On-shelf availability: the steps retailers need to take for better in-store efficiency.
If we believe the most recent – and comprehensive – study of global out-of-stocks, then retailers are currently running at an average rate of +8%. This is a figure that has remained largely unchanged across the past 20 years.
In simple terms, this equates to store shelves being empty for 28 days per year or the equivalent of every store closing its doors for an entire month. These figures are typically defined by gaps, but not all product availability gaps are created equal - something many measurement tools do not take into account.
If milk, chicken fillets and carrots are missing that might only be three items, but they represent a potentially significant availability problem as they are high demand, highvelocity items; if they are not there many customers stand to be disappointed.
Retailers often believe that if the shopper is faced with an out-of-stock scenario they will likely buy a substitute item, but that is not always the case.In their global study of out-of-stocks, Corsten & Gruen assess that at least 36% of cases result in shoppers abandoning their purchase or defecting to another store.
It is not just a lost sale though; as this scenario could lead to a shopper deciding never to come back – so it is the lost lifetime value of that customer that is potentially at stake.
As global grocery retail feels the squeeze from multiple disrupting factors, sales and margin growth is increasingly hard to come by, but there is a real opportunity to deliver value to the business and its shareholders. Retailers, suppliers and customers all recognize the problem – if the product is not on the shelf then the shopper has no chance to buy it.
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