May 11, 2023 By: Arujit Das
Stockouts have become a significant challenge for retail businesses, with research indicating that 30% of customers consider stockouts as a major hindrance to their shopping experience. After experiencing stockouts three times, a staggering 70% of customers switch stores or stop buying from the existing store. To tackle this issue, retailers are turning to Data Transformation, Data Analytics, and Hyperautomation to gain valuable insights into customer patterns and predict future needs accurately.
The power of Data Analytics in retail is immense, leading to more efficient and agile decision-making. With the global retail analytics market set to surge at an incredible 18% in the coming years, the demand for such solutions is rapidly increasing. Data Analytics enable retailers to predict future demands based on seasonality or lead times and gain a peek inside sizeable datasets. The ongoing retail transformation towards data-driven decision-making is poised for tremendous growth, with the market set to surpass $3.82 billion by 2028.
The Rising Challenge of Retail Stockouts
A wide array of scenarios that might lead to stockouts occurring in the first place are:
- Inaccurate Inventory Data: Poor inventory data management can be a major detriment to retail store profits, potentially leading to stockouts and dissatisfying customers. To stave off these problems, consistency is the key: retailers must pay close attention throughout the year to maintain accuracy during all stages of their inventory processes – from initial counts through manual entries into systems tracking live levels. In doing so, they will ensure accurate customer demand expectations while optimizing service quality and profitability potential.
- Ineffective Replenishment Rate: For retailers, proper management of inventory levels is absolutely essential for guaranteeing customer satisfaction. From forecasting inventories to ensuring prompt restocking processes are in place, replenishment rates play a critical role in creating positive shopping experiences and preventing customers from turning away due to a lack of available products. Shrewd attention to consumer trends helps stores stay one step ahead when ordering merchandise before their stock gets too low – the key to keeping shelves full with what shoppers need most.
- Inaccurate Demand Forecasting: Despite best efforts, stockouts remain an annoying issue for retailers due to weak inventory forecasting or lack of historical data. This is further complicated by promotions, seasonality, and fluctuating economic conditions, not to mention shipment deviations, lost products, and returns that spring up unexpectedly.Unfortunately, many organizations still don’t have a key performance indicator specifically aimed at tackling the problem of material shortages – leaving them vulnerable as they venture into the retail industry.
- Insufficient Working Capital: Without sufficient working capital, retail stores can be left vulnerable to stockouts – an issue that impacts both customers and profits. Not having enough funds available could mean missing promotional opportunities or ordering too little stock to meet customer demand. For these reasons, all retail businesses must prioritize their working capital levels if they want sustained success in keeping up with customer needs and retaining positive relationships.
Benefits of Data Analytics to Avoid Stockouts
While most retailers rely on reactive measures to address stockouts, it is possible for them to take proactive steps in order to stay ahead of the curve. Below are some of the ways that advanced insights can help retail organizations excel in their stock control processes and gain supply chain optimization:
- Predicting Requirements to Avoid Stockouts: Data in the retail sector takes inventory optimization to new levels of success through predictive analytics. By tracking customer behavior, retailers can better anticipate demand and have higher accuracy when it comes to managing their stock.
As customer demand shifts throughout the year, it can be difficult for retail entities to stay on top of considerable changes in buying habits. This is where Data Analytics comes into play – providing insight no crystal ball could match and helping retailers keep their inventory up-to-date with items that customers truly want. With this tool at their disposal, businesses avoid incorrect stocking decisions and last-minute rushes for additional stock. JK Tech’s Augmented Analytics Solution powered by Hyperautomation helps in analyzing the data that are acquired from multiple systems giving insights into customer buying patterns across several channels and geographies.
- Resupply Optimization: Keeping up with consumer demand and ensuring customer satisfaction can be daunting for any business. Manual inventory checks often leave guessing games as to how much of an item should be reordered now. Introducing Data Analytics into the workflow allows businesses to take advantage of sales trends, remove slow-moving items from stock more quickly, and maintain in-trend product readers on shelves – providing customers with what they need faster than ever before.
- Balancing Discrepancies in Item Counts: Unifying inventory management across all your sales channels drastically lowers the risk of stockouts. Efficient Data Analytics streamlines data from in-person and online retail, allowing businesses to stay current with their inventory effectively without relying on manual reconciliation processes that could create discrepancies. This ensures accuracy when it comes to both ordering and selling items for optimal customer satisfaction.
- Optimize Safety Stock: Retailers can rest easy knowing data-driven solutions are helping them accurately predict what items will fly off their shelves. By leveraging the retail technology solution of JK Tech, they no longer have to manually examine past sales and calculate reorder points themselves. Additionally, retailers can customize stock alerts to extend a warning when popular products face running out so that swift action is taken with timely reorders.
- Adjust Pricing with the Demand: When demand for a product is high, businesses must carefully leverage retail demand prediction to contemplate the correct course of action to maintain stock and not be liable under anti-price gouging laws. Increasing prices can benefit profits but should only ever be done with caution; overpricing may have serious consequences in destroying customer demand altogether and ultimately disappoint customers looking forward to their purchase. JK Tech’s targeted solution involves assessing price sensitivity, price recommendation, competitive price analysis & benchmarking market drivers’ model which leads to optimal price setting.
Stockouts spell more than customer dissatisfaction; they represent missed opportunities for retailers. Without the right inventory levels, businesses risk losing potential sales and customers to their competitors. Drawing on the power of business intelligence and Data Analytics, retailers can extract actionable insights to make informed decisions that promote better inventory management and operational efficiency as well as increase sales. Ultimately, this enhances customers’ overall interaction with their brand.
