February 09, 2022
Grocery stores aren’t the only food retailers experiencing significant stockouts this year.
According to a CNN item. A Texas, TXB-based convenience store chain is reporting stock-outs at a rate of 12% to 13%, with 6,500 to 8,000 products a week not showing up at suppliers. The normal rate is around 1.5%. In this environment, even substitute brands for out-of-stock products are proving difficult to find.
The phenomenon is of particular concern in low-income communities where convenience stores are the only place to buy groceries. At a location of the Arko convenience store, which operates primarily in small towns and rural areas, customers line up early in the morning to try to catch delivery trucks and get the products as they are stocked.
Massive stockouts have been a problem in grocery stores throughout the pandemic. In the early days, panic buying frequently emptied the shelves of toilet paper, paper towels, pasta, and other staples. Then workers who fell ill at US meatpacking plants led to disruptions in meat and poultry selections on the shelves. More recently, the closure of overseas ports due to workers sick with COVID-19 and the shortage of truck drivers to transport products to the United States have contributed to the unreliable assortment on retailer shelves.
Supply chain disruptions have also been named as a driver of food price inflation, which rose in January 2022 at the fastest pace in a decade, according to Looking for Alpha. Raw material costs have also increased at an accelerated rate throughout the pandemic.
Non-grocery retailers have also faced out-of-stock issues due to supply chain disruptions. In the rise of the holidays, clothing retailer Difference went so far as to reroute 35% of its vacation product by airfreight, to the tune of $450 million, in an attempt to bypass port bottlenecks and get the product on the shelves.
DISCUSSION QUESTIONS: Are convenience stores better or worse positioned to deal with stock-outs than grocers? What should they do to better handle this situation?
“All retailers – in convenience stores and grocery stores – should leverage advanced analytics to combat these dynamics.”