You make careful strategic and tactical choices to stock your stores. But if these products aren’t available for shoppers to buy due to out-of-stocks, damage, or misplacement, then you lose that sale. Out-of-stocks and shelf merchandising issues are a continued frustration for shoppers, retailers and brand owners. And according to the Harvard Business Review, it 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 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 the store level, while the rest require upstream intervention. Root cause analysis allows you to understand the broad cause of all out-of-stocks and resource appropriately. So, you can remedy both immediate issues and strategically for the long-term through process improvement.
One grocery store delivered payback within three months, showing a 1.27% month-one comparable sales improvement
An APAC grocery and convenience retailer attributed 1.8%pts of its 2015 comparable 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