How big of a problem are Out of Stocks? According to CNBC, retailers lost $634.1 Billion in 2015, and that number is continuing to grow every year. As of 2018, that number has grown up to be $984 Billion, according to IHL Group. So how prevalent is the issue? 1 in 3 shoppers finds at least one item out of stock when they go to the store.
Why are out of stocks so costly?
Many consumers are already turning to online shopping and the convenience of One Day Prime Shipping from Amazon to buy the things they need daily. When consumers choose to fulfill their needs at a local store, it is typically to meet one particular demand: they want or need the item right now. Some other reasons they find to buy in-store over buying online include the desire to support their local community, or laws are limiting the ease of purchasing specific items online like wine, beer, and spirits.
So, where is the money being lost when they can't find the item right then?
When Amazon Prime members find empty shelves, 52% have said they will pull out their phones and buy the item right then. They aren't taking the time to look around the store for the item or ask an associate to help them locate the item. IHL released a report that found that "upwards of 24% of Amazon's current retail revenue comes from customers who first tried to buy the product in-store."
How do I stop losing money due to out of stocks?
The quickest and easiest way to prevent lost sales due to out-of-stocks is to keep items in stock and on the shelves. Keeping data collected from both the shelf and store levels gives you valuable insight into what products are moving quickly in the market. Using this information, you can decide on planogram changes needed, so you always keep inventory on the shelves. You can also gain insight into the best back stock levels you need to continue to fulfill your customer's needs and wants at each specific store.
Here are some simple tips our customers have found helpful:
Don't worry just about the shelf level inventory
The easiest way to prevent Out of Stocks is to know where you are running low on inventory or where you move inventory the quickest. EasyCheck customers are now using our newest EasyChecks feature to complete daily and weekly checks of both what items are out of stock at the shelf level and to keeping track of what items are out of stock in the restock areas before they leave a store.
Monitor your store inventory levels using history.
Don't just look at the store sales information to know which items are most popular at a specific location. You may be missing some vital information due to out of stock items. Some products may be selling more due to others not being on the shelves. Look at your rate of sales based on the base count you begin with at a full level. If you stock 100 cans of product one and ten cans of product two, look at what your sales rate at the end of the week. You may be seeing out ten cans of each one, but product one has a 10% sales rate while product two has a 100% sales rate. Look at adjusting your shelf counts for each product to optimize your sales and increase your sales in the process.
Out of stocks don't have to become a problem for your business and can give you the ability to capitalize on tremendous opportunities your competitors are missing at the store level. Take a look into how your business is looking at these key data points and see what ways you can improve your field-level execution and eliminate out of stocks for your business.