The retail supply chain was drastically affected by the pandemic of 2020-2021, and it has yet to regain its pre-pandemic level of stability three years later.
This is detrimental to retailers who are endeavoring to maintain the availability of products and satisfy their consumers. Today’s consumer will act promptly when an online item is unavailable or out of stock during the purchasing process, as research and studies have demonstrated. Additionally, they are not enamored of vacant shelves where their preferred product was previously readily accessible. In fact, 24% of U.S. consumers would abandon their shopping missions and leave the store without purchasing any additional items in their baskets if they encountered a shelf gap.
In the past year, 78% of U.S. shoppers have encountered out-of-stock products in-store, as indicated by recent data from Retail Insight. Not only that, but 68% of consumers have encountered the same out-of-stock issue online.
Retailers are still facing the same challenges as they did two years ago when inflation and cost-of-living issues are included in the equation.
However, retailers can achieve solutions by utilizing real-time data to establish a consistent inventory level and be nimble and efficient in replenishing shelves, which in turn contributes to customer satisfaction and loyalty.
RetailCustomerExperience conducted an email interview with Paul Boyle, CEO of Retail Insight, to gain insight into the current supply chain challenges that brands are encountering and the solutions that retailers can implement, as per the research conducted by Retail Insight.
Q. In your opinion, what is the current state of the retail out-of-stock situation?
A. The out-of-stock situation in retail is undeniably a significant challenge, and many consumers believe that it has intensified since the pandemic. Retail Insight research indicates that 75% of consumers now believe that product availability has deteriorated more than it did during COVID-19.
The retail supply chain was long-shadowed by the pandemic; however, the current out-of-stock issue for retailers is being exacerbated by more recent factors, particularly the macroeconomic landscape and associated labor challenges.
These issues are not as acute as some of the problems that the pandemic has caused; however, they are more systemic and necessitate that retailers more effectively implement critical components of their in-store operations in order to optimize product availability and, as a result, enhance the quality of their customer service.
Q. How would you characterize the consumer perspective on items that are currently unavailable? Is it so potent that it is causing consumers to switch to alternative brands, or are consumers not as fickle?
A. According to Retail Insight data, if out-of-stocks became a frequent occurrence, three in 10 (30%) U.S. consumers would doubt their loyalty to a grocer. Furthermore, a further 24% of shoppers would forsake their shopping expeditions and exit the store without purchasing any additional items if they encounter a shelf shortage, thereby increasing the likelihood of transferring to a competitor. In today’s retail climate, consumers have come to expect immediacy and availability, and when a retailer fails to deliver, customers are fast to turn to the next best option.
Q. As the holiday season approaches, what actions should retailers take regarding their stock inventory strategy? Should they strive to prevent consumers from experiencing this issue, or should they seek to compensate them for the inconvenience?
A. According to a survey conducted by Retail Insight, 56% of consumers reported that out-of-stocks were more prevalent in the months leading up to Christmas. Therefore, it is evident that consumers prioritize product availability during the holiday season. Retailers require an accurate understanding of the products available for purchase on the shelves in order to prevent out-of-stocks from disrupting the hectic and food-centric holiday season. Many retailers utilize gap scans; however, this method is highly manual, consumes valuable time, and provides a restricted perspective on availability at that particular moment. Instead, retailers can gain a comprehensive understanding of the issue by adopting a data-driven approach to product availability monitoring, which results in increased operational efficiency and sales. This information provides retailers with a comprehensive, real-time understanding of the availability challenges they are currently encountering. This information enables retailers to direct store associates to the locations where out-of-stock items are located, thereby eliminating the guesswork game and enhancing labor productivity. It can also be employed to uncover automated insights, which free up associate time to serve and sell to consumers. This is particularly important during the holiday season, which is known as the “golden quarter” of retail.
Q. How and from where does real-time data originate to address the issue of out-of-stock situations, and are the majority of retailers aware of its invaluable value in resolving the problem?
A. In order to guarantee that consumers can purchase the items they desire at the time they desire, it is essential to have real-time data. There are an infinite number of data points that, when effectively utilized, can provide an accurate, always-on availability monitoring tool from the moment an item enters a retailer’s distribution center to the moment it is purchased by the consumer in-store. Nevertheless, it is a challenging endeavor to completely capitalize on this data. In order to effectively analyze, leverage, and act upon the insights that emerge from real-time data, retailers must implement advanced, cognitive technology, which is a distinctive combination of AI and subject matter expertise. More retailers are likely to adopt advanced analytics solutions in order to maintain a competitive edge and offer a seamless purchasing experience for their consumers, as the recognition of the significance of real-time data continues to increase.