One of the biggest nightmares for retailers, distributors and even the end customer is an out of stock item. After all, when a customer enters in your store looking to buy a particular product, and it's out of stock, you lose a sale. These may even turn things worse since your customer may think that when they need to buy something in the future, they may choose to not go to your store. After all, they left empty handed the last time they tried to buy from you.
There are many reasons why out of stocks occur. While some are easier to identify, others not so much. Here are the 3 of the most common we've found in the market.
#1: Bad inventory reporting:
A basic inventory list isn't enough to know what items are on the shelves or how many you have in stock. You need to know the exact number you have today and that they are on the shelves. Things happen in the field like spoilage and theft so you must ensure you have the product on the self you think you have. Additionally, you need to make sure that you always have sufficient product to satisfy your customer's demand. Taking the time to conduct a retail audit could save you the embarrassment of not having the right inventory count.
#2: The client can't find the product on the self:
Sometimes you have more than enough of the units in stock, but they aren't where they need to be for your clients to find them. It could be that your team has them in the back of a stock room or are in a different area of the store. Using a planogram can be extremely beneficial in this situation. When you take the time to use a planogram to precisely lay out your store and what items you will sell with others you benefit from things like cross merchandising and making your customers enjoy shopping at your store.
#3: The client can't find a product with the expected discount:
When you have a promotion running, and your customer arrives not to find the discount they were expecting, it is as bad as not being in stock. There are a group of shoppers who only shop on price, and they love finding discounts for the items they want on the shelf. Take the time to conduct your own price checks to ensure they find what they want at the price they expect to spend for it. Learn more about price check audits here.
How can you eliminate the out of stock problem?
Out of stock is not a new issue for most stores, we continue to see stores losing billions of dollars in sales every single year. In a 2008 study done by RIS News and IHL Group, found that retailers miss out on $93 billion a year in sales due to out of stocks. And this is not only a matter of losing money on lost sales. The study doesn't include any of the opportunities they missed having to do with cross merchandising of products. It can also imply the wrong image about your brand and the bad customer service you are providing to the end customer.
To avoid any out of stock problem, you need to have a tool and a plan that helps you have all the relevant data on your fingertips.
This tool and plan should be able to help you verify if you're placing the products correctly, both in-store as well as on the shelves. Having information on if you have enough products in your inventory to satisfy the demand is of great importance.
Tools like this one also allow you to access meaningful reports that enable you to manage your brand better. You can even customize reports and gather all sorts of information including competitive data and field level execution data. We will have more on execution data collection in next week's post.
When you are managing a brand, you need to be on top of everything, all the time. And with these kinds of tools, you can be in your office taking care of important business while also getting field level alerts regarding a particular product. With stock counts coming in instantly and information related to your field execution, you have the ability to manage your employees as well as provide direct feedback more efficiently.