On-shelf Availability
On-shelf availability is quite simply providing the desired product in saleable condition when and where the customer wants it. In practice it is a complicated process with many interdependent factors throughout the whole supply chain.
Availability is an industry issue that affects both retailers and manufacturers alike. ECR UK estimates that business loses the equivalent of £2.4 billion annually, or nearly 2 weeks’ expenditure for the average UK household*.
This figure only takes into consideration the 9% who do not purchase anything when faced with an out-of-stock (ECR Europe 2003), and so the true picture could therefore be even higher, because shoppers also react by buying products elsewhere, postponing purchases, buying alternative sizes or moving their entire basket elsewhere.
In this context, it is important to understand the elements in the modern supply chain to see how they must interact to ensure availability.
The Modern Supply Chain
Source: IGD Research
Availability is seen to reduce as product moves through the supply-chain. Even if manufacturers succeed in providing 97-98% availability to the retailer’s Distribution Centre (DC), and the DC’s get 95% delivered into the store, by the time the product actually reaches the shelf, it is possible for availability to have dropped to 90% on certain product lines.
“Hot spots” where availability can be particularly affected will include the following areas:
- Data accuracy – replenishment calculation errors, ordering errors, inventory mis-alignment at store and DC.
- Physical accuracy - delivery discrepancies to the retailer DC, pick discrepancies at the retailer DC, in-store execution.
In-store execution in particular is a key area of focus for retailers, as it is not uncommon for large quantities of stock to be left in the back-of-store storage areas. There are many reasons for this, but availability of sufficient replenishment staff, back-of-store warehouse management, fixture space, pack-sizes, and easy-to-use packaging will be among the most important elements in stopping a product getting to the shelf in a timely manner.
Collaborative Working
As a result of these challenges, and concerns over customers’ decreasing retailer loyalty, retailers and suppliers are increasingly working together collaboratively to improve availability throughout the supply chain, and satisfy customer needs. The ECR movement has been researching availability at an industry level to provide direction, benchmarking and best practise case studies.
In 2003 ECR Europe research identified seven critical levers to affect out-of-stocks. These levers are directly related to the importance of more co-operation within the retail industry supply chain, and within its store trials out-of-stocks reduced by as much as 50%.
The 7 Improvement Levers
Source: ECR Europe 2003
ECR Europe concluded that one lever by itself will not lead to desired improvement. Only by the careful orchestration and integration of all seven will the expected on-shelf availability improvements be achieved.
Measurement and Management attention are the two prerequisite levers for this model and must always be present. ECR UK has addressed these by providing a common Industry measure through its quarterly on-shelf availability survey.
Launched by the ECR UK Availability workgroup in 2004 the survey measures on-shelf availability of 200 core lines from the customer’s perspective. 350 stores between 15,000 and 50,000sqft are surveyed nationally across seven leading retailers.
Management attention is galvanised through internal and collaborative reviews between retailers and suppliers. With key messages disseminated throughout the Industry in press releases containing the results, media articles and conference presentations by the workgroup and its co-chairs.
To learn more about ECR, ECR UK Availability Survey with results and to access availability case studies examples visit ECR here.
As the retailing environment becomes more competitive and consumers become ever more demanding, improving availability will continue to be essential. Companies will need to work together through the complete supply chain in order to maximise sales, retain customers and deliver the required in-store experience every visit.
* Figures based on ECR UK Availability survey during 2004
| Related Items on IGD.com |
 |
Availability 2007
On-shelf availability free guide from IGD, includes availability surveys of superstores & convenience stores, and the factors influencing the optimum level of on-shelf availability. |
|
|
 |
Availability in the Supermarkets
This free factsheet includes a shopper definition of availability, and how customers feel about out-of-stocks | |
