Nothing drives customers away (often to your competitors) faster than stockouts. According to GT Nexus, 57% of UK in-store shoppers who’ve experienced stock-outs became lost sales and 41% "blamed the retailer when the product was unavailable."
Clearly, stockouts not only lead to lost customers, they can also diminish your brand’s image. That’s why it’s incredibly important to manage your inventory and ensure that you never run out of your best products.
To help you do that, we’ve put together 3 common causes of out-of-stocks in retail and how to avoid them.
1. Inaccurate data
It’s very easy to run into inaccuracies when dealing with inventory. Between shipment variances, misplaced products, returns, and stolen goods, retailers find that the inventory numbers they have on paper (or on screen) often don’t match what they have in their stores.
Such discrepancies can lead to merchants mistakenly thinking that they have an item in stock when they don’t, so they end up re-ordering the wrong products or quantities.
You can prevent data inaccuracies in your inventory by:
Using a modern retail management system - Rather manually managing your stock using a pen and paper or Excel spreadsheet, arm yourself with a retail solution that connects your point of sale and inventory systems so you can manage your stock easily.
Doing so saves you time and minimises human error, so you can focus less on stock management problems and devote more energy to selling more of your best merchandise.
Doing regularly stock counts - The best way to ensure that your physical inventory matches up with your records is to conduct stock-takes frequently.
Make it habit to count your items on a regular basis. Doing so not only keeps your records up-to-date, it also enables you to spot discrepancies and errors much more quickly so you can address them early on.
2. Poor communication or relationships with your suppliers
Poor communication with vendors can lead to missed or late orders, which in turn could result in out-of-stocks.
Prevent that by being open and communicative with your suppliers. Be clear and detailed with all your orders and get everything on paper to ensure that all parties are on the same page.
It also helps to share inventory data with your vendors. Consider giving them access to your stock levels and forecasts so they can determine if stock is running low and replenish accordingly.
3. Not enough working capital
For obvious reasons, being short on business capital can prevent you from ordering new stock. To address this, consider taking the following steps:
Move unsold inventory - You can start by running promotions on slow-moving stock or by bundling them with your more popular products. Another option is to sell your surplus stock to liquidation companies.
Collect on unpaid invoices - Do you have customers who are behind on their payments? Stay on top of those on-account sales and keep an eye on outstanding invoices to ensure that you get paid.
Streamline your operations to reduce expenses - Identify areas of waste in your business then find ways to cut costs. You could also look into automating specific tasks in your stores. By putting repetitive activities on autopilot, you can reduce the time, manpower, and operating expenses required to run your business.
Final words
Out-of-stocks don’t have to be a headache — for you or your customers. As long as you stay on top of your inventory, work with your suppliers and have a healthy amount of cash flowing through your business, you can always ensure that your shelves are stocked with your best products.
Note: A version of this post originally appeared on the Vend Retail Blog.