Monitoring store shelves to prevent stock-outs

May 4, 2014 | By RetailME Bureau

A customer walks into a store looking for a specific product. It’s not there on the shelf. The customer walks out disappointed, maybe going to the next store looking for the product. The store loses the customer. The tragic part of the episode is that the product is available in the store but it’s in the back end or the warehouse, not on the shelf, at the time the customer needs it.

So how does a retailer avoid such situations, which tend to occur more often in the case of fast-moving items, leading to loss of customers and, naturally, loss of sales revenue, which could range anywhere from 6-to-24%?

Tech Mahindra, the IT services and consulting division of India-based conglomerate Mahindra Group, says its ShelfMonitor software can help the retailer by proactively alerting store staff about potential out-of-stock situations. A timely warning would enable them to replenish the item and maintain high-on-the-shelf availability, thereby retaining customers and fostering customer loyalty. This pragmatic, single window business insight solution interfaces with the store’s back-end systems on a real time basis to generate its actionable role-based reports.

Here’s how the ‘Mobile Merchandising Monitor’ works, explains Mahesh VS, global head–retail & CPG practice, Tech Mahindra. “Real-time data from the point of sale (POS) is processed by a business rules engine to arrive at the frequency of sale on a daily or hourly basis. At the same time the item inventory in the store is also monitored. This combined data is interpreted by the analytics engine, the logic used being simple. If there is any deviation in the sales pattern of a stock keeping unit (SKU) – say, no sales – in a window of time while the inventory shows the stock is available in-store, an alert of a potential out-of-stock situation on the shelf is immediately generated and a report is sent to the mobile of the concerned persons on the floor for action,” he elaborates.

The concerned person could be the store manager, department manager or floor merchandiser, each of whom has a different role to play. The solution generates separate role-based reports of the out-of-stock so each of the players gets to see a different view of the potential stock-out. The store manager gets a view of the entire category-level potential stock-outs for the store in a period of time, while the department manager is allowed to view only the SKUs of the department within the store and the merchandiser views only the SKU level for which he/she is responsible.

Mahesh points out that the information is appropriately packaged in the intuitive dashboard of the user’s hand-held mobile device, which has a provision to retrieve the back store stock, minimum presentation quantity and shelf location.

“Since this process goes on in near real time, the merchandiser can check the shelves and replenish them with SKUs from the back end/warehouse, thereby ensuring constant availability and improving store productivity, which shores up the bottom line,” Mahesh adds.

Tech Mahindra’s retail digital enterprise solution is built on the network, mobility, analytics, cloud, security, sensors and social (NMACSSS) technology stack foundation and is hosted on a secure and enabled Google Cloud platform, which makes it easy to deploy, allowing it to mine sales and inventory data from disparate systems and generate role-based alerts on mobile phones. The company is offering the software as a pay-per-use service or on-premise solution.

“In a scenario where retailers are digitising their store systems to give customers a better store experience, the solution definitely contributes to better efficiency and productivity in-store. The basic challenge is to ensure that the right stock is available on shelves at the right time for customers. What’s important is to ensure the optimum minimum presentation quantity (MPQ) on shelves to avoid high inventory carrying costs. That way retailers can also have more products on display in the store, giving consumers a wider shopping choice, which in turn would help generate the right impulse purchase intent in them,” says Pravat Rath, head, retail practice, Tech Mahindra.

“ShelfMonitor is an innovative solution that enhances the customer experience and increases topline revenues of general, food and grocery retailers by optimising their store productivity. Its easy to deploy and its capital cost for retail customers is quite low, yet it offers them a host of innovative engagement models,” he adds.

Mahesh points out that ShelfMonitor has applications that go beyond that of an in-store solution providing real time alerts to a more predictive and prescriptive analytics solution for planning and operations. “It’s in a typical pull-type supply chain model that such data is highly useful in preventing out-of-stock situations and improving the replenishment process. But we can create customised extensions to capture trends – such as customer buying patterns – and feed them into the supply chain planning and execution systems, depending on their relevance to different retailers,” he concludes.

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