"Keeping the Customer Happy": A Report on the Effects of Out-of-Stocks" focused on the results of a Convenience Store News (CSN) study, In Stock Means In Business. Co-sponsored by Anheuser-Busch, Inc., The Coca-Cola Company and NACS, the study sought to understand how big the problem is in the convenience store industry, develop a solution process to address the root causes of out-of-stocks and generate incremental sales for convenience store operators. Categories examined represented over 70 percent of merchandise sales, and 2,135 convenience store customers were interviewed at the time of purchase. Three areas were focused on: store level audit information, customer survey information and store operations interviews.

The study found that 9.2 percent of items are out-of-stock at any time (level varies by category and retailer); 29 percent of customers, if faced with an out-of-stock on their favorite item, will leave the store without purchasing a substitute; the average store loses 3–6 percent of sales due to out-of-stocks (translating into an industry loss of $1.5–$3 billion); 36 percent of all out-of-stock items remain out-of-stock for three or more days; and 10 percent of customers said they have stopped going to a convenience store that was out-of-stock on a favorite item.

   Food Mart Inventory Control

   Our recommendations:

• Redefine Out-of-Stock: view an out-of-stock through a consumer’s eyes (consumers do not know or care if you have just ordered an out-of-stock item; almost one-third of the time, you’ll lose a sale).

• Communicate: develop a consistent approach to two-way communication (between yourself and your store(s), stores and wholesalers, distributors, management and front-line employees); and assess vendor performance (delivering the right product mix with the right frequency).

• Value and Use Information: as scanning technology becomes available, move past order data to movement and inventory data for placing orders; minimize use of the MISC key (complete a price book, scan all products, improve data integrity); and establish a back-up decision-making plan (who to call for rush orders versus waiting for the next delivery).

• Strive for Structure: establish a consistent routine for facing and stocking; use shelf tags across the entire store; use planograms at the store level; synchronize planograms, tags and price book; and provide standardized training for out-of-stock handling.