Study: Out of Stocks Carry High Cost

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Study: Out of Stocks Carry High Cost

NASHVILLE, Tenn. -- A new research study from IHL Group found out of stocks cause retailers to lose sales of at least one item, and up to as many as 20 percent of consumers coming into stores, as well as lead many consumers to quit shopping with the retailer altogether.

Consumer electronics stores are losing the most, with consumers saying they leave without buying at least one item 21.2 percent of the time. Put another way, these retailers are losing $1.35 for every customer who comes into their stores due to their level of out of stocks. Likewise, warehouse clubs lose $1.78 and grocery stores lose 68 cents in sales for every customer when consumers cannot buy that product or an adequate substitute.

"Retailers remain in denial when it comes to consumer's perceptions of out of stocks," stated Greg Buzek, president of IHL Group, an analyst firm and consultancy that serves retailers and technology vendors. "Consumers don't care why the product is not available. They come in with money to spend at the stores and have to leave either because the shelves are empty, there is no one to help get a locked item, or the staff simply cannot find the merchandise even though the computer system says they have it. Nine percent of all consumers in our study have simply stopped shopping at one or more retailers in the last 12 months due to the problem," he noted.

The study, entitled "What's the Deal with Out of Stocks", available at, looks at why retailers lose sales to consumers who want to spend money at their stores but leave without purchasing for reasons other than price. The study reviews the performance in the minds of consumers of retailers such as Wal-Mart, Kroger, Best Buy, Circuit City, Costco, Albertson's, The Home Depot, Lowe's, and many others that sell products in food/grocery, home improvement or electronics categories.

Some other key findings of the study include:

-- Among grocers, best in-stock performance is Safeway (14.7 percent of consumers report experiencing an out-of-stock of at least one item); worst are Food Lion and A&P (each at 22.8 percent). Grocery customers leave stores not purchasing at least one item they planned to buy or a substitute product 16.6 percent of the time.

-- Consumers aged 26 to 35 experience out-of-stocks 11 percent more often than other age groups.