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This piece was originally published on Search Business Analytics.
Soft Stuff Distributors was faced with a choice when the spread of COVID-19 began to affect the economy: either pivot its business or perish. Soft Stuff, founded in 1990 and based in Jessup, Md., is a wholesale food distributor owned by Bob and Lois Gamerman. It specializes in desserts; baked goods like cupcakes and croissants; and savory foods, including soups and hors d’oeuvres. Its customer base is made up largely of restaurants, hotels, convention centers, and schools.
After a strong start to 2020 that saw growth of 21% year over year through the first nine weeks of the year, demand for Soft Stuff’s products started to wane. COVID-19 was spreading, and nearly all the industries that make up the company’s customer base were being affected. By mid-March, Soft Stuff’s business plummeted, falling to 20% of where it had been at the same time in 2019.
With no end to the pandemic in sight and no clear future date when hotels would again be filled and convention centers hosting events, Soft Stuff needed to pivot its business model to survive.
Adopting analytics before COVID-19
One year before COVID-19 struck, however, after 29 years operating without a business intelligence software platform, in early 2019 Soft Stuff started using Sisense, a BI vendor based in New York and founded in 2004 whose platform is aimed at business professionals and doesn’t require the skills of a data scientist.
Analytics quickly permeated the organization, and Soft Stuff became a data-driven company with not only the executive team relying on analytics but also its sales and accounting departments.
And in early 2020, Sisense became a critical tool for Soft Stuff, not to help grow its business, but to quickly identify that something was changing. The company realized it needed to do something drastic to deal with an economic crisis that was hurting the industries it worked with most closely and was only going to get worse.
“Talk about a market you don’t want to be in,” said Amir Orad, Sisense CEO. “What they saw was at first a slow and then an immediate decline in orders, revenue, demand. And the data showed this is not going to go away anytime soon.”
On March 16, a Monday, Soft Stuff’s leadership held a meeting at 9 am. Remaining a business-to-business wholesale food distributor was no longer an option. Executives decided to pivot the business and become a business-to-consumer food distributor — essentially, a grocery store.
And just as Sisense played a critical role in helping Soft Stuff quickly identify a rising problem, the platform helped Soft Stuff plan and develop Shop Soft Stuff — its new venture — and is now a critical tool as the company tries to grow its new business.
Unleashing the power of analytics in the COVID era
Soft Stuff was a success before Sisense. Over the course of 29 years, the Gamermans built a business that employed about 50 people and had 2,500 customers. But managing that business with spreadsheets was cumbersome and didn’t provide any competitive advantage.
“Thirty years ago, people only dreamed of having information at their fingertips that would allow them to make better, more informed and thoughtful decisions about how to operate their business,” said Lois Gamerman, Soft Stuff’s president and CEO. “Bob is very much a visionary, I’m very much an implementor, and [director of technology and business operations Darren Klinefelter] is the analytics person. And it was time to start running a business like we belonged in this century and not the last.”
Klinefelter, in particular, has a background in data and statistics, and was key to the decision to adopt an analytics-driven philosophy and develop a data-driven culture.
“If you look at the archetype, the template for a data-driven company, it’s not them. They are not who you would expect, but the future is companies like this getting a leg up by transforming their DNA,” said Amir. “Every company is a data company, and if you’re not using it, you’re losing it.”
Bob Gamerman, Soft Stuff’s COO, and Klinefelter took on the task of vetting different BI vendors. They looked at Microsoft Power BI, among others, but ultimately chose Sisense because of how it enabled users to join together different data sets.
And while the dramatic growth Soft Stuff experienced in early 2020 can’t be directly tied to its adoption of Sisense, how the company can now more easily get an overview of everything that’s happening within the business and identify potential problems at an early stage can be directly tied to Sisense, according to Soft Stuff.
“It’s hard to quantify the full effect,” Klinefelter said. “I was able to see in more depth the customers that come to our website and we started tracking better our e-commerce ability.”
In addition, he said, Soft Stuff could quickly identify a drop in sales, whether with an individual customer, product type, or geographic region. That then allowed the sales team to react, using data to focus their efforts.
Eventually, when sales started falling precipitously in March 2020, it was data that led Soft Stuff to the quick decision to pivot its business, with Sisense playing a role in choosing to open a direct-to-consumer grocery service.
The crisis begins: business drops precariously
On the morning of March 4, Bob and Lois Gamerman had to be in Washington, D.C., at 8 a.m. for a speaking engagement. Under normal circumstances, the drive from the Baltimore area to Washington, D.C., took two hours in morning traffic. That day, including a stop to deal with an email problem, it took an hour.
When they arrived in Washington, D.C., there were few cars in the streets, and no one walking on the sidewalks. Lois Gamerman started asking what was going on, why the nation’s capital was nearly deserted on a Wednesday morning at rush hour.
“No one wanted to give [COVID-19] credence, but we began to see a shrinkage in momentum right around that point,” she said. “By the 13th of March, knowing what we were doing last year versus this year and tracking it with analytics, we saw stuff was going on. It was bubbling.”
