What are the consequences of stockouts?
A stockout is the absence of a product on the shelf caused by a lack of supply to the point of sale by the brand or a lack of replenishment. Here are some of the potential consequences that a stockout can have for a manufacturer.
Loss of consumer trust: In addition to causing a decrease in sales for the brand, it is also a credibility issue. What happens to the consumer when this occurs? They may purchase a different format, version, or flavor of that product; they may buy a competing product, or they may leave the store to find the product elsewhere. On average, 26% of consumers substitute the out-of-stock product with another brand.
Loss of distributor credibility: If a product experiences a stockout, loyal consumers of that product will likely look for it in another store. It is important for store managers to always report all stockouts detected in the store and share that information with the distributor.
Waste of promotional campaigns: A stockout during a promotional campaign, such as during the Christmas season, will result in a waste of the money spent on the promotion. Additionally, empty shelves with promotional signage create a negative image of the brand.
A stockout is one of the most common issues encountered by sales teams. At Winche, our field sales representatives are highly aware of the consequences of a stockout for achieving brand visibility at the point of sale. Although the point of sale manager may not directly handle purchases, they should focus on anticipating and minimizing the risk of stockouts or efficiently reporting stockouts to resolve product absence.