Every year, retailers miss out on business worth nearly $ 1trillion due to stockouts. Stockouts are the most distressing phenomenon for retailers, as it not only leads to loss of sales, but also causes a sharp drop in customer satisfaction, as shoppers often feel let down when a retailer does not have the product they are looking for.
Stockout or out of stock refers to the unavailability of certain products in demand. When a shopper walks into your store and is unable to buy the product they are looking for, it can affect their loyalty and be a speed bump in their shopping journey. As a result, they may choose another brand and refer it to their social circle, which can cause a decline in your sales and your brand’s reputation. To avoid these kinds of scenarios, retailers must be strategic about their planning and be prepared to avoid stockout-like situations.
Stockouts generally take place due to the following reasons :
Inaccurate data can be a result of human error, technical glitches, theft or the displacement of products. For all types of retail businesses, human error during inventory count is inescapable and can lead to retailers assuming that they have an item in stock, even when they don’t. This leads to the re-ordering of incorrect products or quantities. The best way to avoid this is by adopting technologies to automate inventory optimisation. A modular POS is the best solution to manage inventory and keep track of available and required products.
Inaccurate forecasting or failure to place timely item orders
Unexpected consumer behaviour is one of the main reasons for inaccurate forecasting. There are times when some products experience unexpected rises in demand, and this leads to stockout situations, as retailers are left unprepared for the increased demand of a particular item. Therefore, efficient demand forecasting and paying heed to consumer trends are imperative in proper inventory planning.
Lack of training
Sub-standard employee training can also be a reason for poor counting of stocks. Inefficient management of shelves and untimely placing of orders are the general causes for stockouts in physical stores. Lack of supply chain management and poor skills of staff can often cause a delay in inventory turnover, as goods may get misplaced by warehouse staff—the implications of all these result in stockouts or mismanaged stocks.
The following tips can help avoid stockouts :
Instead of taking chances with human error, arm yourself with tools from the world of technology, to make processes more manageable and error-free. There is a plethora of inventory management softwares in the market right now, that makes Product Management easier. Many retail shops use RFID (Radio Frequency Identification) to search products and merchandise effortlessly. Furthermore, a report by Retail Dive states that an estimate of 73% of retailers consider demand forecasting a challenge. Hence, automation by a POS software offers the best-in-class technology for demand forecasting and inventory management, and also helps avoid overstocking and stockouts. iRetail Suite of services is one such solution that helps in accurate demand forecasting and inventory management. It tracks and analyses which products are in demand, keeps a check on customer data, enabling and empowering retailers to be prepared.
Train retail professionals and promote good relationships with suppliers
Logistical challenges and delivery issues are massive issues for retailers, especially when trying to ensure smooth supply chain functions. To achieve this, ask your warehouse and store employees to establish clear and good communication with vendors. Sharing and discussing data and forecasts with your vendors can also be a good idea to pre-plan product ordering and schedules. Efficiently managing physical inventory is also crucial to avoid stockouts. Regular stock counts and auditing inventory are some of the best practices retailers can implement for hassle-free inventory management.
In any retail store, organisational skills are of extreme importance when it comes to inventory management. More so when there are cases of product displacements, which makes physical counts crucial. To avoid theft and shoplifting that leads to stockouts, having a reliable security system also helps keep track of such discrepancies and effectively manages the same.
A POS that makes Product Management easy
Overstocking or stockouts can lead to a decline in sales, and most importantly, it puts customer loyalty at risk, which can jeopardise all your accomplishments and hard work too. It is of primary importance for retailers to refuse to be a part of such scenarios. One way to do so is by experiencing iRetail Suite - a one-stop solution for all your inventory and product prediction needs. Book a demo now!