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Product availability key to customer loyalty

By Anita Awbi , 06-Jun-2006

Retailers and manufacturers across Europe are losing out to store and brand switching as consumers substitute products which are unavailable or difficult to find, says a new survey from the Institute of Grocery Distribution (IGD).

Availability is becoming an increasingly important issue for consumers seeking out convenient grocery solutions, and IGD claims store loyalty is fading as the customer "propensity for promiscuity" grows.

The research found German shoppers are the most likely to substitute stores if a product is out-of-stock, with over one in two claiming this is a response to availability issues.

 

The majority of shoppers across the EU also admit to switching shop if they cannot find key products they need.

 

"It seems shoppers are increasingly relying on factors that make shopping easier and quicker, and improving availability is one strategy for delivering against this expectation.

 

"In today's busy society, shoppers do not want to have to visit multiple stores to complete their weekly shop, and it is likely if this action is necessary on a regular basis, shoppers may switch their entire shop to a competitor store," said IGD.

 

But the survey found that the shopper's notion of availability is much wider than the industry definition.

 

A large proportion of items the consumer believes to be "sold-out" are actually in-store but in a new location, while many missing products were never on the store inventory in the first place.

 

While it is important to go back to basics and ensure the retail team works to iron out these in-store problems, IGD stresses the "last 50 yards" is only part of the issue.

 

Staff motivation, collaborative retail and supply partnerships, inventory accuracy, retail-ready packaging (RRP), reducing product ranges and increasing the use of RFID (radio frequency identification) technology are all vital for perfecting the art of supply.

 

Retail and shelf ready packaging has been one of the latest developments to assist the availability issue, speeding up the delivery of goods from factory to shelf.

 

Across the four key European markets - France, Britain, Germany and Spain - shoppers are responding positively to new shelf-ready innovations.

 

More than 62 per cent of French consumers think supermarket packaging makes it easier to find products, with 50 per cent of German and British shoppers agreeing.

 

Another breakthrough heralded by the industry is RFID, but it is currently too expensive to use on individual products.

 

Advocates of the technology say mass RFID implementation would solve many supply-side problems, allowing for visibility across the whole supply chain, automatic recording of all inbound stock and easier identification and retrieval of stock in the supermarket itself.

 

"The challenge is being met by industry head on, and it seems collaboration is key to delivering improved availability," said IGD.

 

According to a recent IGD Efficient Consumer Response (ECR) On-Shelf Availability survey, Christmas 2005 had the best availability since records began.

 

The results suggested that using RFID and improving packaging design could help UK supermarkets save £1.9 billion (€2.7bn) in lost sales every year because of availability issues.

 

The study involved observations of the shelf-replenishment process in four major supermarkets and interviews with store managers, identifying several areas for improvement.

 

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