Out-of-Stocks: 3 Strikes You’re Out

By: Patrick Walsh, Vice President of Supply Chain and Chief Business Development Officer, Food Marketing Institute

In this consumer-driven landscape many business imperatives remain, but the struggle around on-shelf availability is more than just a revenue problem. With our trading partners at the Grocery Manufacturers Association, FMI recently commissioned a study conducted by JDA Software that shows a disturbing three-strikes-and-you’re-out pattern when it comes to customer loyalty.

The study found that on the first occurrence of an out-of-stock, the typical shopper will substitute another item 70 percent of the time; on the second occurrence, the shopper is equally likely to substitute, make no purchase, or go to another store; and on the third occurrence, 70 percent will go to another store. In the food retailing industry, when it comes to customer loyalty, you don’t always get a second chance so avoiding the third strike is important.  Here are the Top-10 Reasons why retailers should share point of sale (POS ) data with suppliers:  

10. Your mother always taught you to share your things

9.   It’s what friends and partners should do

8.   It builds trust and strengthens partnerships

7.   It helps suppliers better meet retailers’ needs

6.   It helps suppliers quickly adjust to new product introduction sales trends

5.   It helps suppliers better understand promotion effectiveness

4.   It helps suppliers understand local demand patterns

3.   It helps suppliers better understand the effects of seasonality by region

2.   It enables retailers and manufacturers to more effectively collaborate on on-shelf-availability

1.   You can’t effectively solve the on-shelf-availability problem without accurate, timely POS data