If It’s Not on the Shelf, We Don’t Have It. (Or How to Lose Sales)

How many times have you heard that? Here’s a story about an interesting shopping experience I had recently…

I was shopping for a particular item in an office supply store…a big one that is part of a big chain.

The item I was looking for – a very basic item for that retailer – was sold out. Or, so it appeared.

I got the attention of a nearby associate and asked her if they were, in fact, sold out. She said “if they aren’t there on the shelf then we don’t have any.”

I was skeptical about this so I said, “Maybe you have them somewhere else. Could you check the backroom for me please?”

This time the associate told me that they never have back up stock in the backroom. Hmmm, never?

What about the time between receiving it in your shipment and getting it on the floor? It’s in the backroom then, isn’t it?

Just maybe the item I was looking for was, in fact, in the backroom. But, of course, I didn’t say these things out loud.

The associate said “You’re going to have to come back another time, or go to another store.”  So, I continued with the rest of my shopping.

What else could I do? I’m not the manager of the store.

And, really, I didn’t have a good and valid reason to think she was lying to me, or that she didn’t know what she was talking about.

Lazy, or not properly trained, or indifferent maybe. Anyway…

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When I got to the check out, the cashier asked me if I had found everything I was looking for.

I told her that I couldn’t find one item and I told her about the conversation with the other associate.

It just so happens that there was a ‘managerial looking’ individual close by and she overheard the conversation.

She seemed surprised and said “Oh, let me check for you. I’m sure we have those.” Excellent news.

A few moments later she came back with the item. Great. Then, to the cashier, I said “That’s interesting, the associate told me there were no more.”

And the cashier explained that they ‘usually’ didn’t carry extra – if it’s not on the shelf, then it ‘usually’ means they don’t have it.

What happened here? If the ‘managerial looking’ person hadn’t overheard my conversation with the cashier and hadn’t intervened and gone to find the item I was looking for, the sale would have been lost.

Some may say that’s no big deal. But it’s a very big deal. Let’s look at the numbers, below.

The item was priced at $25.99.

Assuming the sale actually had been lost and assuming it happened once a day – which is highly unrealistic – the number is closer to 10 times a day – but let’s say once a day for the sake of argument, then annual lost sales or missed opportunities would be $9,356 for that one store.

If there are 15 stores in a district then the annual loss of sales, for the district, would be $140,340.

If there are 1000 stores in the chain, the amount would be $9,356,000.

Adds up, doesn’t it?  

What if you have a chain of 10 stores, and the item in question sells for $129? And let’s say you miss one opportunity to sell that item every day.

At the end of one month, your chain sales will be short by $38,700.

And if your gross margin is 40%, that means you have $15,480 less to operate your stores with. $15,480 covers a lot of expenses, doesn’t it?

As I said above, lost sales are a big deal.

We could be so much better off if we stopped worrying and complaining about sales not being on target, or up to last year’s level and started doing something about it by plugging the holes in the operation.

The moral of this story, for all retailers to take note of, is this: Identify all of the different behaviors that may be causing you to lose sales, or miss opportunities, and then train and coach on those behaviors. Be focused and be relentless.

All the Success!
DMSRetail

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