Blog · 21 September 2026
Out-of-stocks on own-label products: why do they cost the store more than the others?
In shortAn out-of-stock on an own-label product has three particular features. The shopper who falls back on the national brand stays in the store, but the store sells a product that earns it less: that is the brand switch, 26% of the reactions measured by Gruen, Corsten and Bharadwaj. The shopper attached to the retailer's brand cannot find it anywhere else, except in another store of the same retailer. And no brand sales force comes to check that shelf: only the store team can see the gap. These SKUs therefore deserve a stricter out-of-stock target than the average.
Three particular features of the own-label out-of-stock
The shopper stays, the margin goes
In front of an absent product, 26% of shoppers switch brand according to the study by Gruen, Corsten and Bharadwaj. When the absent product is the retailer’s own label, the natural substitute is the national brand in the same aisle. The sale looks saved, but the store sold a product on which it earns less. The mechanism is detailed in out-of-stocks and margins.
The product does not exist elsewhere
A national brand out of stock can be found at the competitor: 31% of shoppers go and get it there. An own-label product exists only at that retailer. The shopper who wants it has two choices: another store of the same retailer, or another product. For the retailer, that is a chance; for the store, it is a sale lost to the store next door. And for the shopper, it is one less reason to prefer the retailer (out-of-stocks and loyalty).
Nobody else is looking
National brands have sales forces and field merchandisers who visit stores and report gaps on their products (brand field reps’ reports). Own label has nobody: its availability rests entirely on the aisle team. An own-label out-of-stock can therefore last longer than one on a neighbouring national brand, simply because nobody reported it.
Where own-label out-of-stocks come from
The store causes are the same as for any product (72% of out-of-stocks according to Corsten and Gruen): ordering, replenishment, book stock. Two specific causes add to them:
- a single supplier per SKU: when it has a production problem, there is no replacement source, and the out-of-stock lasts (shortages and long out-of-stocks);
- supply through the retailer’s warehouse only: the warehouse service level on own label is measured at receiving, SKU by SKU (supplier service level and out-of-stock rate).
What to do
- Identify the own-label SKUs that count: those in the largest number of baskets, usually staples (milk, butter, pasta, tinned food, paper, toiletries).
- Give them their own out-of-stock target, below the aisle’s, with facing and reorder point set accordingly (automatic ordering and out-of-stocks).
- Put them on the cycle counting list: wrong book stock on a fast-moving own-label SKU costs more than elsewhere (cycle counting).
- Count the own-label out-of-stock separately in the weekly dashboard, so it can be seen (out-of-stock dashboard).
- Escalate supply out-of-stocks to the warehouse from the first week: on own label, the store is often the first to know.
| Situation | Consequence for the store |
|---|---|
| National brand out of stock, own label present | the shopper takes own label: sale and margin preserved |
| Own label out of stock, national brand present | the shopper takes the national brand: sale preserved, margin reduced |
| Both out of stock | sale lost, shopper sent to the competitor |
The first line is a reminder that well-kept own label is also the aisle’s insurance when the national brand is missing.
A worked example (hypothetical)
Take a fictional supermarket whose tinned food aisle has 60 own-label SKUs out of 300. The weekly count gives 6% out-of-stock on the aisle, but 9% on own label alone: nobody was reporting them, while brand field reps came every week for the rest. By putting the twenty best-selling own-label SKUs on the cycle counting list and raising their reorder point, the expected scenario is an own-label rate brought back to the aisle level, then below it. The figures are illustrative.
What shopper reporting changes
On own label, the shopper is the only outside pair of eyes: no sales rep will come and report the gap. With ShelfAlert, the shopper who cannot find their retailer-brand product reports it in a few seconds, and the store sees which own-label SKUs come back in the reports. 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).
- Corsten, Gruen, “On Shelf Availability”, 2004: summary.