When Stocks Run Out... Do Customers Run Off?

Retailers could lose 43% of intended purchases when products are out of stock, whilst manufacturers could lose 25%, according to global food and groceries specialist IGD. The finding is published in 'Shopper Insight', a new quarterly report series that looks at developments in the food retail environment through the eyes of shoppers.

The research looked at the reaction of shoppers on finding a product out of stock or unavailable, and found that 46% have experienced empty shelves 'often' or 'sometimes' in their supermarkets. The great majority of those 'lost' will go to another store (37% of all shoppers) but 6% 'would not buy at all'. The figure of 25% loss for manufacturers comes from adding the 6% who would not buy at all to 19% of shoppers who say they would switch to a rival brand.

The main threat to retailers is from shoppers going to another store, as they may decide to switch stores permanently. However, even when faced with continual out of stock situations only 2% of shoppers said that they would change store. Reasons for this inertia are the high priority given to factors such as familiar store layout, favourable prices and accessible location - and such factors are likely to make switches temporary unless poor availability continues, the products are extremely important to them and / or the secondary retailer's offer matches or improves on that of their main retailer.

Shoppers appear to be creatures of habit - those surveyed were frustrated when items had been moved about, and would consider items to be unavailable if they could not find them. Particular mention was also made of 'Walls of similar products' which can confuse shoppers and lead to them walking away.

Joanne Denney-Finch OBE, Chief Executive of IGD, picks up on the finding about shoppers' reluctance to move from a comfortable arrangement: 'Shoppers place a high priority on a good value offer and on factors that make the shopping process easier. The research suggests that as long as convenience and value are offered, the majority of shoppers would be willing to tolerate the current retail out of stock rates as a frustration rather than a significant issue'.

However, both retailers and manufacturers stand to lose significantly if they underestimate the importance of keeping stocks. 'Keeping an existing customer satisfied is generally considered cheaper and easier than acquiring a new one' says Denney-Finch.

Among the practical conclusions drawn, the research suggests that:

• poor availability should not be overlooked when planning large promotions, as shoppers may buy an alternative brand and manufacturers involved in the promotion will lose out
  
• signposting to products and ensuring relevant lines are listed will help ensure visibility in-store
  
• retailers should ensure staff are knowledgeable about stock levels and location, to alleviate frustration caused by products not being available, and retain loyalty.

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.

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