It was a time when states hadn’t yet issued stay-at-home orders — California became the first on March 19 — and many restaurants and bars were still open for business. Schools in many areas were closing but were expected to reopen in just a couple of weeks.
The data, however, wasn’t telling Soft Stuff that the declines it was seeing would last just a couple of weeks. It was telling the company that the pandemic could have a lasting effect on the economy, and that the types of businesses it relied on for orders were being affected more than most others given their almost complete reliance on foot traffic.
Tackling change with analytics
On March 15, the Sunday before Soft Stuff’s Monday morning meeting, Lois Gamerman asked everyone in the company’s leadership to reread Who Moved My Cheese?, a book by Spencer Johnson, M.D., about how to deal with change.
The next morning, Soft Stuff’s leadership discussed ideas about what to do if the U.S. shut down the same way Italy had shut down in response to COVID-19.
With data models projecting U.S. deaths at potentially well over 1 million at the time, Soft Stuff acquired the domain midatlanticmorgue.com. The Gamermans reasoned that if the number of deaths overwhelmed the capacity of morgues, there was going to be a need to store the bodies before they could be buried or cremated, and Soft Stuff had the freezer trucks and warehousing space to help do so.
The suggestion that kept coming up, however, was a business-to-consumer model.
“Individual people had been wanting to buy from us for years, but we said we don’t compete with the people who keep us in business,” Lois Gamerman said.
That dynamic, however, changed when the people who kept Soft Stuff in business were no longer able to do so because they were either closed or seeing far less demand for their own services and therefore needing far fewer products from Soft Stuff. Meanwhile, using Sisense, Klinefelter had been keeping track of all the individuals who had come to Soft Stuff’s website or made phone or email inquiries about placing orders but didn’t own a business.
“We started to gather this data not ever thinking we would go to B2C, but still having this data in our back pocket to produce a business case that was more B2C-centric,” Klinefelter said.
Similarly, Sisense enabled Soft Stuff to better understand product demand.
“Not knowing we were going to make this move, our ability to analyze our product movement was of benefit because it put us in a better position to be more nimble,” Bob Gamerman said. “It limited some of the buildup of inventory that might have occurred.”
Finally, once the company decided to pivot the business and focus on a business-to-consumer model — while still maintaining what remained of its business-to-business operation — Soft Stuff developed Shop Soft Stuff and got it up and running in less than three weeks.
Making tough calls to weather the storm
One of the hard decisions Soft Stuff’s leadership had to make at that meeting on the morning of March 16, with orders declining, the economic outlook darkening, was to furlough 27 employees. And one of the immediate benefits of developing an entirely new business was that Soft Stuff has been able to bring many of those 27 people back.
But Soft Stuff is still figuring out its new business. Thanks to its pivot, revenues have returned to 35% of where they were a year ago — after bottoming out at 20%. Knowing that the travel and tourism industry may take a long time to come back, and that the conference and convention business could also struggle over the long term, the company has muted expectations about the return of its business-to-business traffic.
“We’re hoping that we’re back up to 80% within four months,” Bob Gamerman said.
Meanwhile, Shop Soft Stuff has the potential to keep growing.
The business-to-consumer model Soft Stuff has developed is unusual, and brings with it efficiencies that physical stores don’t have. The biggest of these, of course, is that Soft Stuff doesn’t have to buy or lease space in addition to its warehouse. Rather than keep food in a warehouse and then bring it to a store where shoppers can buy it, Shop Soft Stuff cuts out that expensive middle step. In addition, Shop Soft Stuff is different than grocery delivery services that don’t own the food itself.
“We’ve talked about going B2C for a long time but … if this hadn’t happened, we would have eased our way in,” Bob Gamerman said. “But this made us build a grocery store, and in doing that it’s given us an opportunity to disrupt what the grocery business is all about.”
Beyond the specialized products Soft Stuff previously offered, it’s added what anyone would expect from a grocery store: meat, poultry, fish, produce, dairy, and other items. Customers can choose curbside pickup or delivery, and delivery is free on orders over $99. Meanwhile, as Soft Stuff plots its future, just as Sisense played a role in quickly identifying the need to pivot the business and the decisions that led to launching a business-to-consumer, the analytics platform will play a role in future decisions.
“We need to absolutely use the data to analyze the previous portfolio of products that we offered to customers in the pre-COVID-19 world,” Lois Gamerman said.
Soft Stuff will need to figure out whether people will ever buy soup or salad in a corporate cafeteria again, whether they’ll buy a single cookie or banana in an open setting and whether hosts will ever again serve hors d’oeuvres at parties. And rather than plan on a seasonal basis, strategizing every six months or so for the next six months, Soft Stuff’s planning will need to be fluid.
“There are large swaths of our business that are gone,” Bob Gamerman said. “The data is going to be very important to the company to determine what products we keep, and the size of the products.”