The writer speaks on inventory shortages in the retail industry and the way various retailers handle this challenge
As a business owner, how many times have you told the customer ‘sorry we don’t have it’, when a customer has asked for a particular item, that was not available with your store? Or offered a substitute item and the customer purchased it half-heartedly. Or if you were a bit considerate to the customer, then arranged for the item from a competitor’s store; or else told the customer ‘I will get it for you later’; or simply allowed the customer to walk away to your competitor. The cause for this kind of behaviour on part of retailers arise due to improper inventory management of merchandise of the store. Customers are very demanding thereby expecting every item of their need to be available at their store and retailers must take extra efforts to ensure that they meet these expectations of their customers, all the times, calling for astute inventory management skills.
Inventory management is one of the critical pillars for success of retail businesses. Inventory shortages are bad, yet they do happen. Here are a few examples how some of the retailers firefight inventory shortage situations, knowing very well the implications of shortages on customers’ satisfaction.
Case 1 – Francis, the friendly neighbourhood chemist, who runs his medical store for decades has learnt the art of convincing customers to wait till the evening or the next day for the required item, that he may not have in stock, unless it is an urgent requirement of the customer, in which case he himself will tell the customer to go to other chemist and buy the medicine as it is necessary to take it on time. He will frankly tell the customer that while he is having most of the items required, he is not having in stock a particular item. And he will add further ‘I can bring it for you by evening and I will drop it at your home, or I will give you a call you can collect it’. He not only gains the confidence of the customer but also goes a step ahead to ensure that he does not lose the customer.
Case 2–Satish, the friendly neighbourhood kirana store wala, is yet another retailer who tries to be diplomatic with customers. When a customer finds a particular item missing from the store, the customer will ask Satish, ‘Is the item available?’ and Satish would say – ‘Sorry, it is not there. The order was placed one week back but the supplier has not supplied it till now. May be, they too are having some genuine problems of stock shortages therefore they did not supply it. Normally they…’ and he continues with the story…while the customer is busy picking up other items s/he wants. Satish knows how to convince the customer, though for short period it may be. But, what he does not realise is that not all customers are going to believe him and certainly not every time. The shortages of goods is not going to help him and he better pull up his socks as regards ensuring that there are no shortages at any given time in his store.
Case 3 – Nikhil runs a super market on a busy street with adequate parking space. He is blessed with a sweet tongue. Thus he gets a good footfall to his store. He is extra careful about inventory holding and refill, he also believes a shortage is a lost opportunity and lost customer. However, in spite of taking all required care to ensure that there are no shortages, invariably shortages do occur, most of the time due to spurts in excess demand. So what does Nikhil do in such situations? Does he tell the customer ‘Sorry it got over’, No. He goes a step ahead to ensure he meets customers’ requirement. He will tell the customer ‘Please wait I will check inside in the store room (in spite of knowing for sure that the concerned item is not available in the store) and then going inside he will assign his person to go to some other store and get that item and hand it to the customer. He will do everything to ensure that the customer gets the required item. But in spite of all his efforts, if he cannot get the item, then he profusely apologises to the customer as though he has committed some kind of a crime. Further, he will offer substitutes with special discounts to this customer, with good intent of meeting the customer’s needs.
Case 4 – Bhiku runs his kirana store for many years now. From a small mobile cart to a full-fledged retail store, the growth has been good. With growth, apparently it appears like complacency has set in. Once a very active and helpful shopkeeper, Bhiku has now become quite docile and indifferent. The location of his shop is one of the best in the locality as it is right at the corner of four very busy streets crossing with adequate parking space in front of his store. The footfalls to this store and neighbouring businesses too are quite high.
While all things are in favour of Bhiku’s store, his inventory management seems to have gone for a toss. Invariably, every single customer coming to the store is found complaining of non-availability of required items. And, Bhiku pays no heed to these complaints. He simply says ‘yes yes, the supplier has not supplied the goods’. In case some customer asks for a particular item, he will reply while sitting from the cash counter ‘if it is not there then it is not available’. A close look at the inventory holding of this store shows that there are irregular patterns. While certain goods are over stocked, with two to three shelves overcrowded with units of one product, the other products are missing. It is only a matter of time that a strong competitor will come up nearby and customers will move away from Bhiku.
Well these are some fire fighting techniques adopted by retailers to keep the show going on. But does that work all the time or atleast most of the time? No, it won’t work. If inventory shortage issues continue, then, at times, you may even lose the most loyal customer to competition for want of adequate stock. Customers excuse a shortfall few times; not all the time! The amount of goods stored – too much v/s too little – i.e over stocking v/s under stocking matters a lot. Proper management of inventory facilitates retailers to meet customer demand without running out of stock or carrying excess products, thereby preventing loses to business.
Thus, it is prudent for any retail business to take extra efforts to maintain optimum inventory of goods at all times.
