Retail competition in South Africa is stiff. With the vast array of products available in retail stores, consumers often stick with the brand they know and trust, wriets Sean Leas, executive director of Smollan Diversified Services. But what happens when their choice of product is out of stock?
It is estimated that, worldwide, unavailable stock ranges from 7% to 10% and, as a result, retailers lose about 4% of potential sales. This can have serious implications for the manufacturer as consumers sometimes switch brands altogether.
In order to maintain brand loyalty, it is important that manufacturers have shelf presence and always have their products available in stores. To do so, they generally have a field force that is either dedicated to that manufacturer or they are outsourced. However, in the absence of such a force, the task of checking stock availability becomes daunting for the retailer. A solution would be to use the voiding system.
Voiding is a methodology designed to determine whether or not a product is available on the shelf. Firstly, it establishes if a listing of the product has taken place at the store and is open to order. This requires a follow-up with the store to let them know the products are available to be ordered. Secondly, it determines if the product is listed but is not on the shelf. This could be as a result of the product not being ordered or replenished.
Voiding takes two forms, both of which require technological infrastructure. The first form gathers product information using a multi-store audit team. Their responsibility is to physically scan either the product or the in-store barcode. This will determine if the product is available or if it is listed and ready for order. The data is then sent through electronically or downloaded to a central repository where an exception report is generated stating where the gaps or voids exist.
The second form of computing the voids is to gain access to the store’s electronic point of sales (EPOS) data and run a match against the product’s stock-keeping units (SKUs). Where no sales were recorded, manufacturers must assume that the product is unavailable. Another exception report is then generated.
It is important for manufacturers then to understand the voids in the context of: the product has not been listed; it is listed and has not been ordered; and it is listed but is not profiled for that store. Using this information, they can take the necessary action to get the product back onto the shelves and in the stores it should be found in.
Voiding in South Africa is not a substitute for field marketing. It does, however, have its place as an audit solution used to identify the availability on shelf. It then requires the manufacturer to understand why this is so. Fixing the gap is not as simple as developing a report because it requires follow up from the stores to ensure the product gets into the catalogue and onto the shelf where it can be seen.
So what is the best solution? In a perfect world, products will always be available in the right stores. This, however, is most unlikely. It is suggested that a solution for field operations with an audit capability be in place to ensure the best on-shelf availability exists at the point of purchase.