The CEO of a popular drink company wakes up in the middle of the night from a terrible nightmare—product distribution voids were taking over shelves across the nation. These are the silent enemies of all brands and manufacturers, making products literally disappear from the shelves, decreasing profits. Although stockouts are more commonly addressed, product voids cause much greater losses. Stockouts are easily solved through reorders, whereas product voids result in the loss of a store carrying the product until the mistake is caught.

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How do products disappear from stores?

Everyone has seen how difficult it is to stock and organize shelves while customers shop. It can be extremely strenuous and detailed, requiring continuous rechecking to ensure the store looks clean and items are present. Due to many of the following reasons, distribution voids often go easily undetected during shelf restocking:

  • Frequently during high trafficked times (especially when kids are involved), shoppers misplace products by putting them on different shelves or locations in the store.
  • Similarly, shoppers can knock shelf tags off. These tags can end up in shoppers’ belongings or on the ground, never to be seen again.
  • When a product is out of stock, employees often remove the shelf tag and fill the space with another product for visual appeal. By doing so, it becomes easy for the shelf tag not to return to that spot on the shelf again and the product to disappear from reorder tracking.

All of these circumstances can lead to confusion when it is time to restock and reorder products. Without a shelf tag, physical product, or guidance, the employee is unaware of the absence of the product and cannot reorder it. Ultimately, it will completely disappear from inventory in that store. This can become especially problematic if a retailer’s most popular product sold out quickly and is then not replenished, because sales will vanish in that store.

Who does this effect?

The disappearance of extremely popular products can lead to decreasing customer store loyalty. If customers cannot find their favorite products, they may change the store they shop at. Thus, the store can experience massive losses on more than just that product but entire future shopping trips (http://www.nacds.org/pdfs/membership/out_of_stock.pdf).

As the product loses its shelf space, it can frequently be filled with competing brands, increasing competitors’ sales and brand awareness. Not only is this preventing customers from seeing the product, but it is potentially converting customers to competitors’ products for future purchases. When the product is not reordered, it ends up sitting in a warehouse with a zero opportunity to be sold. The product owner will therefore see significant decreases in profits.

How do we avoid the voids?

Without proper and consistent data collection from every store, it is impossible to know when and where distribution voids are occurring. Therefore, regular, repeated audits are necessary to prevent them. Although voids are easy to spot in stores, the only true way to track if a product is being shelved is to physically check the store and chart out the trends (http://www.cpgdatainsights.com/distribution/id-dist-voids/). Some products may need to be audited in thousands of stores, and this can become difficult and time intensive to track for companies. However, once the data is collected and distribution voids are noted, the information can be brought to a store and pointed out for future changes to be made. The potential change can massively increase sales and product awareness! Observa provides cost-efficient clarity on where executions are failing, so that corrective action can be taken quickly for these product voids.

(Sign up for our webinar on Avoiding Voids to learn even more)