpose-built capabilities that cater to your industry are vital to mitigate these demand spikes.
Impending impacts to foodservice and distribution
There are a number of traditions around Valentine’s Day, and the recent pandemic has actually heightened the number of people who think it is important to celebrate this holiday (73 percent) and those who plan to actually celebrate it (52 percent) in some way with family and friends.
There is some evidence that people are looking for different activities beyond the usual, with singles and couples throwing dinner parties and get togethers or doing outdoor activities. According to the National Retail Federation, 41 percent planned to celebrate at home, which could mean an increase in fresh food and meat categories in the supermarket in the week prior to Valentine’s Day. Among those who said they’re not going out to dinner, 63 percent plan to make a special meal at home, and 35 percent plan to order takeout.
But, candy, cards, flowers, dining out and romantic getaways still rule. So here we’re going to discuss the latter two.
Big date nights = is hospitality ready?
Nearly half (43 percent) of those celebrating plan to go out to dinner, with a further 15 percent undecided. So Valentine’s creates a short spike in or around February. Theoretically this means some suppliers should see an uptick in demand in the week or so prior.
This uptick shouldn’t be a surprise to anyone, so it’s more around predicting the size of it, on what things, and with whom. Looking at your sales for previous early February periods by category will help here.
An enterprise resource planning (ERP) system, and especially an ERP that is purpose-built for food distribution, makes it easier to review the previous year’s sales and provide forecast demand projections for the current year. A robust ERP also looks at your sales in real-time so you can adjust on the fly if you see certain categories moving faster, or slower, than projected.
If your ERP is combined with a good order management system (OMS), you can help push slower moving categories and products through an integrated advertising and push order capability, such as a popup at checkout that asks, “Do you also want to purchase X?”. An OMS will help you react to both increased and decreased demand in certain categories. You could even make recipe or ingredient suggestions to customers based on what you’ve seen demand for in previous years or based on complementary categories to those with the highest sales spikes.
Then there are your warehouse management system (WMS) considerations. If you have an uptick in picks across categories at the warehouse, or more activity on the receiving side, then you need to plan for additional labor. An automated WMS can help with scheduling for this demand.
Romantic getaways = local demand spikes
In 2023, Americans are planning almost 50% more Valentine’s Day trips than in 2022, according to Allianz Partners. 71 percent of the itineraries reviewed are for domestic trips and 29 percent are for international ones.
Perhaps unsurprisingly, eight of the top ten destinations are somewhere warmer: Florida (Orlando, Fort Lauderdale, Miami); Hawaii (Honolulu, Maui); Phoenix, Las Vegas, and Los Angeles. The other two likely revolve around skiing, being Denver, Colorado and Salt Lake City, Utah.
So you can expect local pockets of demand to most popular destinations. This means being prepared for higher than usual demand from hotel properties and upscale restaurants in these locations across the week either side of Valentine’s Day. Make sure your local distributor has sufficient stocks for the spike in demand. Look to your previous year’s sales in these destinations around early February, and a broader analysis of geographic locations in which you saw sales spikes in early February last year.
As with date night dinners out, you can use your ERP, OMS and WMS systems to leverage this demand.
The purpose-built solutions for distributors
Valentine’s Day is a perhaps underleveraged occasion to not only cater to additional demand but upsell on supply. Good data analytics of previous years, coupled with a good OMS will help you leverage increased demand in certain categories.
By anticipating trends such Valentine’s Day you can get prepared with the Ignition by TELUS Consumer Goods suite of distribution solutions. Contact our distribution experts for more information on how and to request a software demonstration.