Retailers Feel Consumers’ Pain
by July 26, 1999 12:00 am 82 views
It’s happened to everyone at one time or another: A trek to the local discount store for a sundry purchase ends unsatisfactorily because the desired brand or size is out of stock.
There’s much more at stake here than a single consumer’s one-time disappointment or frustration.
Indeed, every link in the retail delivery chain, from manufacturer to distributor to retailer, stands to lose money, many multiples beyond what they might have earned had the shelves been adequately stocked.
And that’s true whether the retailer is a discounter, a grocer or a druggist. In today’s increasingly sophisticated retail world, every link in the chain feels the pain of the unhappy consumer confronted with an “out-of-stock” item.
Roger Blackwell, a renowned marketing expert, says studies have shown that simply improving scheduling in the supply chain can result in savings of 5 percent to 9 percent.
“That’s more than the typical profit of a store. Think about it. If you cut 5 percent or 10 percent to the consumer in the price, that’s worthwhile,” Blackwell says.
Blackwell expects the demand for increased efficiencies to grow as retailers’ need for more sales grows.
“We have a situation in which we have too many stores chasing too few consumers. What has happened is that the most efficient retailers have driven the inefficient ones out of business. So what we have left is mostly efficient ones or what some people might call the elephants.
“And when elephants fight, it can very dangerous to the grass.”
About Wal-Mart Stores Inc., Blackwell says that company is really in a class by itself, not just because of its size – it’s expected to become the largest business firm in the world by year’s end, he says – but also because of its long-time philosophy of finding out what consumers want and then supplying those items.
Other retailers tried anticipating consumer wants, to some extent, but they mostly displayed items and tried to entice consumers to buy, Blackwell says.