ECR Europe white paper - Approaches to measuring on-shelf availability at the point of sale - 2006
|Publication Date: 2006||Publication Language: English||Publication Country/Region: ECR Europe||Publication Type: White paper||Companies involved: Roland Berger||Author: Gerhard Hausruckinger|
The goal: to raise productivity
Less time waiting in line, more special offers and more products actually in stock.
Right now, these are consumers' three biggest wishes. What happens when a product is out of stock? When customers can't find what they are looking for in its usual place? Surveys show that 9% of customers then don't make a purchase at all, meaning that they do not buy an alternative product either. In Europe, these 9% constitute EUR 4 billion. Yet even this figure is probably only the tip of the iceberg. If individual products or selections of products are regularly not available on the shelves, this can even cause a store to lose regular customers.
When a "loyal" family turns its back on a given store, the weekly revenue loss comes to around EUR 150. Over a 20-year period, that adds up to EUR 150,000 in lost revenues.
The average out-of-stock rate in Europe stands at 7 to 10% of the total product assortment. That is a considerable amount.
There are, however, a number of reasons why on-shelf availability is not measured in many cases. Taking measurements is seen as complicated, although it would be relatively unproblematic to refer to existing catalogs of causes. Taking measurements is also seen as expensive, although the "salvage operations" and losses triggered when an item is out of stock cannot exactly be regarded as cheap. Moreover, many companies shy away from ongoing out-of-stock (OOS) monitoring because they simply assume that they will require too detailed POS data to do so.
This white paper outlines a uniform measurement methodology that uses POS data. Based on an out-of-stock index (hereinafter referred to as the OOS index), the methodology permits more accurate comparison of the OOS rate by different categories, countries and sales channels. The method can be leveraged to initiate a continual improvement process that will ultimately increase on-shelf availability, improve the revenues of both manufacturers and retailers, and make customers happier.
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