Retailers take a new approach to addressing
out-of-stocks
 

By Farrokh Abadi
President & CEO,
Shrink Mgt & Merchandise Visibility Solutions
Checkpoint Systems

Retailing has always been a tough business, marked by demanding consumers, tight profit margins and intense competition. Retailers also have had to overcome challenges such as managing inventories, controlling shrink, representing their brands in an innovative and attractive manner and maximizing every square foot of selling space, while improving shoppers' experience.

Today, however, the stakes have been raised to even greater levels for retailers in every geography, vertical market and store format. The global economic downturn of 2008-2009, followed by its slow and unsteady recovery, has pinched shoppers’ wallets and put even greater pressure on retailers. Even as weak players fall out of the market, new competitors enter just as quickly, often from unexpected sources. Competition for a share of the shopper’s wallet has never been greater.

At the heart of the challenge for retailers is the same priority they’ve always pursued: creating a great shopping experience that results in customer satisfaction, repeat purchases and word-of-mouth referrals. In essence, retailing is still about making sure the right products are in the right place and at the right time. This quest to ensure availability of the products customers want to buy, however, is more difficult than ever. More dramatic shifts in customer preferences, the need to turn over inventory faster and more often, the growing complexity of global supply chains and the disruptive impact of Internet retailing are forcing stores to innovate more boldly and faster than ever when it comes to ensuring merchandise availability, over many more channels.

The Retailer’s Enemy: Out-of-Stocks

For retailers, more attention and resources must be allocated to ensuring that shelves are properly stocked at all times, and are replenished immediately as merchandise leaves the store. While every retailer understands the economic impact of out-of-stock situations – lower sales and profits – they also realize that when shoppers aren’t able to buy a specific item because it’s out of stock, they’re highly likely to leave the store and buy elsewhere. For instance, the Retail Feedback Group’s 2012 Supermarket Experience survey noted that an astonishing 50 percent of shoppers who couldn’t find an item in stock went to another store to purchase it. We can readily surmise that this extra time and inconvenience causes shoppers to feel frustrated and dissatisfied.

In essence, out-of-stocks must be avoided by retailers at nearly any cost. Out-of-stocks rob retailers of sales, profits and customer goodwill. It annoys shoppers and even forces them to... read more.