This study analyzed out-of-stock (OOS) grocery store merchandise data from 661 retail outlets across 29 countries over 18 months. The study found that 4% of sales are lost due to missing items from shelves. A key finding was that 75% of OOS issues were caused by retail-level factors like underestimating demand, long ordering processes, and self-restocking practices rather than upstream supply chain issues. When OOS occurs, up to 43% of customers will shop at a different store and 7-25% may avoid the purchase altogether, representing significant losses for retailers.

1. Retail Out of Stock
Submitted by:
Steve
Prashant
Shawn
Professor : Samuel Lota Jr.

2.  The article provides information about the dilemma of out
of stock grocery store merchandise (OOS).
 Examination of worldwide data for 18 months and from 29
countries. (US, Asia, Europe)
 This study looked at a 661 retail outlets and 32 consumer
goods categories, and it surveyed 71 thousand customers.
 The report was made by:
 Sundar Bharadwaj – Emory University
 Thomas W. Gruen – University of Colorado
 Daniel S. Corsten – University of St. Gallen, Switzerland
Overview

3.  The analysis of worldwide data which has Causes,
Extent and Consumer Response, is believed to be first
of its kind.
 This assessment is termed as OOS (Out Of Stock)
 OOS is a point of concern for both Manufactures and
Retailers. (critical study).
 Results of this study shows 4% loss in sales due to
missing item on shelves.
Study on OOS

4.  Studies revealed that 75% of OOS are directly result of retail
practices :-
 Underestimating demand.
 Lengthy ordering process.
 Self restocking practices.
 This study confirms that causes of OOS is at retail store
level.
Study on OOS

5. The reason why OOS appear
having products
in the store but
not on the shelf
combined
upstream
causes
store ordering
and forecasting
practices

6. Manufacturers are global and retailers
are starting to be global. if we can
implement some practice in one part of
the world, I’d like to implement this
practice in another part of the world.
Shoppers have lots of choices to
purchase goods what they want.
Competitive environment analysis

7. 21% to 43% of consumers
will make that purchase
at another store.
while another 7% to 25%
will not buy the item at
all.
The choice by the customers when
OOS happened

8.  Retailers are likely to lose almost one-half of the
intended purchases.
 In addition, they may abandon this purchase and buy
all items in another supermarket.
 They will disappointed that store and may choose
another store next time if they have choice.
The direct damage to retailers

9.  If the shopper switches stores, the implication is that
the likelihood of getting the shopper back is very low.
 The product will move slow and without that product
to move, cash-flow velocity also slows. That will be
very harmful for the financial health of the store.
The further damage to retailers

10.  Frustrated customers are likely to either buy cheaper
merchandise in place of the missing stock
 Change brands --a major hit to the manufacturer,
what you’ve lost is the revenue stream over the
lifetime of the customer.
The direct damage to manufactures

11.  There are simple “low hanging fruit“ retailers can go
after to help with OOS issues and reduce the hit to
their pocketbook
 Focus on a limited set of categories
 Reduce the impact of fast moving products first (triage)
 Consider reducing total number of items
Remedies to the OOS Problem

12.  Retailers need to effectively and efficiently replenish
the stock on their shelves. This requires:
 Collaboration and communication with manufacturers
 Utilize technology to track stock, predict trends and to
streamline the re-order process.
 Track customer spending habits.
Remedies to the OOS Problem

13.  The conclusion of this study is that retailers suffer
financially from out of stock conditions.
 There are simple things the retailer can do to prevent
and correct out of stocks to minimize impact to their
pocket book.
 Retailers and their supply chains that best satisfy their
customers are those that are most likely to succeed.
Conclusion

14. QUESTIONS?