Can the FMCG industry afford to lose billions from empty shelves?


Can the FMCG industry afford to lose billions from empty shelves?

During the last few months, commodity price increases, rising energy costs, and the impact of the war in Ukraine have caused widespread disruption of supply chains, leading to out-of-stock situations in supermarkets across Western Europe.  

In France, Spain, and the U.K., 4% of FMCG products were out-of-stock on the shelf in 2022, for an average of 4 days—this amounts to billions in lost revenue and weakened consumer loyalty.  

Going out of stock means going short on profit

In France and Great Britain, the out-of-stock issues caused sales losses on the level of almost 2 billion Euro. The 4.4% out-of-stock rate in France resulted in 851 million EUR in missed sales, while in the U.K., a 4.0% figure represents 1 billion GBP in missed sales1.

So, how can FMCG manufacturers and retailers avoid ongoing losses?

Some categories are impacted more than others due to product availability—the trick is to know how retail space and assortment can be optimized based on the current situation.

One example is cooking oil, which has been heavily impacted by heightened supply chain issues and is now out of stock in many retailers across France, Great Britain and in Spain. In France, cooking oil was out of stock in 25% of cases.2

This left one quarter of consumers unable to find products at the shelf.

Shopper’s loyalty has its price and value

Losing money by not optimizing retail space and assortment is just one side effect: the second is losing the trust and loyalty of the shoppers.

NielsenIQ research shows that 30% of shoppers will visit a new store when they can’t find what they’re looking for, and 70% will buy a different brand when their regular choice is out of stock.

Once trust is lost it can be very difficult to regain. It is better to architect the space and shelf strategy prior to shoppers’ migration to different opportunities.

Person refining their assortment

Make your assortment strategy work for you

While assortment is getting harder, your competitors are looking for every edge. Stay ahead with proactive strategy and solutions to simplify the complexity of the changing retail and manufacturing landscape.

Do not go out of stock—optimize your assortment

Unoptimized space and consumer loyalty can be managed with the right strategy and implementation of efficient shelf architecture. NielsenIQ has 4 tips to help avoid out-of-stock scenarios:

  1. Try to spot shelf trends earlier and make faster decisions on assortment and shelf optimization actions.
  2. Those actions will help optimize shelf space based on segment demand, performance and potential and allow decision makers to feel confident that shopper needs and demand will match the product on the shelves.
  3. Companies will need a single, comprehensive view of store-level shelf data updated on a weekly basis to catch up with dynamic changes.
  4. By optimizing the gaps and filling the rest of the available space on the shelves with the right offer, manufacturers and retailers will secure healthy growth in revenue and will keep clients’ loyalty close to their brands.

NielsenIQ Shelf Architect is a single, cloud-based solution for your assortment and merchandising needs. By integrating data and models into one end-to-end solution you can simplify planning, drive better performance, and create sustainable growth—ensuring no more lost profits and ensuring your consumers continue to shop your brand.

Start planning your optimized shelf today.