January 4, 2016
How do you solve a problem like out-of-stocks? The best retail minds have been pondering this conundrum for decades, and yet empty store shelves still sabotage sales, ding retailers’ cred and threaten customer loyalty. This is especially true in today’s mobile world, as shoppers have grown accustomed to finding whatever they need whenever they want it. Although out-of-stocks will never go away completely, there are ways to cut down on them and to better manage these situations when they occur. Here’s some expert advice.
Distributor: Andrew Fleming, vice president of natural sales at KeHE
Plan plenty early for promos. It’s great for retailers when distributors have promotions, but if we don’t have a good idea of how much product you’ll need, we don’t know what to tell the manufacturer. Then, come promo time, you may not have enough inventory. You don’t want to be deciding which displays will go up next week; plan these a month or so out so we can cut an appropriate order, giving manufacturers enough time to secure raw materials.
Ask for manufacturers’ letters. The expansion of natural and organic into so many outlets is putting a huge strain on supply, so we’re seeing more manufacturer out-of-stocks than ever. When manufacturers can’t keep up with production, we ask them to give us a letter that retailers can use at their shelves. These convey to your customers that you’re doing your best as a retailer and because the manufacturer is behind, they’ll likely see the same out-of-stock at other stores.
Prep for “food holidays.” If you don’t have the bandwidth to plan for and build out seasonal displays every month, at least key in on those food-focused holidays like Thanksgiving and Christmas. Shoppers expect retailers to be prepared for these holidays, so plan extra early and be first to market with your offerings so you can snag the most sales. If you don’t preplan properly, you’ll risk running short on holiday products when shoppers are scrambling for them.
Retailer: Kathy Andrew, marketing director at Nutrition S’mart, a seven-store chain in Florida
Review invoices upon delivery. Checking invoices lets you see if you were shorted any product. Also, if there are price increases, you can catch those immediately and adjust your sale price so it won’t impact margin. We use Catapult as our POS, and with vendors that use EDI for ordering and invoices, Catapult lets us know of any price increases before the merchandise even arrives. With our non-EDI vendors, though, we’d only catch increases when reviewing the invoice.
Mine sales data for future ordering. Our system analyzes the past 90 days of sales and gives us the recommended order for 15 to 30 days of stock, depending on department. We take a percentage of what was sold during a sale date and apply that to our next order. But we don’t want to just replace what we sold on a sale date; rather, we expect a bump of maybe 40 percent in that product overall. However, with our quarterly deals, we have to use our brains a little more to make sure we order enough.
Stock endcaps and home locations. We’ll run a sale both from an endcap and from a particular item’s home location, and we always put a sale tag on that product in its home location. Some shoppers may not notice the item on an endcap and will look for it only where it’s usually stocked. For instance, customers looking for ketchup may quickly go to the condiment section. Stocking sale items in two places lets you have more product on the sales floor.
Retail consultant, Daniel Lohman, owner of Category Management Solutions in Littleton, Colorado
Suggest comparable products. When an item is out of stock, you miss out on not just one sale but incremental sales as well. For example, if you’re out of a customer’s favorite potato chips, you risk losing the sale of those chips, plus a dip and any other products she may have bought. Have staff in the aisles who can quickly suggest an alternate chip and explain why it’s also great or even better. The shopper may wind up preferring your recommendation.
Guarantee satisfaction at checkout. Cashiers often ask shoppers if they’ve found everything they were looking for. Train your checkout staff to ask these questions honestly and empathetically, and if the customer says “no,” either because she just couldn’t find a product or it was really out of stock, call for help. That team member should march the customer over to the section to help her find a solution rather than letting her leave dissatisfied.
Stay ahead of trends. Study up to see what’s going on in various categories and markets. Beyond attending Natural Products Expo, know what products and trends are being discussed on Good Morning America, The Today Show and other popular programs. This will help you prepare for increased demand for certain items and reduce the likelihood of out-of-stocks. And if a product featured on a show isn’t one you carry, use this as yet another opportunity to steer shoppers toward a different item.
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