In a strategy to save money on inventory and storage, retailers and manufacturers have switched to a just-in-time supply chain model, but with the arrival of the pandemic shortages have taken over and now businesses are adding up the costs of lost sales.
Chicago-based NielsenIQ said that an analysis from May 2020 to February 2021 shows that, even after that two-month panic outbreak by US consumers with the coronavirus outbreak, the problems of lack of stocks persisted in supermarkets for the rest of the year, leading to billions of dollars in lost sales.
According to the company, retailers lost more than $ 1.5 billion in sales of tissue products, such as toilet paper and paper towels, and the 10 most common items sold out totaled nearly $ 3 billion in lost sales between March 2020 and February 2021.
With the increasing number of vaccinated Americans and the recent blockade in the Suez Canal, the lack of stock of new products will have more consequences for stores and the staple items that have been sold out have been a problem for retailers since the first months of pandemic.
According to a Forbes story, toilet paper was the biggest missed opportunity, with $ 836.5 million in lost sales due to empty shelves, followed by paper towels, at $ 689.3 million.
Value lost sales are defined as lost purchases because retailers did not have what customers wanted to buy. The NielsenIQ survey also found that 30% of shoppers surveyed will go to new stores when they are unable to find what they want in their current stores. Likewise, 70% of buyers will buy another brand when a product they are looking for is not available.
“Not only can retailers lose a significant amount of their sales if the products are not on the shelf, but out-of-stocks also result in reduced customer satisfaction and lower loyalty levels,” Richard Cook, Intelligent Analytics Leader at NielsenIQ, said.
In a world where spikes in demand are difficult to predict, manufacturers and retailers have realized that they must rethink their supply chains. According to Forbes, a new report by the Capgemini Research Institute found that two-thirds of retailers and consumer products companies plan to significantly change their supply chain strategy in the next three years.
The research firm found that about 70% of surveyed companies said it took more than three months to recover from the supply chain and stock outages at the start of the pandemic, with retailers among those reporting the longest recovery times.
The report also mentions that manufacturers and retailers are willing to change so-called “just-in-case” inventory management, with redundant supplies in stock, even if it means higher operating costs.
Retailers and manufacturers understand that consumers easily change their shopping habits and always look for the easiest, fastest and most convenient option.
The pandemic has caused millions of Americans to abandon their traditional shopping habits and retailers will experience these changes in the years to come, so they are changing their inventory strategies.