It’s out of stock
In a recent survey[i], 48% of retailers cited frequent out of stock situations as one of their most significant challenges.
Stock challenges are one of the things that make businesses that sell physical products interesting to me. There’s a whole level of complexity associated with this, with which a service business doesn’t have to contend. If you’re an accountant and you need extra capacity, you can recruit someone from anywhere around the globe (within reason). That person doesn’t have to be physically present in your office for you to be able to sell their time.
With goods however, unless you have the product at the very least available within a short period of time, you are likely to lose the sale. No thanks to Amazon, we are now conditioned to expect immediate delivery of almost anything we wish to buy. Whether we are shopping online or visiting a store, when we want something, we want it now.
Having stock available to purchase is a key factor in building a retail brand, and yet, as we have seen, almost half of retailers cite this as one of their major challenges. And if we roll back the clock a couple of years, we can all remember the photos of shelves empty of loo rolls, as panic buying took over.
Around that time, my sister shared this photo of a hi-rise residential apartment in Hong Kong which gave me some understanding of why the shelves were so empty.
And it works both ways, I’ve seen situations where the product is in stock, however due to errors in the management information systems, the website or the retail store can’t see it, so it appears out of stock. I recently helped a retailer find over £100,000 of invisible stock, and many of the affected SKUs customers had tried to purchase, unsuccessfully.
It doesn’t take a rocket scientist to understand the double cost implications of this scenario – not only is cash flow tied up in stock that isn’t moving, there are lost revenue opportunities from missed sales, and the stock itself is costing warehouse space and possibly going out of date.
All too often, retailers I work with don’t understand the impact of this on their business, because they haven’t sat down and worked out the impact. Understanding the extent of the problem is the first step to resolving it.
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[i] SML RFID STATE OF RETAIL INSIGHT REPORT Jan 2022