“Beware of minimising costs and wastage in your supply chain at the expense of the needs of your shoppers”, you will hear me utter to delegates in our workshops. This was brought to life for me last week when I popped into a supermarket for few items on my way home from work.
I took a route to go past a convenient supermarket. On entering the fruit and vegetables department, I encountered a succession of depleted fixtures. As I made my way around the store it was clear several items were unavailable, and I had to make several substitutions. The last straw for me was when the size of milk I wanted wasn’t available. At 7pm on a Tuesday evening, this store was not going to get anywhere close to delivering my needs as a shopper!
Being a good shopper, I put what I had picked up back and left. On exiting, an old ECR statistic on availability came back to me. After three instances of poor availability, seven in ten shoppers will shop elsewhere. That was true for me and it only took 15 minutes to lose me as a customer.
We know through our shopper research, there are categories where an out of stock impacts store sales more significantly – including milk and produce. These are staples and customers are less forgiving when out of stocks are encountered.
Source: Shoppervista Category Benchmark Research, Jun-Sep’ 18
Back to my shopping trip… I decided to try another store. It wasn’t quite as convenient, but I was confident it would meet my needs, as it stocked a wide range and always had great availability in the past. While there was plenty of stock on the shelves, it wasn’t perfect. In fact, there was too much stock! So much so, that wastage was clearly a problem. I bought what was on my list, but I also purchased several products from the clearance fixtures. While this is probably a preferable scenario for me as a shopper, it certainly doesn’t help retailers make money.
In both cases, the stores hadn’t balanced their inventory to achieve optimum availability and minimise waste.
However, there’s one store I won’t be returning to. Yes, it might have been a one-off issue; the store may have been running down stock for a fixture relay. But as a shopper, I am not going to give them the benefit of the doubt because I don’t have to.
With a wide choice of stores for shoppers to choose between, retailers need to consider more than just matching on price to attract shoppers, they need to consider how they serve all of their needs.
Source: Shoppervista Sep ‘18 All shoppers Top reasons for choosing last store visited
In the ideal world, retailers would have an excellent grasp on inventory to minimise wastage and maximise availability. When making decisions that affect availability and waste, it’s so important to consider the impact of choices on the shopper. Getting it wrong means missed sales today and potentially a lifetime of lost loyalty and value.
With more and more focus on minimising wastage, I’m concerned we’ll see more empty shelves later in the day. We need to remember who the customer is and to not lose sight of their needs.
We recently published a report exploring on shelf availability and the factors that influence it. Take a look.