When you go into a store with the intention of making a purpose, it is normally expected that the product will be there waiting for you. If that product had been specifically advertised with the hope that it will attract customers, it should be in stock. But what happens if it isn’t in stock?
The cost of being out-of-stock
Studies have shown that the retail industry is losing billions of dollars every year due to being out of the stock that a customer had wanted to purchase. On average, there is an 8% out-of-stock rate for retail stores every year. People will come into a store expecting to buy something, and leave empty-handed. In the process, the store is losing the money that would have been spent. Overall this is bad for business and it gives customers the idea that the store cannot give them what they want. These customers may become frustrated and not return, or give bad reviews to their acquaintances.
Why are retailers out of stock so often?
Some items are very hot on the market, and people will be clambering to buy them as soon as they come out. This could include anything from new technology to a designer product. In this case, it is likely that retail stores will quickly sell out of these items. They will try to restock popular products quickly, but they will be unable to if there is a shortage of the item. However, products can also run out due to poor resource allocation and planning. If the market forecast is inaccurate, this can result in too few supplies being purchased. The same can happen if retailers do not maintain a proper inventory.
A solution that retailers have been using to keep all their products in stock is a virtual inventory. This type of inventory keeps track of all the products that the retailer currently has in the store facilitates. This can include products from the back room and in the warehouse. If a customer requests a product, an employee is able to check the inventory to see if it is in stock at the location. If the product is at the warehouse, for example, the employee can send a request for that product to be shipped to the customer’s home. The virtual inventory can also inform the employee whether the product is in stock from another nearby source.
Reducing lost products
Retailers will sometimes underestimate how many products they are losing due to theft or shrinkage. A retail store may know exactly how much stock they have of a certain product, but some of it might be stolen. If the theft remains unnoticed, the retailer will not know that they have to update their inventory count. By implementing a few preventative measures into their business, they can reduce this number and retain their stock levels. These measures can include anything from more training for employees, hiring security, or implementing security systems.