Ending Stockouts in Today’s Omnichannel Grocery World


Without exception, every major grocer today is focused on improving the customer experience in one way or another. 

Whether they are investing in strategies like “click and collect,” partnering with third-party delivery services, or building out back-end solutions to manage and enhance loyalty programs, the end goal is the same. Namely, re-capturing consumer loyalty in a hypercompetitive omnichannel world. Something that seems to be getting harder and harder. 

With more choice than ever before, just 11% of grocery shoppers say they shop at just one grocery store per month, according to a recent report that includes research conducted by The Harris Poll on behalf of Rubikloud. Over half of consumers visit three or more stores per month, raising the question of whether consumer expectations are being met and whether brand loyalty exists at all in today’s convenience-driven marketplace.

Indeed, investments in new fulfillment strategies and promotions won’t matter if grocers don’t carry the right products or cannot effectively manage their inventories to support real-time consumer demand. 

Stockouts, walkouts and the consumer experience
Product availability plays a vital role in maintaining a positive consumer experience. When grocers misplace inventory or underestimate demand, the result is a lose-lose situation for grocers and shoppers. Not only do stockouts represent lost sales, but they can also carry repercussions to consumers’ perceptions of the local store or brand, especially if consumers are going out of their way to shop at your store in search of specific goods.

In fact, 53% of grocery shoppers say they would feel annoyed if a product that they were deliberately shopping for is consistently unavailable or out of stock. Further, 13% say stockouts would make them feel angry.

The report, which surveyed a mix of grocery and retail merchandisers, also found that 50% of retailers experience 3-4% of product stockouts throughout the year. The most likely culprits? Human error and unanticipated spikes in store foot traffic.

While 58% of grocery and retail merchandisers say they are utilizing technology to forecast product demand, almost all are still experiencing stockouts at the store level, especially during heavy promotion campaigns. That’s because most grocers are continuing to rely on the same tired technology and manual processes developed decades ago which are fundamentally unable to address omnichannel inventory and fulfillment challenges. 

Automating demand forecasting with AI
Any effort to accurately forecast demand amidst rapidly-changing business complexity requires not only complete data, but the ability to automatically scale platforms as business increases and for the data to reintegrate back into legacy systems. It’s also important for employees to have the ability to augment or override insights when needed.

Legacy systems grocers and retailers have historically used to manage inventory do not provide a full picture of real-time inventory, nor do these systems offer predictive technology that anticipates inventory needs based on consumer demand and shopping patterns

To end the problem of chronic stockouts, a bane to both management and consumers alike, grocers should look to artificial intelligence (AI)-assisted demand forecasting. Using thousands of data points collected across all cloud and enterprise resource planning (ERP) systems, grocers can better understand and predict consumer behavior, allowing them to order only the amount of merchandise they can sell.

For larger grocers with a high volume of products and SKUs, improvements in demand forecasting of just 5 to 10% can provide millions in cost savings annually while improving the customer experience. That’s why it’s no surprise that implementing better technology, including AI to automate demand forecasting and promotion processes, ranks as grocers’ top priority over the next two to three years.

Grocers understand that consumers in today’s omnichannel world won’t tolerate stockouts for long. They’ll simply look for the next most convenient competitor that will give them what they want, when they want it. 

Kerry Liu is co-founder and CEO of Rubikloud.

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