On-shelf availability is the next key issue that retailers and suppliers must tackle in order to reduce costs, increase sales and increase consumer loyalty.

Speaking at IGD’s annual
retail logistics conference, Safeway’s supply director and ECR UK co-chair Mark Aylwin said that on-shelf availability was one of the industry’s hot topics alongside transport optimisation and packaging.

In response to the issue of availability, ECR UK has formed a sub-group, which is chaired by Somerfield’s group logistics and business systems director Martin Oakes and Nestlé’s supply chain director Chris Tyas.

Its purpose is to measure on-shelf availability and to determine the causes of out of stocks. Oakes told the audience that out of stocks was “a critical threat to all our businesses”.

He said that studies had found on-shelf availability was only 92%.

“We lose 5% availability between the back and front doors. European Union industry forfeits E4bn in sales annually to out of stocks.”

Poor availability had a detrimental effect on brand and store loyalty Oakes added.

“The first occasion a shopper finds a product out of stock, 70% will buy a substitute and 30% will either not buy or they will switch to another store. By the third occasion, 70% of shoppers will not buy or they’ll switch to another store.”

The difficulty, said Oakes, was that there was no single definition or measurement of on-shelf availability. He added: “What does it mean? Is it good enough for the customer if there is just one item on the shelf or should there be eight or nine?”

Since July, an ECR working group has been investigating the causes of out of stocks and will publish its initial findings in December and a further report in the spring. This is in addition to an on-shelf availability survey of the leading eight UK retailers to begin next spring (The Grocer, November 8, p9).

Nestlé’s Tyas said that store related causes, such as ordering, delisting and replenishment of shelves, accounted for 66% of all gaps on shelf. However, he said suppliers did have a role to play.

Safeway’s Aylwin put it more bluntly: “Suppliers need to understand what a balls-aching job it is for a kid on £4.70 an hour to fill shelves.”

Suppliers should work more closely on the shop floor with issues on packaging and boxes, he added.
Sean McAllister