Many retailers still have a hard time addressing the basics of store operations, often because they either don’t have access to the data they need to improve matters, or they can’t make sense of the data they do have. This lack of insight leads to issues with on-shelf availability (OSA) which, in turn, leads to customers spending less because the items they’re looking for aren’t in stock.
Why on-self availability is such an important metric
Even in the digital age, where people can now do all their grocery shopping online, there’s still no comparison to the experience of visiting a store in person. That’s not likely to change in the foreseeable future either.
That said, items being out of stock (OOS) hinders the customer experience and makes them likely to spend less or even start shopping elsewhere. When an OOS situation occurs, a third of people will buy the product they need elsewhere, a quarter will buy a different brand, while others wait for a later date or even buy nothing at all. In every case, the supplier, retailer, and the customer all lose.
What are the challenges facing on-shelf availability?
Monitoring and optimising retail availability is essential for improving the in-store experience and keeping waste to a minimum and improving your bottom line. Reliable on-shelf availability is one of the main growth drivers throughout the CPG sector, so ignoring it simply isn’t an option.
Despite that, a lack of OSA remains a significant problem for many retailers. Here are some of the biggest reasons why:
- Slow replenishment
While OOS incidents may also happen closer to the top of the supply chain, there are plenty of situations where the problem lies with retailers themselves. For example, goods may be in stock in the warehouse, but the store shelves remain empty simply because a member of staff hasn’t yet noticed. In other cases, OSA may suffer due to products being placed incorrectly or tagged inaccurately.
- Inaccurate forecasting
Every retailer places orders ahead of time based on their anticipated needs, but these orders are often based on little more than guesswork. In fact, inaccurate demand forecasting is one of the number-one reasons why supermarkets end up throwing away vast amounts of spoiled food every day. On the other hand, underestimating demand results in empty shelves, much to the frustration of customers. That’s why retailers must have an accurate forecasting system.
- Improper management
A large number of OOS events occur because of poor planning and communication between retailers and their suppliers. Given the increasing complexity and global distribution of supply chains, this is hardly surprising. Poor supply chain management leads to reduced planogram compliance, with discontinued and outdated items showing up on shelves, and inventory stock failing to align with demand. That’s why automation has become so important in supply chain management.
How innovative technology offers greater control
The traditional approach to managing and mitigating OOS incidents revolves around manual auditing, which is naturally very time-consuming and subject to costly human error. Modern inventory systems can help track sales, but they often lack on-hand accuracy. POS data can also provide insights to assist in more accurate demand forecasting, but they might not work so well when it comes to SKUs that sell slower than others.
Fortunately, innovative technologies have arisen in recent years that can help you track the reality of your store shelves and compare it alongside your planogram. That way, you can align the reality with the situation you actually want to achieve. For example, image recognition can provide real-time insights into the state of your store shelves. This data can then be analysed and translated into actionable insights that help you optimise product positioning and forecast demand with an outstanding degree of accuracy. Moreover, you’ll always know about an OOS event before it even happens.
Inspector Cloud is changing the CPG sector with its award-winning image recognition solution. Our powerful, AI-driven software slashes retail audit times, eliminates human error, and offers a detailed analysis of store efficiency. Get in touch today to find out more.