Fresh aisle: how to reduce out-of-stocks without increasing waste?

The fresh dilemma

The ECR France / IRI barometer puts fresh aisles structurally above the store’s average out-of-stock; in the UK too, the highest gaps in the ECR UK measure sit in short-life categories. The reason is simple: in grocery, safety stock only costs space; in fresh, it costs waste. The manager who raises yoghurt orders to avoid evening out-of-stocks finds the same value in shrink three days later.

So the right setting is not “as few out-of-stocks as possible” but “the best trade-off between out-of-stock and waste”, reference by reference.

Two indicators, never one

For each fresh reference, track together:

• the out-of-stock rate counted at the end of the day (when fresh runs out);
• the waste rate: units thrown away or marked down, divided by units delivered.

Situation	Out-of-stock	Waste	Diagnosis
Well-set reference	2 to 4%	1 to 3%	nothing to change
Under-ordered	10%	0%	raise slightly, or add a delivery
Over-ordered	0%	10%	reduce, or move to two smaller deliveries
Badly replenished	8%	6%	product in the cold room, not on the shelf: evening replenishment

The last line is the most frequent and the least seen: out-of-stock and waste at the same time almost always point to a replenishment problem, not an ordering one.

The levers that work in fresh

Split deliveries

Two deliveries of 50 units beat one of 100: average stock is halved, waste too, and the second delivery covers the end of the day. When the warehouse allows it, this is the first lever.

Replenish in late afternoon from the cold room

Fresh sells in the evening. A replenishment pass at 5 pm, targeted at the twenty fast movers, from the cold room, reduces the evening out-of-stock without a single extra unit ordered. The organisation of passes is described in how to organise replenishment to avoid gaps on the shelf.

Size the facing on half a day

A facing too large in fresh pushes you to overfill, hence to waste. A facing calculated on half a day of sales, with a midday replenishment, holds availability with less stock on the shelf (facing and shelf capacity by sales velocity).

Strict rotation, short dates to the front

Waste often comes from longer-dated products placed in front of short dates. Rotation at every replenishment (short dates to the front) avoids waste without touching orders.

Accept the late-evening out-of-stock on ultra-short dates

On products with one or two days of life, an out-of-stock in the last opening hour costs less than the next day’s waste. The trade-off is decided reference by reference, with both indicators.

An example

Chilled aisle, 120 references. Before: one delivery a day, morning replenishment, average out-of-stock at 6 pm of 11%, waste of 5%. After: split delivery on the forty main references, replenishment pass at 5 pm from the cold room, facings reduced by a quarter on short-dated references. Out-of-stock at 6 pm brought down to 5%, waste to 3%. Average stock on the shelf went down.

What shopper reporting changes

In fresh, the time of the out-of-stock is the key information, and it changes every day. ShelfAlert reports give it reference by reference: you see that plain yoghurts are missing at 6:30 pm but never at 5 pm, and you set the evening pass accordingly, without ordering more. 14-day trial, no payment card: see the plan for store managers.

Sources

• ECR France / IRI out-of-stock barometer: LSA, out-of-stock rate.
• ECR UK / IGD on-shelf availability measure: On-shelf availability: the case of a UK grocery retailer.
• Gruen, Corsten, Bharadwaj, “Retail Out-of-Stocks: A Worldwide Examination”, GMA, 2002: full study (PDF).