The Produce Out-of-Stock Burden

If you were looking to buy an automobile at a dealership and the salesperson told you, “Sorry, we’re all out of cars” — what would you do? Without a doubt, you would go to another automobile dealer.

I was shopping at a supermarket for some nice California navel oranges. Upon entering the produce department, it was instantly evident that several displays appeared depleted. I immediately had a bad feeling about my navel oranges.

As I approached the citrus section, I was surprised to see it was totally empty of California navel oranges. I asked a nearby clerk if it was going to be stocked soon and was told, “Sorry, we’re all out of oranges until our delivery tomorrow.” All out of California oranges in the middle of peak season?

Besides the oranges, several lettuce varieties were unavailable, the mushroom section was wiped out and the grapes that were on ad promotion were down to only three tattered bags remaining on display.

Having a retail supermarket mentality, especially as a former director of produce, this scenario disturbed me. It was about “out-of-stocks” which cause millions of dollars in lost company sales annually.

When customers were asked why they did not make supermarket purchases of items they wanted, the majority responded by saying that the items were not on display.

Retail businesses surrender approximately 4 percent of sales due to items not being available for consumers to purchase. It may not sound like much, but with stringent budget pressures these days, a mere one percent improvement could make a great difference in achieving the numbers.

One of the most important functions of a produce department is to keep the top twenty popular items fully stocked that customers want to buy the most. Nothing is worse than customers seeing empty displays throughout the department while shopping.

There are levels of our produce industry where out-of-stocks can originate — the grower, shipper, wholesaler, distribution center, warehouse, and, of course, at the supermarket.

Here are five basic causes of out-of-stocks and how to avoid them:

Careless Ordering — Making out a “rush order” will cause out-of-stocks every time. Not considering all the essentials, like sale items, holidays, special promotions, weather, etc. opens the door to running out of product. Prevent it by taking time to calculate specific items on hand as well as checking history and current trends.

Stocking Oversight — A delay in replenishing displays will rapidly lead to an empty hole. Keep close attention to fast sellers, especially basics like bananas, tomatoes, potatoes, peppers — and oranges. Always be ready to restock your most popular demanded items repeatedly.

Space Allocation — A small display will sell less product, especially if it contains the top twenty items. Avoid allowing every item to be allotted the same amount of display space. Expand on items that customers want the most.

Inaccurate Data — Incorrect inventory counts at the warehouse or store level can distort the numbers required in ordering product. Buyers and produce managers need to double check and concentrate on accuracy. This applies to suppliers as well as retailers.

Inventory and Shrink Control — These programs are necessary but can also lead to running out of product. When management hangs tough on reducing inventory assets to lower shrink losses, produce managers frequently become overly cautious and will order too close on key items. This can cause item shortages. Use data and stocking skills in accommodating programs as well as satisfying customers’ needs.

We have been wrestling with chronic out-of-stock situations for many years. It’s understandable when the weather plays havoc with crops and causes a supply disruption. Outside of that, each level of responsibility must be more observant in getting the goods to consumers.

This is where the responsibility lies with every produce manager. Reducing out-of-stocks can mean the difference in meeting sales and profit budgets, but mostly to satisfy customers.