Why It Matters
Empty shelves are expensive. NielsenIQ estimated that United States (US) retailers lost about $82 billion in consumer goods sales in 2021 to products that weren’t on the shelf, and it separates “out of stock” from “out of shelf”: product can be in the building and still not be on sale.1 Ordering is a big part of the problem. Corsten and Gruen trace most out-of-stocks to the store itself, chiefly to store ordering and forecasting, and to shelf replenishment.2 Store systems don’t always help: DeHoratius and Raman found that 65% of about 370,000 inventory records across 37 stores of one retailer were inaccurate.3 An order built on a wrong count is wrong too. Promotions raise the stakes. POPAI UK and Ireland, the United Kingdom (UK) and Ireland arm of Point of Purchase Advertising International (POPAI), reports, citing the Institute of Promotional Marketing, that over three quarters of shoppers who make a special trip for an advertised promotion have found an empty shelf.4Best Practice
Take the Right Order at the Shelf
Build the order from what you see, not from habit or last month’s order:- Count what’s there. Stock on the shelf, plus stock in the backroom.
- Look at what sold. What moved since your last visit tells you the rate of sale.
- Look ahead. Cover the days until your next visit, plus any promotion or display coming up.
- Order the difference. What the store needs to last until your next visit, less what’s already on hand.
Order in Cases and Cartons
Most wholesalers ship in cases or cartons, not single units. Know the units per case for each product, and round with the rate of sale in mind: rounding a slow seller up to a full case can leave stock that expires before it sells.Don’t Over-Order to Hit Volume
Loading a store to hit a monthly target feels like a win, and turns into short-dated stock, markdowns, and returns. An order the store can’t sell through before the next visit is a problem you’ve moved, not solved.Rotate Stock Every Visit
- Use first in, first out (FIFO) for long-life goods, and first expired, first out (FEFO) for anything with a date.
- Pull older units forward, and put new stock behind them.
- Check dates on every visit, and remove product that’s past its date.
Deal with Short-Dated Stock Early
Flag product that’s close to its expiry date to the store manager, and agree what happens to it under your trading terms: markdown, return, or donation. Record what you found, by product and quantity, so the root cause gets fixed. Repeat short-dated stock usually points to over-ordering or slow rotation.Pack Out What You Deliver
A delivered order that stays in the backroom is still an out-of-stock. After a delivery or a new display, make sure the product reaches the shelf, and take before and after photos as proof.Follow the Order Through
Check that the order was sent, that it was filled, and, at the next visit, that the stock is on the shelf. An order that never arrives looks exactly like a gap on the shelf.How FieldKo Helps
Common Pitfalls
- Ordering from the shelf alone. Stock in the backroom gets ordered again.
- Trusting the store’s system count. Check the shelf and the backroom yourself.
- Treating Sent as delivered. Confirm the order was filled, and check the shelf next visit.
- Rotating only when there’s time. Dates checked only now and then mean expired product on sale.
See Also
- Keep Products on the Shelf
- Run a Great Store Visit
- Execute Promotions and Displays
- Place an Order
- Retail Execution Metrics
Sources
- NielsenIQ, “Empty Shelves in America: U.S. Retailers Lost Over $82 Billion in 2021,” 2022. Read the analysis
- Corsten, D., and Gruen, T., “Desperately Seeking Shelf Availability,” International Journal of Retail and Distribution Management, 2003. Read the abstract
- DeHoratius, N., and Raman, A., “Inventory Record Inaccuracy: An Empirical Analysis,” Management Science, 2008. Read the article
- POPAI UK and Ireland, “In-Store Insights, Issue 24: Compliance Report,” 2015. Read the report