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Revolutionizing Retail: The Strategic Imperative of On-Shelf Availability in the Modern Marketplace

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On-shelf availability (OSA) remains one of the most critical but challenging metrics in modern retail. Approximately 8% of items are out-of-stock on average, leading to $750 billion in lost annual sales globally according to IHL Group. As both in-store and e-commerce shopping accelerate, today’s consumers expect products to be available across channels anytime they want to buy. Retailers must optimize OSA to meet these rising expectations and capture each sale opportunity. 

In this article, we will chart the evolution of OSA and its growing strategic importance. Through examining case studies, latest innovations, and future trends, we will uncover best practices that today’s retailers can implement to maximize product availability, improve the shopping experience, and gain a competitive edge.

The Evolution of On-Shelf Availability  

Early OSA efforts were grounded in backroom inventory replenishment. With the rise of technology, the focus shifted toward increasing visibility into product movement and availability on the sales floor itself.

For example, when Walmart adopted barcode scanning and point-of-sale systems in the 1980s, the retailer gained unprecedented insights into item-level supply and demand. By leveraging this data, Walmart improved inventory planning and in-store stock levels, reducing out-of-stocks by 10-15%, according to former executive Kevin Turner.

Other grocery retailers followed suit, utilizing emerging IT infrastructure to not only replenish shelf inventory from the backroom, but gain visibility to guide availability decisions on the floor. Scan-based trading also enabled real-time data exchange between suppliers and retailers to enhance collaboration.

Today, the proliferation of e-commerce has heightened consumer expectations for availability with shoppers accustomed to online convenience and access. Retailers must now fulfill orders across channels while maintaining optimal in-store OSA, requiring sophisticated omnichannel strategies.

The Strategic Importance of OSA

Optimizing OSA provides quantifiable benefits:

Increased Sales: IHL Group estimates average OSA rates of 93-95% lead to $100 billion in lost US retail sales annually. An OSA increase of just 1% lifts sales 2-4%.

Enhanced Loyalty: AC Nielsen found approximately 10% of shoppers will not return after just one out-of-stock experience. Availability is critical for retention.

Lower Costs: Out-of-stocks raise inventory costs through spoilage and write-offs. Excess labor costs also result from inefficient restocking. OSA excellence boosts productivity.

Omnichannel Enablement: Real-time inventory visibility facilitates fulfilling online orders from store stock and minimizing split shipments. This omnichannel capability is now expected.

Given these impacts, OSA must become an integrated, strategic priority shaping decisions across operations, technology, and human capital.

Case Studies: Successes and Failures in OSA

The business importance of OSA is highlighted by these real-world examples: 

Amazon Go stores utilize overhead cameras, shelf sensors, and machine learning to automatically monitor inventory levels. When a popular item runs low, the system triggers supply chain replenishment. Coupled with a highly automated fulfillment process, this enables Amazon Go to achieve exceptional 97%+ OSA rates.

In contrast, industry analysts highlighted out-of-stocks and empty shelves at Kmart, stemming from antiquated inventory management systems, inaccurate forecasting, and minimal technology investment. Shoppers vented their frustrations online and ultimately shifted purchases to retailers like Walmart and Target that delivered better availability. These OSA failures helped accelerate Kmart’s downward spiral.  

Technological Innovations Enhancing OSA

Cutting-edge technologies are enabling step-change improvements in OSA:

Blockchain: Walmart employed blockchain to establish end-to-end traceability across produce suppliers. This enhanced inventory visibility, agility, and availability. Out-of-stocks dropped by 13%.

Smart Shelves: Companies like Trax Retail provide IoT shelf sensors that identify low stock levels in real-time. This data powers rapid restocking. One grocery chain experienced a 17% OSA lift within 6 months.

Demand Forecasting: Machine learning has driven forecast accuracy above 99% for retailers like Kroger, optimizing stock levels and availability. 

Unified Commerce: Tapping into cross-channel data provides a single view of demand and inventory. This allows retailers to align supply and availability across online and offline channels.

Best Practices for Improving OSA 

Based on proven strategies, here are three recommendations:

Firstly, leverage predictive analytics and external data to forecast demand within 1% accuracy. Tools like machine learning and multivariate regression are required for this level of precision.  

Secondly, implement extensive OSA training programs for store staff that emphasize diligent shelf monitoring, proactive replenishment, and planogram compliance. Equipped employees are indispensable. 

Finally, collaborate with suppliers through shared forecasts, aligned inventory planning, and availability-based incentives. Treat suppliers as partners in your OSA mission.

The Future of OSA

Four key trends will shape OSA excellence going forward:

Prescriptive Analytics: AI will prescribe highly targeted actions for optimizing future product availability and shelf space allocation.

Automated Replenishment: Machine vision, sensors and robotics will enable responsive, self-managed inventory across the retail value chain. 

Real-Time Transparency: Digital price tags and smart shelving will provide shoppers with immediate inventory visibility, reshaping purchasing habits. 

Omnichannel Alignment: Retailers will achieve unified commerce through integrated data, shared inventories, and inventory visibility across all channels.

To capitalize on these innovations, retailers must upgrade technology capabilities while putting availability at the heart of corporate strategy and culture.

Conclusion

On-shelf availability remains one of the most influential factors driving retail performance. However, today’s hyper-competitive omnichannel environment demands modern OSA excellence grounded in predictive intelligence, automation, and cross-functional execution. Retailers that transform availability through both cutting-edge technology and enterprise-wide commitment will gain loyal customers, unlocked sales, and lasting competitive advantage. The time for action is now – there is no success with empty shelves.


By Arvind Bhardwaj is a Technology Transformation Leader

Arvind Kumar Bhardwaj is currently working in Capgemini. He is a Technology Transformation Leader with 18+ years of industry experience in Business Transformation, Software Engineering Development, Quality Engineering, Engagement Management, Project Management, Program Management, Consulting & Presales. Arvind is a seasoned leader with experience in managing large teams, successfully led onshore and offshore teams for complex projects involving DevOps, Chaos Engineering, Site Reliability Engineering, Artificial Intelligence, Machine Learning, Cyber Security, Application security and Cloud Native Apps Development.

Arvind is IEEE Senior member and Author of the book “Performance Engineering Playbook: from Protocol to SRE”. He is an “Advisory Committee” Member, 9th International Conference ERCICA 2024 and IEEE OES Diversity, Equity, and Inclusion(DEI) Committee member. Arvind holds 2 Master degrees in computers and business administration. Arvind has published research papers in major research publications and technical articles on dzone.com and other major media. Arvind served as a judge for reputable award organizations in Technology and Business which include Globee Awards, Brandon Hall Group and Stevie Awards. Arvind is senior coach and approved mentor listed in ADPlist organization.

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