In-store logistics: an analysis of on-shelf availability and stockout responses for three product groups

Abstract

Efforts to maintain high service levels upstream of the shop are often compromised by poor in-store replenishment, which causes the system to fail at the final point of sale, where availability has its greatest impact on consumer behaviour and sales. This paper reports the results of a study of the on-shelf availability (OSA) of three categories of product: dairy products, frozen foods and health and beauty (H&B) items. Data from a quarterly, industry-sponsored survey of OSA were analysed to assess availability trends and patterns. Interviews were conducted with consumers at shop checkouts to determine how they reacted when products were out-of-stock. This revealed marked differences in behavioural responses to stockouts in the three product groups. Interviews were also held with supermarket managers to explore the reasons for stockouts occurring and to seek their views on a range of corrective measures. As H&B items exhibited the highest average stockout rate, a further investigation was conducted on particular replenishment problems of this category of product. This included an analysis of stockouts in two sub-categories of H&B product at stock-keeping unit (SKU) level. Various methods of increasing OSA are proposed, including staff training, overhauling the shelf-replenishment process, improving inventory accuracy, the redesign of packaging and more effective use of planograms.

Keywords:

• On-shelf availability
• Retail out-of-stocks
• In-store logistics
• Last 50 m
• Supermarket retailing

Acknowledgements

We would like to acknowledge the excellent support provided by the Insight Group of ECR UK and in particular its chairman, Tim Harrison of Kraft. We are also very grateful to the Institute of Grocery Distribution and the various retailers and suppliers who assisted us with the surveys discussed in this paper.