Stockouts and Retail Reality in 2022: Never Going Out of Stock Is Now a Customer Expectation

Never going out of stock is now a customer expectation.

Special emphasis on “never,” with plenty of evidence to support that statement.

We’ve said in other posts that when one is discussing current issues in retail, context counts for a whole lot, especially as it’s been prone to near-daily changes in the last 18 months or so. Let’s consider…

The current landscape: evolving consumers demand more

To those retailers – both e-commerce and brick-and-mortar – who have successfully survived the last two years of chaos, it’s no secret that the current retail landscape is far more consumer-focused than ever before.

Kudos to you for weathering the storm, though you’ve had little choice but to go along because retail survival has demanded that you adapt.

The pandemic and its many implications for consumer behavior have been such that retail consumers are now less easily put off by excuses, more engaged, and more demanding. They’re also more interested in retailer, brand, and manufacturer transparency, honesty, and experiential involvement than in the past.

Shopper expectations of greater personalization and relationship-building are growing, and industry has found advantageous ways to meet the demand.

But the realities of the situation are such that manufacturing and retail have also had to cope with geopolitical events (some of them horrific in nature and impact), global shipping delays, container shortages, other logistics problems including truck-and-driver problems, COVID-related red tape, and more.

They’ve had to work at getting their supply-chain acts together. It’s not been easy, and there’s no indication that supply-chain problems will somehow magically resolve themselves in 2022, despite the record-breaking 2021 holiday shopping season and the lessons it had to offer.One of those lessons is that increasingly, consumers are less tolerant in the face of out-of-stock notices, and it doesn’t matter whether we’re talking about e-commerce or brick-and-mortar. It seems we’ve grown past the days when brand loyalty reinforced consumer patience in the search for desired goods. Consumers have heard more about shipping deadlocks and manufacturer problems and inventory issues than they ever wanted, and their behavior is changing as a result.

Why stockouts are increasingly toxic for retailers

First, let’s be clear about the nature of “stockouts.”

It’s not rocket science, despite the far-reaching and potentially disastrous impact chronic stockouts can have on a business: a stockout occurs when a vendor runs out of stock in an item it’s currently selling. This is as opposed to a sort of generalized product shortage that spans an industry or sector, and is more specific to a consumer’s vendor of first choice.

In theory, a stockout can happen at any point in a supply-chain.

But we’re particularly concerned with a stockout in the final stage – the retail transaction stage. It’s dangerous because it generally occurs at the moment a shopper is trying to buy the item – and now you’re left with a frustrated consumer who is already overly familiar with out-of-stock notices.

Stockouts have become increasingly toxic for retailers in both e-commerce and brick-and-mortar, and the reason isn’t a mystery: they’re occurring with much greater frequency in multiple industries and sectors.

In fact, recent research from Adobe indicates that the frequency of out-of-stock messages increased by a ridiculous 250% between January of 2020 and October of last year, and 325% over October of 2019.

Seriously.

That’s around 2 billion messages, just in October 2021 alone, telling consumers they’re out of luck because a vendor is out of stock.

It’s safe to say that in this area, things are definitely not “…all good in the [retail] hood.”

We recognize that if you’re a retailer, you could be looking a variety of factors driving your stock shortages, including inventory management issues, expanding demand for specific products, supplier delays, cash-flow problems you may be experiencing, and other factors.

But clearly, consumers staring at brick-and-mortar shelves that are 15 – 20% empty, or at online out-of-stock messages that don’t point to any of the potential reasons for the shortage, are at the stage at which they don’t really care about the reason.

They want what they want when they want it, and they’re uninterested in excuses, reasons, or promises.

Ironically, the same new digital consumers in particular – the ones who want honesty, transparency, sustainability, and a new, deeper relationship with you as a vendor or brand – will dump you much more quickly today than they might have two or three years ago.

The evolution of consumer expectation: loyalty fades before service

Brand loyalty is fading.

Dramatically.

We’re not saying it will become a thing of the past, especially where luxury brands are concerned. However, some of the criteria that inspire the loyalty brands need are changing.

It wouldn’t surprise us to see more of it directed to brands and vendors who try their best to follow the “never going out of stock” rule.

It’s not just about customer service, or about key strategies for retention, like sound customer assessment, the creation of CX based on deeper knowledge of the customer, or even your ability to evolve with consumer trends and best communication practices. It’s about the penultimate moment of a transaction, the one where the customer has selected a desired item and is ready to buy, only to be told that the item is unavailable.

