dark store grocery

3 Strategies Grocers Can Use to Enhance Online Availability and Avoid Losing Their Omni-Channel Customers

Customers worldwide have changed the way they shop for groceries. Millions have now chosen online shopping for ease, convenience, and safety. Take Jeannette for example. In addition to having a demanding work schedule, she’s also a full-time mother who prefers to do her grocery shopping online. She intends to purchase 10 items using her favorite grocery store’s mobile app and chooses the same-day-delivery option so her dinner ingredients will be waiting at her doorstep once she arrives home.

Shortly after placing her order, the store calls to say that 3 of the 10 items she wanted are not available. The store manager offers to substitute these with similar items. However, Jeannette has a very busy schedule and doesn’t want to deal with this on the phone while she is having a business meeting on Zoom.

Let’s take a closer look at Jeannette's options. She can:

  • Substitute with similar items
  • Buy the rest of the basket and use another grocery store app for the missing 3 items
  • Cancel the order this time
  • Switch to an alternative retailer

The importance of getting availability right

What does a grocery retailer lose when an item is not available online?

Clearly, grocery retailers risk more than the loss of a single sale by not having the right item online when a customer wants it. In today’s omni-grocery world, customers are quick to find an alternative product or a new grocer if their initial choice isn’t available. This means not just lost sales but frustrated customers, and perhaps worst of all, a tarnished brand image.

According to a Harvard Business Review study, retailers can lose nearly half of intended purchases when customers encounter stock-outs. Those abandoned purchases translate into sales losses of about 4% for a typical retailer. For a billion-dollar retailer, that could also mean $40 million a year in lost sales.

hbr figures

How can grocery retailers avoid losing their omni-channel customers?

Today, many retailers recognize the challenge of getting online availability right and keeping their omni-channel customers happy. Forward-thinking grocery retailers are now focusing on their omni-channel customers and radically accelerating their omni-channel inventory planning capabilities to serve them better.

Here are 3 strategies that grocers can use to enhance online availability and avoid losing their omni-channel customers when a product is not available:

1. Measure the true impact of product unavailability

Poor availability means dissatisfied or lost customers and poor financial performance in the long run. Correcting availability problems begins by better understanding their root causes and measuring the impact of product unavailability—including the possibility of losing the full customer basket and reduced future visits by those customers.

Using AI solutions that are built for the omni-world, retailers can characterize the effects of stock-outs and the effect of slow-delivery as omni-lost sales.  This is the first step in measuring the current state and impact of changes in how a retailer is managing its supply chain.

2. Enhance omni-channel demand forecasting capabilities

Predicting how, when, and where your omni-channel customers want their orders to be fulfilled has never been more important.

As more customers migrate towards online channels, they yield increasingly rich data about their preferences and purchasing behavior. Using these new data streams and analyzing them effectively can help grocers to respond to changing patterns of omni-channel customer demands quickly.  

This requires forecasting demand at a location-product-day-fulfillment preference level. In some cases, hours would be more relevant than days. Fulfillment preference can usually be classified into two levels: online vs offline delivery.

Grocery retailers that forecast demand using sophisticated demand forecasting solutions can determine the right amount of inventory required in stores, dark stores and distribution centers. As a result, they can reduce lost sales by maximizing availability. As a result, they can successfully increase their order fulfillment performance and keep their customers happy.

3. Take advantage of dark stores

Rising omni-channel customer expectations for faster grocery delivery have triggered the development of more innovative fulfillment options. Today, dark stores stand out as the next big thing in grocery retail, as they offer a highly effective way of picking stock for online orders and supporting last mile delivery.

Dark stores enable retailers to provide more convenient shopping experiences for omni-channel customers. In addition, they help grocers to deal with the sharply increasing volume of online orders more efficiently and shorten the delivery times.

As grocers look to optimize and expand their fulfillment capabilities, they can take advantage of dark stores and have greater availability, a clearer view of stock levels and, improved fulfillment efficiency.

Invent Analytics

Looking ahead

The omni-channel grocery world has placed supply chain firmly on the front line. Today, serving the omni-channel customer in the best way possible requires grocers to look at everything through an omni-channel lens.

With Invent Analytics’ integrated supply chain suite, Omni-AI, grocery retailers can embed omni-channel retail into their strategy, predict omni-demand at all levels, profit-optimize their inventory, and re-engineer their supply chain to fulfill their omni-channel promise.

Get in touch with our team of experts to learn about how we can help you serve your omni-channel customers better and win in the new omni-grocery world.