Out-of-stocks on organic, gluten-free and free-from products: why do these shoppers not substitute?

Shoppers who have no choice

The study by Gruen, Corsten and Bharadwaj measures that, in front of an out-of-stock, 26% of shoppers switch brand and 19% switch size. That 45% of substitution assumes another product will do. For some shoppers it will not:

• medical diets and allergies: gluten-free, lactose-free, nut-free, egg-free;
• infant feeding: a specific infant formula, not changed overnight;
• firm choices: organic for some shoppers, plant-based, halal, kosher.

For them, the out-of-stock falls into the study’s two other reactions: 31% buy elsewhere, 9% give up. And buying elsewhere often takes the rest of the basket with it, because these shoppers organise their shopping around the store that has their products (out-of-stocks and loyalty).

Why these products run out

The ECR France 2013-2014 survey gave 10.3% out-of-stock on infant formula, against a 5.7% average. Several causes pile up on these families:

• low velocity: a few units a week. The reorder point calculated on the average leaves a safety stock of one or two units, which a single shopper empties (automatic ordering and out-of-stocks);
• bulk buying: the shopper who finds their product takes several, precisely because they fear the out-of-stock;
• minimal facing: one or two units in front, with no back-up (facing and shelf capacity);
• blind detection methods: detection from sales does not see a product that sells twice a week (detecting out-of-stocks with till data), and a dashboard centred on best sellers does not list it.

What to do

1. Draw up the store’s list of products without a substitute, aisle by aisle: thirty to a hundred SKUs depending on size. The criterion is not sales, it is the absence of an alternative for the shopper.
2. Give them a safety stock in units, not in days: for a product that sells three times a week in lots of two or three, a minimum of six to eight units on the shelf is fairer than one day of sales.
3. Widen the facing at the expense of a neighbouring substitutable SKU: on gluten-free, fewer well-kept SKUs beat many SKUs that are often empty.
4. Count them separately, once a week, in ten minutes: the list is short.
5. Show a way to ask for the product: these shoppers are ready to wait for an order or come back on a given day, if it is offered (what to tell a shopper in front of an empty shelf).

Type of product	Likely shopper reaction to the out-of-stock	Priority
Everyday product, several brands	substitutes	normal
Product with strong brand preference	substitutes or buys elsewhere	high
Product without a substitute (diet, infant)	buys elsewhere, with the rest of the basket	highest, despite low sales

A worked example (hypothetical)

Take a fictional supermarket with a gluten-free aisle of 40 SKUs. Each sells little, and the aisle weighs almost nothing in sales: it appears in no dashboard. A dedicated count finds 8 SKUs absent out of 40, that is 20%, some for more than a week. The store cuts the range to 30 SKUs, doubles the facing of the ten most requested and sets a minimum of six units. The expected scenario is an out-of-stock rate divided by two or three on that aisle. The figures are illustrative.

What shopper reporting changes

These shoppers have the most reason to report: they come back for the same product and cannot do without it. With ShelfAlert, their report brings up a SKU that neither sales nor the best-seller count shows, and the store can build its list of products without a substitute from what its shoppers really ask for. 14-day trial, no payment card: see the plan for store managers.

Sources

• Gruen, Corsten, Bharadwaj, “Retail Out-of-Stocks: A Worldwide Examination”, GMA, 2002: full study (PDF).
• ECR France, 2013-2014 out-of-stock survey by category, reported by Journal du Net: the products most often out of stock.