Written by Roger Jackson,
November 20th, 2015 | Views

So what happens when your Brand is out of stock?

Simple, you say. People are so loyal they sprint to somewhere else to buy it!
Well, clearly not I every case. Buyers and sales people have to pour cold water on the white hot enthusiasm on the typical brand manager!

In deciding how to range any category in a store, with a view to optimising availability,  of course we look at units/store/week, but the “hidden” measure that we really need is a sense of “substitutability”. To invest more space in a category or brand must be driven by its ability to disproportionately impact (positively or negatively) the shopping trip.

In our Shopper iQ system, we use a set of measures to understand shoppers likely behaviour if their chosen item had not been available. We capture this over tens of thousands of shopping interactions, in more than 160 categories. Three of the alternatives offered are switching options (I’d change brand, type/flavour or format), the other three are “walk” options – (I’d buy nothing, I’d buy a different category, I’d go to another store). One might term these the “lost sale”.
Across all categories in Australia as shown below an average of about 34% of purchasers feel that “walk” is the most likely action for them.

They key thing though is how this plays out by category and brand. In Australia the categories where we see most “walk” intention is as below

Shoppers need to store switch where loyalty to the category and brand is particularly high. Top of the list is magazines or tobacco but many staple fruit and veg lines fit this typology. These are the “must have” lines. Would one have expected hair colouring and herbs on this list? Makes sense when you think about it. If you need Thyme for your recipe, you need it! I am not an expert in hair colours but I suspect that Orange is a poor substitute for Brunette?

“Buy nothing” categories tend to be the treat impulse categories. Shoppers may have only bought because it caught their eye or on a whim. If out of stock this is just a lost sale, full stop.
Tempted as I am to list the highest “walk away” brands I won’t in this blog. Could prove somewhat controversial to brand managers who believe in “loyalty”
So in a nutshell stock weight should be prioritised for low substitutability categories and brands within the categories, and stock presence is critical to winning the sale at all for many lines.

Happy to get input and discuss further
Roger Jackson
Global Programme Director
Shopper iQ