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Following up on my comments in FaceTime this morning, I want to make sure that attention is paid to folks who disagree with me on my idea about how to turn out of stocks into an opportunity to create relationships with shoppers.

To recap, I opined:

These out-of-stocks, as much as they can be a pain in the neck, also are an opportunity.  Rather than leaving holes on the shelves or trying to disguise the holes by refacing available product, retailers ought to explain to consumers why those holes exist.  (Most consumers, I'm guessing, really don't understand the supply chain issues that create out-of-stocks.). And then, they ought to ask consumers to tell them which products they want but can't find and then offer to contact them when the items become available and even put some aside for them.

Instead of being a problem, the out-of-stocks then become an opportunity to create a relationship, to reinforce to the shopper that the retailer is on his or her side.

I originally made the suggestion at a technology conference where I was speaking, and one of the attendees got back to me:

After presentation I asked some retailers about your idea.  Their overall feeling was it sounds great BUT:

-many retailers don’t have a store level communication process to deal directly with customers other than the old pen and paper for requests.  Most communications go through a corporate team.

-many of the products are on allocation so even if they finally did get the product (Gatorade as an example) they might only get a case of each flavor several times a week.  They felt they do not have the ability at store level to pull product from a delivery and put it in a ‘reserved area’ and then call or email a customer that their product was now in stock, especially if it is not a full case special order. If they did not reserve it, it might be gone by the time the customer arrived at the store.

-with help shortages the effort to tell a customer a product is out is not hard as many CGO users put up a shelf tag with the date it went OOS for long term outs.  They do this  so they don’t keep scanning the same holes every day that will not be in stock for the foreseeable future. However, the rest of the process-reserve/set aside product and communicate with the customer would take considerable labor that is currently not available in most store.

-many of the retailers either currently are or are planning to update the online shopping inventory from CGO for to increase online shopping accuracy and reduce calls to the customer on substitute product for OOS products.  So if there was a ‘reserve’ area, they would need to take that product out of inventory but it is not ‘sold’ yet, a process that currently does not exist and would be time-consuming but necessary in order for the online customer to not order product listed as in stock that was actually ‘reserved’.

Excellent presentation at the conference. However the Ops folks all think in terms of actual processes and execution and they felt it might be a stretch to pull this one off. 

From another reader:

You … have a pie in the sky approach.  To say that the retailer should connect with the customer no matter what the cost is totally unrealistic.  If the retailers took that approach, they wouldn’t have any customers to communicate with,  since no one would shop there due to the high prices necessary to fund such a connection.  Seriously how many cashiers are truly invested in whether an item is out of stock or not?  Unless it is a family run store or a chain that has engrained customer first direction into their eee’s already, I doubt many.  Why do you think that is?  It is because they have no control or ability to influence a change.  Neither does the head cashier, the office manager, or the manager on the floor (if you can find them).  This will never change, unfortunately.

MNB reader George Denman wrote:

I read your suggestions on how a proactive retailer could take action to notify customers on OOS, when they become available again and even to the point on holding some product back for them.  Great ideas but fraught with complexity.

First most retailers have no systems in place to even capture OOS incidences let alone a plan to address the challenge. For years I have asked data companies like IRI, Spins, and Nielsen to provide data that would capture OOS and they have created algorithms that look at lack of movement over a time period and try and capture that as a potential OOS they all admit that this is a guess at best. Short of someone walking the store every day and capturing OOS , up until recently has not been any path to get this data. Kroger tried the walking the store each morning to capture DSD OOS each day but with labor issues and some lack of faith in the data integrity ( why would a store want to punish its own performance by letting corporate know the % of OOS) they are beta testing a new model. It is called DSD Governance and they have chosen a few DSD vendors like Graeter’s and track OOS on a weekly basis. The OOS are captured in click and collect order picking and identify both OOS and substitutions. The retailer assumes that if an item on shelf is OOS when a picker tries to pick it for e-commerce, then it is also OOS for in-store sales. Kroger has set loft goals in this beta test with a 98% in-stock rate and Graeter’s over the past 12+ weeks has come very close to meeting those goals averaging between 95-98% each week. The report generated every Monday for the previous week captures OOS and subs by flavor UPC and by store. It tracks ongoing rates for a 6 -week window and shows each division we supply, the rates by flavor and the Top 10 stores with the greatest loss in sales from the OOS. It has really helped us identify problematic stores and item that may be under-spaced or that our DSD reps have failed to order enough.

So far the program is for DSD vendors only, but I don’t see why this can’t be expanded to warehouse items as well. In the end transparency is critical and Kroger has found an ingenious way to at least capture true data.

MNB reader Monte Stowell wrote:

Interesting reading about in-stock, out of stock, supply chain issues, grocer ads, etc. I have been retired for several years after a long career in the food industry. Some days I enjoy going into several major retailers to see what their store conditions are. Here are my observations on which retailers have the best in-stock and out-of-stock issues here in the Portland, Oregon market. Best in stock, of all retailers is Winco, far and away #1, second is Albertsons-Safeway, Fred Meyer needs a lot of help on out of stock issues, Walmart and Target out of stocks are horrible. Walgreens and Rite-Aid why do they even run an ad. Winco and Albertsons/Safeway still use night crews to stock their shelves, whereas Fred Meyer has people running around stocking shelves during regular shopping hours. 

And, from another reader:

I’m not a computer person but couldn’t the store just hang a sign in front of the OOS item and provide a scan code that you could scan with your phone that is linked to your frequent shopper card. When the item is back in stock you would get a ROBO call/text stating the item is back in stock? Yes a computer programmer would have to set it up but once set up its not like a live person would have to call or text each person individually.

I'm sure more precincts will be heard from.