Analyze the Past to Predict the Future

A few months ago, Wal-mart’s chief merchandising officer Duncan Mac Naughton noted that the mega chain could boost U.S. sales by $5 billion by keeping its store shelves more fully stocked. While it was admitted that that number was an “off-the-cuff” one, the point is well taken — customers cannot buy what is not there. And empty shelves can drive consumers to take their business elsewhere.

Just how much are you losing when an item isn’t on the shelf?

SOLYS offers an Instock Trends/Volume Comparison Graph that shows when instocks dip as well as the effect of that dip on unit volume. The graph demonstrates how sales volume fluctuates as instocks change, and vice versa. We typically see that as sales go up, instocks go down. But if instocks are a consistent problem then you have to investigate how that is affecting your sales volume.

The Lost Sales and Potential Sales SOLYS metrics helps you calculate what you could have sold if your items had been instock. Doing so is simple. Using SOLYS, you set an instock goal. When your instocks are lower than that goal, SOLYS immediately calculates what your sales could have been were the item was instock. The goal is to determine how much potential revenue was lost because of poor instocks. Lost Sales indicates how many sales were lost because the item was out of stock; Potential Sales indicates how much you could have sold if you were instock. 

Using SOLYS you can pull POS data and analyze regular sales and inventory data from a Basic Report and then compare current and past performance. The comparison to LY Trends Graph will highlight patterns year-over-year or week-to-week. Using this graph you can see whether there are consistent instock issues for your items at certain times of the year — for example, particular seasonal time frames.  If so, you can then work to ensure that you are prepared for the next timeframe.

The SOLYS Instock Problems/Instock Tracker automatically monitors your instocks on a weekly basis, alerting you to instock issues before they become a larger problem.

There are several other SOLYS metrics you can review to assess item instocks. Examine price changes and events to see whether they play a factor in instocks. Did you have an ad that out-performed your expectations, thus driving instocks down?  Has the price on your seasonal item dropped this year, causing a run on the product and a nosedive in instocks? Was there an unexpected heat wave in March that drove sales of sunscreen, outdoor toys and t-shirts through the roof much earlier than expected?

In most cases there are several factors contributing to instocks. Be sure to look beyond the obvious factors to determine how to correct and avoid running into instock problems in the future.