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.

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iVend’s smart inventory management software helps to avoid stock-outs.

See how retail technology helps retailers to save the sale.

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.

  • Low stock alerts to prevent out of stock – With a smart inventory management system, a retailer can set up alerts when stock of key items drops below a trigger level. This acts as a prompt to re-order – whether that’s manually or as an automated process. Knowing when you’re getting low on an item enables retailers to significantly reduce the risk of stock-outs happening in the first place.
  • Single view of inventory – It’s essential for today’s retailers to have flawless inventory management, with a single, consolidated view of all stock, wherever it sits – in a store, a distribution centre or a warehouse. That way, if the item is out of stock in a particular store, but sales are slow in another, the goods can be moved to where they’re needed, or customers can be offered the items they want, delivered from another store.
  • Mobile POS for in-aisle advice – The point at which a customer decides to go to another store, or different brand, is at the shelf, when they find the item they want is out of stock. Associates armed with mobile POS, where they can look up inventory, can advise the customer whether the items are available at another store, and take the order to have them delivered. Or they can cross sell/upsell, suggesting alternative (in-stock) items that the customer might like.
  • Online information for out of stock items – For customers purchasing via your online store, the risk of switching to another store is even higher than for in-store shoppers, as ecommerce solutions put your competitors literally just a click away. Clear messages can help to save the sale – either using information from the inventory management system to tell the customer when the item will be back in stock, and allowing them to place a forward order, or suggesting alternatives, based on data about their previous purchases and preferences.

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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