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Stock-outs on the Rise: A Cause for Concern

Stock-outs on the Rise A Cause for Concern

Stock-outs, or the unavailability of a product at a retail store which leads to empty shelves, have been a persistent problem in the grocery industry for many years. However, the COVID-19 pandemic has led to a significant increase in stock-outs, as supply chains have been disrupted and demand for certain products has surged.

A 2022 study by Lusk et al. found that stock-out rates increased by approximately 130% after the COVID-19 pandemic. The study also found that the highest stock-out rates were in categories such as meat and poultry products, some convenience and frozen foods, baby formula, and carbonated beverages.

The increase in stock-outs has had a number of negative consequences for grocery retailers, as highlighted by a study by Cachon et al. (2004), titled “Stock-Outs Cause Walkouts.” This study found that stock-outs can lead to a loss of sales, reduced customer satisfaction, and increased customer churn. The study also found that customers are more likely to switch to a different store if they experience a stock-out.

Repeated stock-outs can erode customer trust and damage a store’s reputation. Narasimhan and Dulac (2000) conducted a study to investigate the impact of stock-outs on consumer satisfaction in more detail. The researchers found that both the frequency and severity of stock-outs had a negative impact on consumer satisfaction. Consumers who experienced more frequent or longer stock-outs were less satisfied with the store, less likely to return to the store in the future, and more likely to perceive the store as unreliable.

The negative impact of stock-outs on consumers is evident. They can cause inconvenience and frustration, as customers may have to waste time and money searching for products at other stores. This can lead to a number of negative consequences, including:

  • Reduced customer satisfaction: Customers who experience stock-outs are less likely to be satisfied with their shopping experience. This can lead to negative word-of-mouth and a decline in customer loyalty.
  • Lost sales: When customers cannot find the products they are looking for, they may leave the store without purchasing anything. This can lead to lost sales for the retailer.
  • Increased customer churn: Customers who are unhappy with their shopping experience are more likely to switch to a different store. This can lead to increased customer churn for the retailer.

There may be many reasons why store shelves are empty, but the main concern should not be lost revenue but rather dissatisfied customers. 

References

Cachon, G. P., Randall, T. M., & Schmidt, L. M. (2004). Stock-outs cause walkouts. The Journal of Marketing, 68(2), 26-41.
Lusk, J. L., Fox, J. A., & Shogren, J. F. (2022). Grocery store stock-outs, consumer demand, and prices during the COVID-19 pandemic in 2020. Applied Economics, 54(10), 1446-1455.
Narasimhan, R., & Dulac, H. (2000). The impact of stock-outs on consumer satisfaction and loyalty. Journal of Retailing, 76(1),

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