On Tuesday in our Top Shelf blog, we brought to your attention a Chain Store Age article citing a study conducted by The Retail Feedback Group on Out-of-Stocks (OOS). The article called OOS the number one factor that stands in the way of shopper satisfaction. Today we will look at another Chain Store Age piece by guest columnist Jeff Weidauer of Vestcom International Inc. Weidauer takes another look at OOS, this time digging deeper into the causes and finding that the majority of OOS arise from problems at-retail. Here are some of the main points:
-The author tells us that the food industry OOS average is eight percent of the total store at any given time. In a 40,000 SKU store, this equals over 3,000 products. That statistic is eye opening to say the least.
-It gets worse in the eyes of the shopper. OOS items are generally more common on sale or high demand items. That raises the shopper perception to more like 25 percent.
-OgilvyAction says that 13 percent of shoppers leave the store without making an intended purchase due to OOS.
-The GMA estimates that 25 percent of OOS items are actually in the store, just not placed or restocked on the shelf.
- Seventy-five percent of OOS are caused by in-store problems, not by supply chain problems. This equals about four percent total sales.
If 25 percent of OOS items are actually in the store and 75 percent are caused by at-retail inefficiencies, then what are some of the problems? It might start when store personnel try to hide holes by facing them over with other product and removing shelf tags. Over time, the product slot is gone and back room stock is never brought up to replenish.
Some items are obscured by neighboring product because the available space was not big enough to fit it all in. Items are forced into other places and eventually take over space that was meant for another product. Other times, shelf tags are inaccurate or misread by inexperienced store personnel and stocked with the wrong SKU.
As Weidauer points out, it all comes back to planogram compliance. Lack of execution at the initial shelf set leads to big problems down the road. This is where the members of NARMS bring great value. All of the POS technology or shelf tag improvements in the world will not address the OOS problem if they are not executed properly in the store.
Raise your hand if you have heard this one before: if it is not on the shelf, it is not for sale. This simple statement is a universal truth of retailing and yet the issue of out-of-stocks (OOS) continues to vex manufacturers and retailers. The problem was brought to light once again in a recent Chain Store Age story reporting on a study by The Retail Feedback Group.
According to the story, The 2012 U.S. Supermarket Experience Study called OOS the number one element that negatively effects shopper satisfaction. On a five point scale, shoppers who found all the items on their shopping list rated their in-store experience at a 4.54 compared with those who did not at 3.97. Keeping a clean in-store environment is also very important, rating a 4.53 on the scale.
It is not just shopper satisfaction that is impacted by OOS. The lack of satisfaction leads directly to lost sales and lost market share. Fifty percent of those shoppers go to a different store to buy the missing item, but 38 percent forego the item all together. Only fourteen percent buy a replacement item at the store and 12 percent buy a different brand or size.
There are many reasons for the problem of out-of-stocks. If it were just one or two things, it would have been fixed by now. Lack of human resources, missing shelf tags, inability to cut-in new items and distribution voids are just a few of the factors.
At-retail merchandising and marketing service companies provide services that tackle a significant amount of the issues that result in OOS conditions. Association studies of its members and independent surveys of their clients agree that well executed at-retail merchandising activities can help achieve incremental sales gains of around 10-15 percent.
Even though much attention has been placed on the issue, the battle against OOS is still raging. The members of NARMS are on the front line for manufacturer and retail trading partners fighting that battle.
Retailers and manufacturers are using advanced analytics and shopper data to know more about their customers than any time in history. They know what the shopper buys, how often they buy and what other products they buy at the same time. The most recent edition of Competitive Edge by Willard Bishop takes a specific look at what it calls a must have in terms of advanced analytics: Macro Space Optimization.
Competitive Edge points out that in general the industry has used data to make progress in improving inventory levels and store conditions to enhance the shopping experience. However, even with all these tools at our disposal, the problem of out-of-stocks has not really improved in 20 years. Bishop numbers put the level of OOS still at almost eight percent. Obviously, it is advantageous to identify fast movers and make sure there is enough stock on hand to handle periods of high traffic.
Using advanced analytics and shopper data is an important step in taking on OOS by making store space as productive as possible. It gives us the tools to minimize potential outages and maximize sales opportunities. Once armed with that information, it is time to execute the new plans at the store and shelf level. However, this logistical challenge can take all the software and analysis and render it null and void.
In order for a product to be on sale, it has to be on the shelf. Likewise, in order for a merchandising plan to impact consumers, it also has to be put on the shelf. All the best laid plans in retail history have run into this one unavoidable conclusion, and many have failed because of it.
Luckily, the members of NARMS are on hand to make these plans a reality. These at-retail merchandising and marketing service professionals provide the trained people, retail experience and technology to roll out merchandising initiatives to all channels of retail.
The members of NARMS and their key stakeholders will be meeting at The Retail Merchandising and Marketing Conference (RMMC), held April 14 – 17, 2012 at Saddlebrook Resort near Tampa. The four days of networking, learning and motivation are coming up fast so if you have not registered or made your travel plans, do so today. The agenda and conference registration, as well as sponsorship and exhibitor opportunities for the 2012 RMMC are available now at the Conference Center on www.narms.com.
The Promotion Marketing Association Coupon Council reminds us that September is National Coupon Month. In support of this time tested sales promotion device, the council has released some pretty compelling statistics. They tell us that, “Eighty-nine percent of the overall population report that they use coupons when shopping for grocery, household and healthcare items at supermarkets.” They add that, “Ninety-seven percent of primary shoppers report that they use coupons at supermarkets.” During tough economic times, manufacturers turn to using coupons, both print and online, to get shoppers back to the store to buy their favorite brand or try a new item. According to Prospectiv’s 2008 Consumer Coupon Poll, 72 percent surveyed say they are using more coupons to make their money go further than they did six months ago. The PMA added that a typical consumer saves 7% on their grocery bill. For NARMS members the increase in coupons, mail-in offers and other sales promotion offers another opportunity to be of service to our clients. Read more