If large retail stores were a movie theatre, the out of stock on the shelf would be a horror film. The unavailability of the product wanted by the customers is not only harmful to sales, but fosters a negative perception of the shopping experience, resulting in a lower degree of loyalty and, in extreme cases, the interruption of the relationship with the store.

Even the brand does not come out unscathed: the purchase of a substitute product may be limited to the single incident or, instead, lead to a strong degradation of consumer confidence.

The previous normal

It is nothing new for anyone that the display and positioning of products on the shelf are factors of great importance. It is necessary to quickly realign the availability of missing goods once they are out of stock or in the process of running out. Preventing the need is the most appropriate defence, and not only for the immediate commercial negative effects: the more frequently the resupply is taking place, the more the costs increase.

Gone are the days of Excel spreadsheets, when the method for handling data was to load it into a table and planners made decisions about when to reduce or increase the range of products. Then, in order to obtain a reliable forecast, predictive software was used to rationalize the most important factors influencing demand (price, seasonality, competitors, etc.), to be applied to multiple stores and large quantities of SKUs.

Today, POS systems with integrated inventory capabilities and other tools such as bar coding are used to automate the process. Electronic tracking of items in real time allows to continuously update availability and needs, and integrated analytics helps improve purchasing processes and create more effective sales paths.

Visual technologies

Without continuous scanning of the store’s inventory throughout the day, impossible to achieve without an extensive and costly use of personnel, the availability of products on the shelf is subject to difficulties.

An innovative boost that in all probability will mark shelf management in the near future comes from the adoption of wireless mini cameras. These provide full visibility on the shelf conditions over the course of the day, without the constraints of the often late detection by the staff. Visual detection replicates, in real time, what customers see in the store.

Effectiveness

The devices scan the entire store at the desired interval, while the other systems that move around the store (people, in normal cases, and robots or drones, in the most futuristic solutions) are limited to a frequency that avoids the peaks of pedestrian traffic, when the availability of goods is most important.

The cameras detect the state of the shelf at scheduled times with images sent to the cloud, where they are analyzed to ensure that products are available in the correct location and at compliant prices. Based on the information obtained, action can be taken to intervene in the store in a timely manner.

The enhanced management of SKUs allows optimizing stock levels and purchases and, of course, increasing revenue, while reducing inventory maintenance costs. The data relating to the SKUs to be updated are collected from electronic labels, and the optimization of stocks ensured by real-time alerts are a prerequisite for automatic reordering according to predefined criteria.

With inventory updates in real time, retailers are able to integrate the store’s data into the e-commerce platform, allowing the processing of the customer’s order and ensuring that it can be satisfied, avoiding cancellations or replacements.

Reciprocity

“It is not in stock, we have ordered it but it has not arrived.” Managing the relationship with the supplier is a crucial aspect of distribution, and this is one of the most typical cases.

Having available regular and accurate information on the state of the shelf to ensure that all stocks in short supply are reported and dealt with, allows to work optimally on restocking, including quality evaluations and timeliness of deliveries and, more generally, on the state of the supply chain. Sharing detailed reports with partners and suppliers on sales trends and reordering is a further strengthening of management and negotiation capacity.

In turn, CPG companies can use them for auditing purposes while monitoring the actual presence of the items on the shelf and ensuring they get what they are paying for in terms of promotion.

A further step in innovation

Technological advances in retail trace its development directions and highlight areas of delay. The visual management of the shelf is part of it in all respects, such as the use of voice, facial recognition, IoT integration, cashless stores, and digital signage systems evolution. Among these, stand out above all others the multifaceted perspectives given by artificial intelligence. According to Servion Global Solutions, a pioneer company in the design of customer experience models, AI will power 95% of all customer interactions by 2025.

Retail is technology, which goes hand in hand with the increasing expectations of those who buy. After all making use of the former in order not to disappoint the latter is an open secret to anyone.