Stock is money. Having large quantities for months of unsold stock on retail shop floors seems unwise. Equally so, having no stock available for days, of known fast moving or highly demanded goods, is unwise. Yet in many South African retail shops, it is unsurprising to find an oversupply or undersupply of goods in stores.
Does it mean retailers are forced to accept whatever the producer wants them to list, or is it the case of management at head office deciding on what the stores must list in spite of demand, or is it a lack of relevant technological solutions to provide intelligence information enabling managers to make informed decisions, or is it the case of poor usage of technology within the organisation? By Nimroth Gwetsa, 31 May 2021.
I thought it was common cause that in offering services and products to consumers, a study or understanding of the nature, characteristics, and preferences of local or targeted consumers would be conducted before finalising their sale. Likewise, a review of past sales and lessons learned would be considered in finalising decisions on the listing of items to put on-sale. I do not know how many times I have been to shops and never found my size. By size, I am not referring to abnormal, oversized clothing here, but “normal average” sized ones. The store would ironically have rows of many smaller clothing items to fit an average adult Italian man. If they are not small, they are too long to fit an average Rwandan or large for a Ugandan man, yet a typical South African man would be within those extremes.
If we give the merchandise manager the benefit of the doubt about the size attributes of their envisioned potential buyer of their new items, I would have expected them to consider past sales performance as a guide to work out sizes that sell the most to decide on quantities to order predominantly. Those factors do not seem to have been considered.
This type of problem is not only limited to clothing, but other consumer items too. I do not refer to items with limited shelf-life owing to time constraints or restrictions. Yet, it is easy to find many empty shelves in stores on regularly purchased items. What then is the cause of this phenomenon? Whenever I ask the shop manager, I never get a satisfactory explanation and they too eventually blame someone at head office for refusing to listen to their inputs. I refuse to believe there would be ignorant or arrogant managers at head office disregarding inputs from those at the coalface of customer interactions.
Logic dictates that there ought to be a reasonable explanation for this issue, though that reason may not have sufficiently filtered through to shop floors. But at face value, it is inexplicable seeing such inefficiencies regularly allowed to continue unabated.
Another classic example is seasonality considerations. Logic would suggest that as winter begins to fall, there would be increased consumption of gas and possibly the purchase of related appliances. Yet again, suppliers of those products would easily run out.
Such inefficiencies have an adverse effect on consumer behaviour. Fearing lack of supplies, consumers with additional resources resort to hoarding and purchasing limited items in bulk and exacerbating the problem for everyone else. And do not think that buying such items earlier before their seasons helps because retailers may not list them, citing “out-of-season” as reasons for their unavailability. Your best bet would be to buy clearance stock at the end of the season in preparation for the following year’s.
Not all such problems can be solved through price changes to regulate supply and demand. Adjusting the price can stimulate or regulate demand. But where there is excess of stock of smaller same items, price adjustment may harm than aid the sales. Consumers can easily see when they are “ripped off”, and trying to win them back may take extraordinary measures and costly resources.
Also, prices of some items are regulated, and the retailer may not increase or decrease them at will. Other indirect measures may need to be taken to achieve the result intended. Now, where proactive management of stock was a problem, how will retailers now have the flexibility, agility, and intelligence information to rapidly adjust prices to deal with demand and supply issues when they could not do an easier and cheaper task of proactive management and ordering of stock?
The problem of availability of “stock” is not limited to physical items, but knowledge work expertise also. Many professionals and small businesses do not manage the capacity and availability of their skills and knowledge workers. Many small businesses do not think of corporatising one day, but are focused on earning income and being busy.
Many a times, what seems an advantage to a small business becomes its Achilles’ heel. The attractiveness of employing services of small business is that the knowledge and expertise often possessed by the owner are applied on the job assigned to them. In contrast, work is often juniorised in many big businesses, and seniors are deployed to either put out fires or casually review work completed by juniors.
But the reliance on the knowledgeable owner can create “key-person-risk” with no immediate recovery when disruptions occur. Some small businesses attempt to “resolve” the capacity problem by limiting the number of concurrent jobs they take. Others try to solve it by playing for time. Despite the approach employed, the issue is whether the business can recover and continue operating if the owner or skilled worker is no longer available, or the owner can continue earning income under such disruptions.
While acknowledging that continuity of service may be a challenge for small businesses, part of the vision we may have for our businesses in a particular period should include plans of reducing the risk of unavailability of core skills and resources.
Do not lose business because of a lack of, or poor “stock” management, and neither should you waste valuable resources oversupplying unnecessary or “unwanted” goods and services.
