They’re making their lists…they’re checking them twice…as the holiday peak season ramps up, shoppers turn to buying the perfect gift for their families, friends and colleagues. They put a lot of thought into exactly what to give each person on their list, whether it’s their nearest and dearest, or a gift for a colleague in the office Kris Kringle or Bad Santa.
Then they go out shopping only to find that what they want is out of stock. In the US, 40% of all shoppers * are concerned about stock-outs, and continued supply chain disruption ** means that their concerns are not unfounded. When the situation does arise, shoppers are disappointed, and their impression of the store or the brand is dented. But most importantly, most of them don’t have time to order the goods they want and/or wait for them to be back in stock. Holiday season is a busy time, and most shoppers have other pressures meaning they need to get their gift buying done on their designated day.
So what do they do? They switch brands or stores, that’s what. Research from McKinsey found 60% of shoppers said they had had an out of stock shopping experience in the last three months. Of those, only 13% waited for the item to be back in stock, and up to 70% switched retailer and/or brand. *** Harvard Business School’s research confirms that shoppers have very little patience with stock-outs – their feedback from 71,000 consumers worldwide is very similar, with 15% saying they wait to purchase, and 66% split between not buying at all, switching brand or switching store. **** All of which mean reduced sales and profits for retailers and brands.
So what’s to be done, to minimise the damage of stock-outs this holiday season? There are several ways that retailers can use smart retail technology to help retain the sale.
Out of stock situations are a retailer’s worst nightmare at any time of year, but especially in the festive season. Having customers who come to your store, ready to buy, and not being able to sell to them dents sales, profits and reputation. But with the use of smart retail technology, there are multiple ways that retailers and brands can save the sale and delight their customers, ensuring that they go home with their perfect gift.
How do out of stocks cause problems for retailers?
Of course the obvious answer is that they lose the sale, and its revenue and profit, which damages their bottom line. But out of stocks hit more than the short-term sales and profit figures – shoppers who cannot find what they want will think less highly of the retailer’s brand and be less likely to recommend it to others. If they go to a competitor for this one item, they may actually find they like them better and never return to their original store, causing long-term damage to sales, profits and reputation.
Why is a single view of inventory so important?
When a shopper can’t find the item they want in a particular store, but there is stock in other locations, the retailer still has the opportunity to save the sale. But only if they know that the item is in stock, where it is, and can get it to the customer – either in a store, or by delivering to their home. They must have a single view of all inventory, whether it’s in a store, a DC/warehouse, or a returns centre.
References:-
*https://www.statista.com/statistics/1270620/us-consumer-stock-out-concerns/
**https://kpmg.com/us/en/articles/2022/the-supply-chain-trends-shaking-up-2023.html#:~:text=Disruptions%20to%20supply%20chain%20operations,other%20issues%20yet%20to%20emerge.
***https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/us-holiday-shopping-2021-strong-demand-meets-big-challenges
****https://hbr.org/2004/05/stock-outs-cause-walkouts#:~:text=Really%20Do.%E2%80%9D)-,What%20They%20Really%20Do,store%20to%20buy%20the%20item.
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