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Improving On-Shelf Availability

Improving On-Shelf Availability

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Published by IRIworldwide
Andrew Mitchell – International Sales Director SymphonyIRI Group, Technology Services
Andrew Mitchell – International Sales Director SymphonyIRI Group, Technology Services

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Published by: IRIworldwide on May 22, 2012
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11/12/2012

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Improving On-Shelf Availability
It Matters More
0202030507070810 About this white paper What is On-Shelf AvailabilityCurrent situationWhy is this important?CollaborationThe barriersThe SymphonyIRI approach to overcoming the barriersSummary and recommendations
April 2012
White Paper 
 Andrew Mitchell –International Sales Director SymphonyIRI Group, Technology Services
 
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©Copyright 2012 SymphonyIRI Group, Inc. All rights reserved.
White Paperwww.SymphonyIRI.eu
Improving On-Shelf Availability
It Matters More
ABOUT THIS WHITE PAPER
Improving On-Shelf Availability (OSA) has been a key focus withinthe Fast Moving Consumer Goods (FMCG) industry for manyyears.Despite this, out of stock levels on the shelf still remainpersistently high, and in today’s challenging economicenvironment it is even more critical than ever for retailers andmanufacturers to ensure that every product a customer wants tobuy is available every time he wants to buy it.Over the past few years, SymphonyIRI has carried out asignificant amount of work with its clients to provide solutionsthatwill enable retailers and manufacturers to measure and improveOn-Shelf Availability through turning daily retail and supply chaindata into actionable information.This work has established SymphonyIRI as the leading expert inthe domain. It has added years of valuable insights to what is achallenging business area.The purpose of this white paper is to share some of these insightsand client experiences as a way to help you to think through your company’s current situation and future aspirations within thecontext of On-Shelf Availability best practices.
WHAT IS ON-SHELF AVAILABILITY?
On-Shelf Availability is the measure of a product being availablefor sale to a shopper, in the place he expects it and at the time hewants to buy it. It typically covers three key stages:
Shelf Availability.
The item is not on the shelf. There may stillbe stock in the store, but it is hidden, in a different locationor stillin the backroom.
Store Availability.
The product is not available anywhere inthe store. It may however be stocked in the distribution centre or en route to the store.
Warehouse Availability
. The product is not available toorder, as there is no stock in the distribution centre.To be able to improve On-Shelf Availability, it is essential tounderstand just what is being measured and how. FMCGorganisations typically measure availability in one or more of thefollowing ways:
at the point of distribution, at the store (typically the backroom), and/or at the shelf itself.
different methods are used to establish the level of availability –physical audit, inventory data reports or point of sales dataanalysis.
one or more different metrics are used, such as the number of instances of an out of stock over a period of time, the number of unit sales lost, or the value of the lost sales.
 
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©Copyright 2012 SymphonyIRI Group, Inc. All rights reserved.
White Paperwww.SymphonyIRI.eu
Improving On-Shelf Availability
It Matters More
ECR Europe has also determined the reaction of a shopper when a product is not available on the shelf to be as follows:
31% buy the product they need, but elsewhere (differentstore or online)
26% buy a different brand
19% still buy the same brand, but a differentvariant/size/flavour 
15% buy the product at a later date
9% buy nothingIt should be noted that these figures are simply averagebenchmarks taken across all categories, and whilst somecategories may have better figures than these, the actualresults for a specific category can be significantly different.However, if used in isolation, each of these measures provides onlypart of the picture.More specifically, measuring availability at the point of distribution or at the store level does not tell you what the shopper is seeing.Physical auditing of stores typically only covers a small sample, andis expensive to maintain long-term, and using inventory data aloneagain doesn’t cover what the shopper sees at the shelf.Finally, measuring frequency of lost sales, or the number of units, or the value in isolation doesn’t enable the end user to pinpoint wherethe most effective action can be taken.
CURRENT SITUATION
With the current economic climate, dramatically changing consumer dynamics, and a wider choice of routes to purchase than ever before,shoppers expect much more today.They have many options open to them to meet those needs andwhere they are not met, this can have a dramatic effect on their loyalty to a brand or a store. A research study by Gruenand Corsten(Guide To Retail Out-Of-Stock Reduction, 2008) observed that studies conducted as far backas 1992 showed out of stocks on average across developed marketsas being around 9%.Nearly twenty years later, with many billions having been invested inefficient factories, state of the art distribution centres and the ability totrack stock by the second and minute until it reaches its finaldestination, recent ECR Europe research shows the situation has notreally changed.
Out of stock levels acrossEurope are still averaging at 8.3%Promotional lines are likely to betwice the level of stock linesOut of stocks are costing theindustry billions every year 20% of all out of stocks remainunresolved for more than 3 daysThere is only a 4% chance of buying all 40 items on your shopping list
Source: ECR Europe

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