How to organise replenishment to avoid gaps on the shelf?

The problem with morning replenishment

In most stores, the bulk of replenishment happens before opening or early in the morning: pallets arrive, teams fill, the shelf is perfect at 9 am. Then it empties. A fast mover on a short facing is out of stock before noon, and stays so until the next day if nobody comes back. The ECR France / IRI barometer puts the out-of-stock rate of French grocery stores between 5 and 8%; a good share of these out-of-stocks are products in the back room, not yet put back on the shelf. That is exactly the case daytime replenishment fixes.

Three passes rather than one

At constant headcount, it is a matter of spreading differently:

1. The bulk fill before opening, unchanged: it handles the delivery and brings the shelf back to level.
2. A short pass in late morning (11:30 am to 12:30 pm), targeted at fast movers and promotions: twenty minutes per aisle are enough if you know what to fill.
3. A pass in late afternoon (5 pm to 6:30 pm), the slot where out-of-stocks cost the most because the store is full and baskets are large.

On Saturdays and before holidays, a fourth pass in early afternoon avoids the midday out-of-stock on traffic drivers.

Target, do not wander

The difference between a twenty-minute pass and a one-hour walk is the list. A targeted pass starts from a list of references missing or nearly empty, drawn up either by a quick count (the person walks the aisle and notes), or from shopper reports, or from the morning’s sales for fast movers. Without a list, the employee fills what they see first, often what is easiest to carry, and not what is missing.

Priority in the list:

• the twenty best sellers of the aisle (they account for a disproportionate share of out-of-stocks and of turnover);
• current promotions (an out-of-stock on a promotion is the one that makes people change store the most);
• products of a complete basket (ingredients of a meal, baby products), where one out-of-stock loses several items.

Fix the facing before adding passes

If a reference is out of stock three times a day despite the passes, the problem is not replenishment, it is facing capacity. Doubling the facing of the references that empty fastest removes whole passes. This analysis is part of the levers described in how to reduce out-of-stocks on the shelf.

Close the loop with detection

Daytime replenishment works when it is triggered by detection and not scheduled blind. A gap detected in ten minutes and filled within a quarter of an hour costs ten times less than a gap left until the next pass. That is where shopper reporting becomes a replenishment tool: the shopper who scans the missing product creates the line of the list, at the moment the facing empties.

Example

Sweet grocery aisle, 12 fast-moving biscuit references. Before: one fill at 7 am, average observed out-of-stock of 3 h 30 per reference per day. After: fill at 7 am, twenty-minute targeted pass at noon and at 5:30 pm on the list of reports and morning sales. Average out-of-stock brought down to 50 minutes. With a sales velocity of 10 units an hour and a real loss of 55%, that is 15 units per reference per day that become sales again, 180 units a day for the aisle.

What shopper reporting changes

ShelfAlert turns every shopper into a detector: the missing product is reported with a two-second scan, the manager and the team receive the alert, and the list for the next pass writes itself. 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.
• Gruen, Corsten, Bharadwaj, “Retail Out-of-Stocks: A Worldwide Examination of Extent, Causes and Consumer Responses”, GMA, 2002: full study (PDF); Corsten and Gruen, 2004, on the share of store-caused out-of-stocks: summary.