Without the final step, you can no longer expect to build or maintain loyalty. With new customers especially, there will be very few second chances.

Let’s be clear.

In a Forbes article, posted online in August 2021, ForbesBooks author Jeff Pedowitz says, “Building brand loyalty today depends on curating unforgettable customer experiences.”

He’s right.

The caveat is that if a retailer or brand builds unforgettable customer experiences through the introduction of new technologies, greater personalization, and immersive brand storytelling, and then the consumer is hit with an out-of-stock notice at the last moment, the retailer’s efforts weren’t merely wasted (though that would be bad enough).

That quality of brand “unforgettability” will now immediately be tied to a failed transaction and a stockout notice in the consumer’s mind, all but destroying opportunities for repeat business and loyalty-building.

Especially today, consumers’ lives are too frenetic and there are far too many alternatives available to them for vendors to rely only on the old principles of “quality, cost, and brand reputation.”

Those are still critical, of course.

But unless you can deliver when the consumer is hot to buy – as in RIGHT NOW – you’ll have wasted time and money, damaged your brand, and lost more than just the immediate transaction.

Solutions galore: emotion, gamification, inventory control, and more

As you’d expect, the retail industry is increasingly sensitive to the problem.

The result is that there are quite a number of potential solutions designed to deal directly with logistics and inventory control, and others that are intended to build loyalty and positivity into the retail environment and the customer experience generally. For instance:

• White Label Loyalty sees several keys to developing loyalty, including a deliberate focus on building consumers’ emotional loyalty to the brand, rather than just rational loyalty built on transactional history. The latter alone isn’t enough after two years of transactional turmoil.They’re also strong on gamification to build loyalty and enhance engagement, enriched CX (particularly where the use of AI is concerned), and greater attention to D2C including reliance on first-party data and the opportunities it presents.
• Linchpinseo offers ten suggestions for enhancing loyalty. All ten focus primarily on loyalty program development and features, and include initiatives such as the development of loyalty program partnerships, the creation of a mobile app for your business or brand, better loyalty perks, the creation of loyalty programs that “give back more,” and so on.
• In an article updated in January of this year, TheGood.com focuses on data and logistics. Their preferred approach to stockout avoidance involves better inventory control through improved data gathering and sound analytics, and the application of better inventory management software for greater accuracy in daily control and needs forecasting. They also like the idea of having “safety stock” so that you always have a sort of stock cushion on hand, though we’re not entirely sure this is realistic in view of current supply-chain issues. They also like the concept of auto-replenishment – another idea that’s great in theory, as long as you can rely on your supply chain to keep things running as planned. Finally, they advocate having backup suppliers at the ready in case your usual sources run into stockouts of their own.

• From the logistics side, there’s a growing number of new inventory management systems designed to function in real-time (or close to it), and to help you avoid stockouts. For example, there’s Netstock, a cloud-based inventory management system designed to accelerate orders, minimize the possibility of stockouts, and reduce the need to have funds tied up in excess stock.A listing of the ten best such systems for 2022 includes Trunk, said to be the leader at inventory syncing across platforms; InFlow, listed as the best all-in-one package; Oracle NetSuite, the top enterprise-level offering; and seven more packages to meet varying needs.

All of these systems have elements in common, as you’d expect. More importantly, they work to solve chronic inventory control issues as they arise from existing patterns and practices in an evolving retail environment.

All seek to provide, among other things, one or more ways by which retailers can reduce the likelihood of stockouts while saving time, money, and waste in retail inventory control.

Final thoughts: Purple Dot

We’re convinced that we’re right about consumer expectations around stockouts, for 2022 and beyond. The nature of brand loyalty is changing, and it will become a primary driver of the search of viable and lasting solutions to this chronic problem.

At Purple Dot, we have our own approach to the issue. We think a little more is possible right now, a solution offering a means of direct inventory control that can work for both small and large online retailers, seamlessly, with minimal fuss over installation and client oversight.

Purple Dot exists to provide the retail industry with a unique order/payment solution that enables retailers to sell product before it’s in their shops and warehouses, minimizing guesswork and shaky estimation in stockage and inventory control.

For recurring offers, new product drops, seasonal promotions, and regular sales, our “Waitlists powered by Purple Dot” offer you ways of knowing in advance exactly how much inventory you’ll need for given events, preventing retail waste, and protecting brand integrity.

If you’d like to learn more, get in touch – and in the meantime, we’ll be cooking up our next post.

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