Connecting the dots

September 19, 2013By Behind the Shelf Blog, Future of Retail

by Dave Wendland

When the biggest retailer in the world recognizes that their out of stock situation is causing shopper frustration what do they do? Begin connecting the dots.

Beginning in May 2013 Wal-Mart Stores, Inc. addressed its stocking problem by developing a green-dot program whereby key items were flagged to ensure their availability. This intensified focus around on-shelf availability (OSA) identified about 800 items that were key sellers that Wal-Mart wanted to ensure were never out of stock. The merchandise included items from virtually every category – peanut M&Ms™ to Crest™ toothpaste.

Are green dots the answer?connect dots

For most retailers – Wal-Mart included – attempting to solve a larger issue with a bandage-like solution is generally not the most prudent approach. Now, I’m not saying that addressing the out-of-stock issue with a good shelf identity program is all wrong. Instead, I’d look a lot further upstream to try and solve a more systemic issue.

For instance, staffing. Does the retail store, like Wal-Mart, have the right inventory management talent and store staff at the ready to ensure in-stock execution?

What about distribution?

Are all aspects of the product handling and in-store systems prepared to keep up with the bombardment of items filling the shelves?

What about staff training?

If the in-store staff doesn’t understand the rationale behind knowing the value of the green-dot items, can we really expect them to take good care of their OSA?

I believe if retailers are not taking corrective measures to right their ship, they will find themselves quickly sinking. Good inventory management should begin with an assessment of what the must-have items (at Hamacher Resource Group we’ve labeled them the Never Outs®) are. Alignment of suppliers to make them aware of the key items is the next step in the process. This should be followed by implementation of systems to ensure the in-stock status – and knowledge – of each of these items.

Ironically, back in the early 90s, HRG introduced a Never Outs® sticker that was to be affixed to the shelf beneath the best sellers. Funny how some ideas never grow old.

One Comment

  • Thanks for commenting, Jason. You are absolutely right. Out-of-stocks (OOS) is one of the chain retailers biggest nemesis and despite repeated reports citing the missed opportunities and mounting customer dissatisfaction, it seems they are continually searching for a better mousetrap. While they experiment with technology, beefed up personnel, and green dots, customers are fleeing.

    Independent pharmacies are in an enviable position. Their physical “plant” is smaller and therefore seemingly more manageable than big box retailers. Granted there is an investment to be made in the right inventory, stocking levels must be maintained at adequate levels to satisfy shoppers. Assuming products are available when and where customers are seeking them, this can be an undeniable competitive advantage for independent pharmacies.

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