Managing the Stock Out Conundrum

In  a recent  survey data   that covered across more than 71,000 consumers in 29 countries  show ho consumers react to stock-outs problems. When consumers can’t find the precise product they’re looking for, consumers typically do one of five things.

•  They find a substitute of the same brand, they substitute a different brand,
•  they delay their purchase until the item’s back in stock at that particular store, 
• they don’t buy the item at all, or, 
• worst for retailers, they buy the item at another store

Depending on the product category, 7% to 25% of consumers faced with a stock-out will continue shopping but won’t buy a substitute for their desired item at the store; 21% to 43% will actually go to another store to buy the item according to a recent harvard review retailers can lose nearly half of intended purchases when customers encounter stock-outs. Those abandoned purchases translate into sales losses of about 4% for a typical retailer. For a billion-dollar retailer, that could mean $40 million a year in lost sales

A study indicates that approx 600 retail outlets across 29 countries, the retailers themselves are responsible for most stock-outs— However these are at odds with other findings which is showed 72% of stock-outs were due to faulty in-store ordering and replenishing practices—retailers ordering too little or too late, generating inaccurate demand forecasts, or otherwise mismanaging inventory. Just 28% of stock-outs, we found, could be attributed to replenishment and planning problems in the supply chain. These included product droughts created by suppliers; category planners who mismanaged shelf space, promotions, or new product introductions; or supply chain managers who misjudged long-term demand.