Report: Out-of-Stock Product Costs Canadian Retailers $63 Billion in Sales

• May 7, 2019
• Topics:
  • Brand Management
  • Bricks and Mortar Stores
  • Phantom Inventory
  • Retail Audit

Canadian Grocer recently reported on a shocking statistic: out-of-stock product costs Canadian retailers as much as $63 Billion in lost sales.

The average shopper experienced 1.4 out-of-stock SKUs per trip. 6 1% of respondents reported at least one out-of-stock product on their last shopping trip.

What’s more, when shoppers found that a product they were looking for wasn’t in stock, the most common response was to leave the store entirely.

While the statistic is shocking, it may not be unexpected. There are several factors that could be contributing to retailers falling short of stocked product, including:

• Retailers focusing more on eCommerce and cutting back on in-store inventory.
• Increased labour wages in provinces such as Ontario and Alberta may mean that retailers can’t afford to employ as many staff.
• The inventory may be in stock, but it isn’t being put on the shelf.
• And more.

If out-of-stock product is an issue for your brand in certain retailers, the first thing to do is to identify the problem.

• Why isn’t the stock getting onto the shelf? Is the store low in inventory, or is the inventory at the store, but there are delays getting it out onto the shelf?

• Is phantom inventory the issue? This happens when there are errors in the POS system showing that there is inventory in stock, but there really isn’t. The auto replenishment will not reorder product as according to the system, there is stock remaining. With a decrease of staff in the store these errors can go missed for several months thus your products do not get restocked and the shelf stays empty.

• Are shelf tags missing? If your products are not tagged properly and/or the shelf tag has been removed, your product will not be re-ordered.

Once you have your answers, focus on the solution.

If there’s not enough inventory in stock…

• Visit the store: conducting an audit at the store and getting the inventory discrepancies fixed while there is one way to get these phantom inventory issues solved.  

• Missing shelf tags: fully understanding what listings are in each store location and visiting the store on a regular basis is key to ensure shelf tags are on the shelf and available for ordering.

If the inventory is in stock but not being put on shelves…

• For manufacturers: again, go into the store and do an actual inventory check to make sure that phantom inventory isn’t the issue. If there are errors, correct them at a store level. If the product is in stock but not going out on shelves, it is important to have regular visits to the stores to ensure products are available to your consumers.

The starting place is to identify the issue as it may vary by retailer. That’s where Marketsupport Canada can help. We have teams across Canada who can go into store, identify the problem, and get it fixed quickly so that you are back on the shelf.

Our teams focus on building relationships with retail staff to continue an ongoing conversation.

Address your inventory stock levels today. Contact Marketsupport Canada by calling 1-877-421-5081 or visiting www.storesupport.ca.