OOS levels in Europe hit 7% and are expected to increase during the upcoming holidays, leading to evident losses for the whole supply chain.
Out Of Stock is one of the most important metrics actively tracked in retail, and it unmistakably indicates loss. Although the industry generally associates it with “loss of sales”, it actually results in several other strategic and operational costs that impact multiple players.
Besides causing decreases in store and brand equity, OOS also leads to less impactful promotions and reduced trade promotion funds.
In addition, the inefficiency generated by an out-of-stock situation results in:
- distorted demand and inaccurate forecasts from retailers;
- more time spent by employees trying to satisfy shoppers;
- disappointed customers;
- advantage for the competition
This means that the whole industry is likely to miss out on future sales from consumers whom they've disappointed in the past.
Poor OSA affects brand owners, manufacturers and retailers, which already experience a loss of $1.75 trillion a year from OOS, overstocks and returns. According to a recent study by GT Nexus, 75% of U.S. consumers have encountered product unavailability in stores over the past year. As a result, most of these frustrated shoppers decide to shop at another retailer or buy nothing at all. The situation gets worse during peak times and festive occasions like Christmas, when products literally fly off the shelves faster than they can be re-stocked.
The loss goes way beyond temporary missed sales, especially within certain product categories. This is the case with beverages, where “on-the-go” consumption is one of the biggest revenue drivers. Here, an out-of-stock event can easily turn into an opportunity for a competing brand, which may even result in the customer switching brands for all future purchases.
At Roamler, over the past several years, we have monitored OOS in thousands of stores across Europe from in-home to out-of-home, checking multiple categories from beverages to canned and fresh foods. According to our data, most European countries have an average OOS rate of 7,5%.
Our research also shows that OOS tends to occur in patterns, increasing on certain days of the week and hours of the day, making regular audits a vital tool for decreasing stockouts and establishing more effective replenishing schedules. Data inaccuracy and lack of “data sync” is, in fact, the root cause of bad forecasting and consequent OOS events across the whole trade channel.
Mobile crowdsourcing provides a sustainable and real-time means of monitoring OSA and implementing corrective actions when and where needed. A Crowd of shoppers directly connected to a mobile app can execute checks outside conventional working hours (when traditional field marketing agents do not operate) and share live data from any location, enabling both suppliers and retailers to get a real-time picture of actual in-store execution. And if needed and agreed upon, the same auditor can also act as a crowdsourced merchandiser to help replenish the shelf directly!
Curious about how to use the Crowd to improve your performance?
Check out our crowd-supported monitoring solutions