For retailers and suppliers to retail, the formula for success is getting the right product in the right place at the right time and at the right quantity. However, the consumer goods-to-retail supply chain has been battling the out-of-stock (OOS) problem for decades, spending millions of dollars in the process, without much success. OOS remains a huge problem in all retail product categories, but is especially true when it comes to fresh foods (due to spoilage) or other items with expiration dates. Some notable statistics:
- OOS occur from 8% to 20% depending on category
- As a result of manual retail counts, 55% of OOS last from 1 to 3 days
- Loss of sales because of OOS for the top 100 retailers is estimated at $69 billion
- Shoppers make 70% of their actual buying decisions only after they are inside the store
- 47% of consumers shop elsewhere if an item they want is out of stock, and only 2% return to the same store when the product becomes available
- If an item they want is not in stock, consumers leave the store about 30% of the time without buying anything at all
- Additionally, it only takes an average of 2.3 negative experiences to send a customer to a different retailer or location
Availability of product is also extremely important when it comes to promotions. Large amounts of time and resources are spent on advertising and product launches, yet manufacturers do not know whether their promotional displays to support those efforts are being put on the sales floor, properly stocked and in time to coincide with advertisements. As a result, many missed selling opportunities and wasted marketing dollars are lost due to ineffective promotion.
- Out of stock rates soar from an average 8% to as high as 20% during promotions due to the increased demand
- Studies show that displays in stores were properly deployed only 45% of the time
- 30% of the time displays (and items packed with them) were simply left in the store’s backroom
- 30% of the time products on the display are used to stock shelves
An Electronic Product Code (EPC)-enabled Radio Frequency Identification (RFID) solution provides enhanced visibility of items as they move throughout the supply chain and provides the information to determine their location once at a facility. This enhanced visibility enables retailers to know not only how much of an item there is, but where it is – enabling them to trust their demand data and more effectively replenish their stock. This new visibility also helps suppliers verify when promotional displays were received and moved out to the sales floor – increasing promotional execution by as much as 30%.
Solutions that improve on-shelf availability do not require full trading partner reciprocation and can smartly begin at a single location, such as a distribution center. Suppliers and retailers can also realize significant benefits when only tagging at the pallet and/or case levels.
For more information about how an EPC-enabled RFID solution can improve your product availability, please call +1 937.291.3300 or email EPCinfo@gs1us.org
View the best practice guide for Improved On-Shelf Availability.