Two years ago, I tried on a pair of jeans that fit so well I was ready to buy every pair in the store. The problem was there was just one pair in my size.
So I did what any shopper would do and crisscrossed the region until I had checked each of the retailer’s other local stores for the jeans of my dreams. Alas, none in my size was available.
Since they were the retailer’s own brand, I couldn’t turn to Amazon. And because I’m leery of buying clothes online anyway, I hesitated going to the retailer’s website. So the company lost my sale.
That’s one of the cold lessons in “Out of Stock, Out of Luck,” a new report from IHL Group, a research firm offering technology advisory services to the retail and hospitality industries.
The gist of the report is summed up in its subtitle: “How retailers alienate customers and lose billions due to poor inventory practices.”
The report cites Amazon not as Enemy No. 1 for brick-and-mortar retailers, but rather as a fallback alternative when stores don’t have sufficient product available. However, used once, Amazon easily becomes a consumer’s go-to place to shop.
“If you cannot fulfill the order because your inventory is wrong, you can’t make the sale, and thus you’re going to lose that sale to online competitors or those retailers who can do that [sale] at their store level,” IHL founder Greg Buzek said in a recent webinar.
The “Out of Stock” report, compiled from household and retailer surveys, noted a “massive change” in shopper behavior in the last three years because 55 percent of households now are Amazon Prime customers. Prime members needing an item weigh first how soon they need it, and if they can wait a bit. The default is to purchase from Amazon using free, two-day shipping.
For “immediate gratification,” though, and for “expertise and experience,” Prime and non-Prime shoppers will visit retail stores. But the stores “must be in-stock the first time a consumer shows up” or they could lose that customer, perhaps forever.
Yet stores are “dropping the ball,” according to the report, which IHL’s Buzek authored.
As often as 1-in-3 shopping trips, consumers have an out-of-stock experience – defined broadly as an empty shelf, no staff to help, or a store price not matching an ad.
“Many consumers are getting more and more frustrated with their experience at the local stores due to out-of-stocks,” the report says.
It put the cumulative cost to stores of being out of stock at more than $100 billion annually.
While technology can help to better track inventory, retailers first have to acknowledge the out-of-stock problem, the report says. Otherwise, they risk “business suicide” because consumers no longer have to shop in physical stores but instead must want to go there.
Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at [email protected]