how to prevent stockout - supermarket

How Brands and Merchandisers Can Prevent Lost Sales due to Stockout

Every merchandising manager can agree that retail business is a highly competitive sector, and that it’s imperative to make sure that your product is on the shelf when the customer is shopping for it. On average, when a customer visits a store, one in thirteen products is out of stock. Inefficient supply chains and stockout cost merchandisers enduringly large sums of money in lost sales and continue to be one of the biggest headaches facing businesses of all sizes.

For many brands, the problem of out-of-stocks (OOS) persists. Why? And what can be done to prevent lost sales due to stockout?

6 possible causes of stockout

There are a number of factors to blame for a product stockout. Below is a list of preventable causes that lead to a shortage in stock.

Some of them include:

1. Supply Chain Issues

Was the product ordered and delivered in a timely manner? 

Production and/or shipping delays can slow down the process of getting products to the shelves, causing a disturbance in the consumer’s shopping experience.

2. Unreliable Data

Shelf-level inventory data must be accurate to be of any real use. While POS inventory data provides the figures of how many units of each product should be in the store, there are instances of “lost” items (items that might be residing in the store’s warehouse rather than on the store shelves, shrinkage, items that may have been shoplifted or fraudulently returned or simply administrative error). 

These instances can be identified through auditing.

3. Store Service Levels

If an item was ordered online, was it successfully picked in the store? 

Additionally, if the store’s storage area (the “back room”) is crowded and/or disorganized, the problem of lost or misplaced merchandise can unnecessarily occur.

4. Day of the Week

Empty shelves are more likely to occur on Friday and Saturday.

5. Advertised Sale Items

Items on sale were found to have up to a 75 percent higher level of out-of-stock than full-priced items.

6. Categories

Groceries, nonperishables, bulk products – several variables between categories cause out-of-stock differences.

how to prevent stockout - supermarket

What is the impact of an Out Of Stock problem?

Not only does the out-of-stock problem have an adverse effect on profits, but it also causes major customer dissatisfaction. In fact, 30% of customers feel that products being out-of-stock (OOS) hurts their shopping experience.

In our age of instant gratification, customers don’t tolerate stock-outs and rather than wait for the product to arrive in stock they will simply and immediately switch to a competitor or buy a substitute.

What brands and merchandisers need to understand is the scale of the lost sales from these empty shelves. According to a study by IHL, stockout causes nearly $1T of lost sales, and shoppers encounter out-of-stocks every one in three shopping trips.

You don’t want your brand to contribute to this.

How to prevent Stockoutswith a Retail Audit Software?

Using a mobile merchandising app gives you instant information about any issues in your retail execution campaign. If a rep finds discrepancies, and can document them timely and accurately with electronic forms and photos, you will be empowered to correct the problem immediately.

With paper solutions, you might not know about issues until long after the campaign is over.

Optim Merchandising App for merchandisers is a convenient tool for improving the efficiency and quality of your company’s operations.

Here are five ways to improve the way you keep track of your inventory, and prevent out-of-stock scenarios by using our app:

1. Ensure your data is reliable and up to date

You may think that you already have good control of your sales and inventory data, but how reliable is it?

Today, if you want to be able to react to your customers’ demands and give them the service they expect, you need to be able to track your stock in real time. 

By using the Optim Merchandising app – a modern mobile merchandising solution based on SmartPhones – you will be inherently good at creating a communication channel between management and the field. This great mobile solution integrate these communication channels into the same application that reps use when in the store with direct messaging, broadcast messaging and bulletin board announcements that keep reps informed and keep communications alive throughout the organisation.

Get a free trial here

2. Anticipate demand with effective forecasting to prevent stockout

You may have a good overall picture of what stock you have, but you also need to be able to understand what you’re going to need in the future. To do this, you need to be able to analyse your data to anticipate demand and make accurate forecasts so you can determine what products to order and when.

Equipping your reps with our Optim Merchandising app is an easy way to collect information about your competition is the easiest way to get relevant and meaningful data about how they are fighting for your space. Create ‘Eyes and Ears’ reports where reps can report back on what they see, as well as structured pricing and presence data collection forms.

3. Understand the impact of key retail events and promotions

All types of events have a huge impact on your sales performance. The question is, do you have the ability to compare these types of events year on year, regardless of where they fall in the calendar, and properly prepare for them?

Similarly, discounts and promotions are likely to have a big impact on the quantity of products you sell in store, and you don’t want to risk under-stocking and selling out too quickly.

By using our Optim Merchandising app, you will be able to look back and identify sales spikes to see which products sold the most and when.

4. Put tools in place to effectively redistribute stock

What measures do you currently have in place to balance the sale of stock across your stores? How do you identify products which are selling better in some stores than others? There are ways to optimise your stock at store level and take advantage of digital workflows to see exactly which stores lack certain items and which have a surplus.

One of the best way to optimise your stock is to use our app. You don’t need to be ‘Big Brother’ to see which stores are getting visits, how long the visits take, which activities are getting done there and when they are getting done. All of this information can provide you with great insights as to how well your outlets are being covered.

5. Identify trends and track customer preferences

Just because a product sells well this year, it doesn’t necessarily mean it will perform the same way the following year. You can’t afford to become complacent. You always need to be tracking current trends and identifying the types of products that people are gravitating towards.

As technology continues to become more sophisticated, brands will have a greater ability to identify who their shoppers are, what they’re looking at, where they are in the world and anticipate exactly what they want, then have the products delivered and replenished to the right places at just the right moments.

An advanced Retail Audit Software that covers all bases

With Optim Merchandising, we’ve got you covered. Our merchandising app has everything you need for retail audit, retail operations & more (click here for more details on the app features)

Working from one centralised database, you can gain full visibility of your inventory in real time, monitor current stock coverage, optimise stock quantities and product mixes based on store capacity, plan the best assortments for every store, calculate variants for each location and perform real-time stock checks on mobile devices.

Get a free trial here.

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