GMA Study: Reducing Out-Of-Stocks Can Boost Retail Sales by 3 Percent
WHITE SULPHUR SPRINGS, W.V. - Increasing product availability on the store shelf can boost retail sales by three percent or $200,000 annually per average supermarket, according to a study released today from the Grocery Manufacturers of America's (GMA) Direct Store Delivery (DSD) committee.
The study, conducted by Roland Berger Strategy Consultants, revealed that consumers cannot find the product they want to buy 7.4 percent of the time they shop. Forty percent of those shoppers confronted with an out-of-stock product situation either postpone their purchase or shop elsewhere, putting $6 billion in annual retail sales at risk in the top 25 grocery categories.
The study reflects audits of 1,600 items across seven DSD categories in four major retail chains, including Albertson's Inc., Publix Super Markets Inc. and Winn-Dixie Stores Inc. In addition, ems provided data and analysis of the top 25 grocery categories in 500 stores. Other key findings of the study include:
-- On average, the top 10 percent of the fastest moving items accounted for 45 percent of the out-of-stock products.
-- When a DSD product is unavailable on the store shelf, the retailer can potentially lose $75,000 annually per supermarket, resulting in a 2.9 percent annual loss per average supermarket.
-- Out-of-stock rates nearly double during store promotions, jumping from 7.4 percent out-of-stock to 13.1 percent out-of-stock.
Consumers shopping during Saturday promotions encountered an out-of-stock problem 8.3 percent of the time, according to the study, and the out-of-stock rate rose to more than 17 percent on Mondays.
DSD product availability during a store promotion ranges from 10 percent out-of-stock (pre-packaged bread) to 25 percent out-of-stock (frozen pizza). The study cites several reasons for DSD out-of-stocks, including increased product promotions, space constraints on the shelf and higher frequency of product purchase.
"DSD suppliers and retailers have to communicate to improve product forecasting, ordering and merchandising to better meet consumer demand. Once the product is in the store, both parties share responsibility for moving the item off the shelf and into the consumer's home," said Joe Hoff, vice president of national retail sales, Anheuser-Busch Companies Inc., and chairman of GMA's DSD Committee.
GMA's DSD committee developed six key steps for improving product availability, including:
-- Optimize delivery and merchandising schedules and back-door procedures;
-- Improve physical space constraints;
-- Develop better communication between the DSD manufacturer and retailer;
-- Align DSD manufacturer and retailer practices;
-- Define planogram and shelf tag compliance; and
-- Create joint scorecards.
The study, conducted by Roland Berger Strategy Consultants, revealed that consumers cannot find the product they want to buy 7.4 percent of the time they shop. Forty percent of those shoppers confronted with an out-of-stock product situation either postpone their purchase or shop elsewhere, putting $6 billion in annual retail sales at risk in the top 25 grocery categories.
The study reflects audits of 1,600 items across seven DSD categories in four major retail chains, including Albertson's Inc., Publix Super Markets Inc. and Winn-Dixie Stores Inc. In addition, ems provided data and analysis of the top 25 grocery categories in 500 stores. Other key findings of the study include:
-- On average, the top 10 percent of the fastest moving items accounted for 45 percent of the out-of-stock products.
-- When a DSD product is unavailable on the store shelf, the retailer can potentially lose $75,000 annually per supermarket, resulting in a 2.9 percent annual loss per average supermarket.
-- Out-of-stock rates nearly double during store promotions, jumping from 7.4 percent out-of-stock to 13.1 percent out-of-stock.
Consumers shopping during Saturday promotions encountered an out-of-stock problem 8.3 percent of the time, according to the study, and the out-of-stock rate rose to more than 17 percent on Mondays.
DSD product availability during a store promotion ranges from 10 percent out-of-stock (pre-packaged bread) to 25 percent out-of-stock (frozen pizza). The study cites several reasons for DSD out-of-stocks, including increased product promotions, space constraints on the shelf and higher frequency of product purchase.
"DSD suppliers and retailers have to communicate to improve product forecasting, ordering and merchandising to better meet consumer demand. Once the product is in the store, both parties share responsibility for moving the item off the shelf and into the consumer's home," said Joe Hoff, vice president of national retail sales, Anheuser-Busch Companies Inc., and chairman of GMA's DSD Committee.
GMA's DSD committee developed six key steps for improving product availability, including:
-- Optimize delivery and merchandising schedules and back-door procedures;
-- Improve physical space constraints;
-- Develop better communication between the DSD manufacturer and retailer;
-- Align DSD manufacturer and retailer practices;
-- Define planogram and shelf tag compliance; and
-- Create joint scorecards.