If your customers can’t find a product, they can’t buy it. It might sound simple, but in reality, it’s much more complex. It’s not just about having the right amount of stock in store, it needs to be in the right place, and exactly where your shoppers expect to find it.
You make careful strategic and tactical choices to stock consumer goods in your stores. But if these products aren’t available for shoppers to buy due to being out of stock (OOS), damaged, misplaced or without the correct POS, then you potentially lose that sale. Items out of stock, often caused by replenishment issues, are a continued frustration for shoppers, retailers and brand owners. According to Harvard Business Review, poor inventory control causes at least a 4% loss in potential sales, with the real chance that this frustration leads them to leave the retailer or brand forever. With the growth in online service from store, Click & Collect and Delivery, it also has the potential to upset online customers.
For many retailers, internal manual gap checks assess the shelves at specified times every day, but the inefficient processes put extra strain on stretched replenishment teams. These checks are often supplemented with store inventory data, but in stock availability doesn’t always equate to a product being ready to purchase, and availability in the store’s warehouse is unlikely to delight the shopper.
From our extensive research and experience, we know that 35-50% of lost sales issues can be fixed at store level, while the rest require upstream intervention. Root cause analysis allows you to understand the broad cause of all items out of stock and resource appropriately. So, you can remedy both immediate and strategic issues for the long-term through process improvement.
One grocery store delivered payback within three months, showing a 1.27% month-one like for like sales improvement
An APAC grocery and convenience retailer attributed 1.8%pts of its annual like for like sales growth to this product
A $46bn multi-format retailer recorded an overall test vs control sales uplift of 0.40%, in the three months prior to full roll out