April 28, 2014 Opinion piece
In recent research conducted by ShopperVista, it was revealed that shoppers are facing increasing availability problems with grocery retailers, with 64% of shoppers stating that they have encountered out-of-stocks during store visits.
The research also focused on the follow-up activity by shoppers when they encounter this problem, which often resulted in them delaying purchases or even taking their business to other retailers rather than purchasing a substitute. Needless to say, the upshot for retailers is that they are missing out on transactions that potential customers were ready to make.
So why is product availability getting worse? There are a number of possible reasons:
Have out-of-stocks increased, or are there other factors involved?
One of the possible reasons is that it is down to perception; have out-of-stocks actually increased or are customers becoming more aware of stock levels? It may be that the weather impacted upon supply chains in some regions, leading to depleted stock. Or it could be the effect of the many cooking programmes influencing shopping habits and leading to a need for a wider range of ingredients, some of which would necessarily be less plentiful, particularly in smaller stores.
Are more frequent delivery demands impacting suppliers?
Some suppliers may be struggling to meet the demands of more frequent deliveries. Shorter order lead-times or last minute changes to orders can lead to some products missing delivery vehicles, with out-of-stocks being a consequence for retailers.
Is retailer forecasting to blame in some instances?
For the larger retailers, an increase in pick-from-store home deliveries may be running in-store stocks down in a poorly-forecasted manner.
Are ‘lean’ processes being exposed by shifts in demand?
Some stores may be operating ‘leaner’ stock management processes than others, in order to rationalise store space and minimise waste, which can easily lead to out-of-stocks when unexpected changes in demand occur.
Is optimisation the answer?
In reality, a rise in customer perception of out-of-stocks is likely to be due to a combination of all the above. One possible solution would be to focus on optimising the automated goods receipt process, enabling quicker reaction to notified shortages (meaning replacement stock can be ordered more quickly), quicker turn-round times at depot making products available for picking quicker and fewer products rejected or left until end-of-day to be booked in.
Whether product availability is getting worse or it merely appears that way to customers generally, supply chain operations are becoming more complex so a focus on optimising processes will continue to grow in importance.
We launched the GS1 UK Certificate of Excellence earlier this year to help support this, which enables retailers and suppliers to drive data quality, accuracy in deliveries and trust in their trading relationships.