Question

Consumers have 5 key reactions to stockouts:

Buy the item at another store

Substitute a different brand

Substitute the same brand

Delay the purchase

Do not purchase the item at all

Thinking about that, please answer the following:

What is a stockout? Please define this in your own terms

Of the five reactions listed above… how do YOU find yourself reacting as a customer in a stockout situation? Why do you think that is?

Of the five reactions listed above… which is the most harmful to a retailer? Why?

How would you suggest a retailer handle a stockout situation... in other words, what should retail employees say to, or do for, customers in this stockout situation?

If you were starting a new retail store today, what specific technology or concept mentioned in Chapter 9 would you feel is most important one to implement in order to have an efficient and effective supply chain? Why?

Answer 1

PRODUCT UNAVAILABLE !!

While surfing on the internet and looking around stuff to buy you might have come across this for sure. Product unavailable or out of stock are scenarios referred to as Stockouts.

This might also happen during offline shopping, as you bought some items from a store but when the second time you went to buy it was out of stock.

Consumer behaviors( listed above ) in such a scenario depends on a number of factors, some of them are-

Presence of good alternative ( either a good alternative brand is present or an alternative product is present or not )

Presence of Competing vendors. ( Can the consumer get that item in another nearby place or not )

Switching stores to get the product is the most harmful action for the retailer.

As a retailer, if such a situation arises try not to make stockout immediately visible, for this

1. suggests a replacement item.

2. offer them discounts if the replacement is expensive ( cost born by the store for giving that discount, surely will be less than the cost of losing a customer )

3. Place emergency orders to the supplier or if possible get the item from other suppliers.

4. Promise customers to send notification on the arrival of the product.

Nowadays Technology can help to avoid such stockouts-

Employing Inventory monitoring systems and demand forecasting Softwares can bring a significant drop in number of such situations.