Tyco Retail Solutions and IHL Research Group Host Webinar to Explore Consumer Reaction to Out-of-Stocks
Every day more customers are switching from shopping in brick-and-mortar stores to online shopping. While most retailers don’t consider this to be too much of a concern because of the growth in online shopping in general, new research from IHL Research Group – an independent global research and advisory firm – proves there’s another reason contributing to this change.
Contrary to popular belief, research shows most online shoppers aren’t ordering online because they’re looking for a better price. Out-of-stocks top the list of reasons consumers are making the switch to online shopping with poor customer service and large crowds following closely behind.
On average, shoppers can experience out-of-stocks up to 25% of the time in several retail segments. And the percentage is even higher with promotional deals. This shortfall dramatically affects customer satisfaction… and the retailer’s bottom line.
Since little has ever been published on consumer's reaction to out-of-stocks and its impact on consumer satisfaction, IHL teamed with Tyco Retail Solutions on September 20, 2012 to host a webinar, “Retail without Disappointment: Consumer Reaction to Out-Of-Stocks,” to reveal key areas of opportunity for retailers.
Why Customers Leave a Store Empty Handed
“We expect an empty shelf to be a key indicator of why consumers walk [out of a store], but the fact that store associates couldn’t help consumers find an item was a big factor, as well.” – Greg Buzek, President of IHL Group
This webinar provided viewers with an inside look at their customers and tips on how to better arm executives with strategies and tools necessary to cure this persistent problem.
One of the main discussion points of the webinar was the definition of an “out-of-stock.”
The term “out-of-stocks” have different meanings to different retailers. For instance, the majority of retailers consider an “out-of-stock” as an item that is not in the store according to their inventory management system. Other retailers define “out-of-stocks” as items that aren’t available in the store or online, or if a customer couldn’t locate an item because they couldn’t find a staff member to help.
But IHL identifies an “out-of-stock” as any situation when a customer, entering a store with the intent of purchasing a specific item, leaves the store without making that purchase. The outcome? Lost sale for the retailer and an unhappy customer.
“The definitions of ‘out-of-stock’ aren’t all grouped together as a unified customer experience,” said Greg Buzek, President of IHL Group. “Yet to the customer, that is how they view whether or not something is in stock or out of stock: If they left a store without buying the item they wanted.”
To help put the problem in perspective, IHL provided the percentage of customers leaving a store without making a purchase, based on retail category:
- Clothing/Shoes: 30.8%
- Electronics: 30.3%
- Sporting Goods: 27.5%
- Home Improvement: 22.3%
- Auto Supplies: 19.3%
- Food/Grocery: 9.2%
These results show there’s room for improvement when it comes to inventory management, and the staffing and processes that go along with it. Inventory distortion erodes retailers’ bottom lines and costs them over $818 billion globally — with 56% of that cost caused by out-of-stocks. IHL quantifies the financial impact of the problem as costing retailers nearly $118 for every man, woman, and child on the planet — every year.
Beating Out-of-Stocks with Intelligent Solutions
Imprecise forecasting, inaccuracies in the supply chain, ineffective replenishment processes, and unidentified theft events all contribute to inventory distortion. Ultimately leading to missed sales and disappointed customers.
IHL and Tyco Retail Solutions believe the best defense against these problems is an inventory intelligence solution that can help increase visibility, manage stock efficiently, drive increased profitability and keep the customer satisfied.
For more information on Tyco’s solutions designed to optimize store performance, click here.