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[26 comments]

Selling What's In-Stock. Or Not.

December 4, 2013

Through a special arrangement, presented here for discussion is a summary of a current article from Retail Contrarian, the blog of the Dynamic Experiences Group.

A salesperson recently asked me if selling only what's in-stock is good service. Her manager had instructed the staff to only show and sell what was in-stock. Some staffers disagreed with this policy, since the best product for the customer might be something not in-stock at that moment.

I told her the manager is right. I also said the staff isn't necessarily wrong, either.

Quick story first. While traveling recently, I stopped for dinner at a local restaurant that offered homemade chicken potpie, something you don't often see on a menu. When I asked the waitress about it, she told me the restaurant is known for the dish, which is made fresh daily and was also her favorite.

Mouth watering, I ordered the item only to be told, "I'm sorry, but we're sold out." Talk about disappointing!

The same thing happens in stores. A salesperson gets his customer all excited about a product only to tell him it's out-of-stock. It disappoints the customers and often results in missed sales opportunities.

But if a new product or hot seller is only temporarily out-of-stock, is it wrong to show the customer the product even though the customer can't buy it right then and there? Not at all — if it's done in a way that doesn't disappoint the customer, and the customer is given an opportunity to make a purchase.

Here are a few things to remember about showing and selling out-of-stock products.

1. Only show an out-of-stock product if you know it meets your customer's needs, or if she specifically asks for it. Too often the staff shows an out-of-stock product because it is new or they like it. A hot seller doesn't mean it's the right product for everybody.

2. Always tell your customer when she can purchase an out-of-stock product before you show it. This not only reduces disappointment but makes it easier to show another product and sell the out-of-stock one.

3. Recommend other products based on what your customer likes or dislikes about the out-of-stock product. "Take a look at this ABC widget. It's got many of the same features as the XYZ, but also has the more modern style that you like."

4. Make purchasing out-of-stock products a great experience for your customer to make up for any inconvenience. Don't tell him to check back next week. Don't charge for shipping.

5. If your customer absolutely needs that product now, find it somewhere else. Always win and keep the customer, even if it means losing a sale.

Discussion Questions:

What advice would you have for store associates in showing and selling out-of-stock product? Which tip around showing and selling out-of-stock product is most critical?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Which tip around showing and selling out-of-stock product is most critical?

Comments:

Anything to keep the sale is always good advice. I do question knowingly showing customers things that are out of stock to begin with. A lot of times we like what we can't get. For my retail clients I would say that is the very last thing to do.

Often sales people are untrained in how to present options. So because they always sold the model 9254 boot, they can't see that another might do just as good a job.

It's a balance, isn't it? How to train to think on your feet, exceed the customers expectations, and get the money - today - in your store.

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Bob Phibbs, President/CEO, The Retail Doctor

Doug's article reminds me of the scene in "Miracle on 34th Street" where Kris Kringle sends a Macy's customer to Gimbel's for an item she can't find in his store - creating plenty of goodwill for Macy's in the process. I agree with Doug that goodwill is important, especially if there is a tech solution to the customer problem. But I also agree with the store manager's point of view: "Sell what you own." Wherever possible, try to keep the customer from leaving the store empty-handed, and a little upselling doesn't hurt, either.

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Dick Seesel, Principal, Retailing In Focus LLC

I think one other point was missed. Too many sales clerks are getting very lazy. If they cannot find an item in the store that is in stock, they simply help the customer order online. I think the systems should prevent the clerk from ordering online when the inventory status is that it is in the store. Another way to manage this laziness is by decreasing the commissions paid for online purchase versus in store purchases.

I do think the key thing to remember is that the customer came into the store to buy something, and we must sell something to them even if online.

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Frank Riso, Principal, Frank Riso Associates, LLC

First thing the associate needs to do is ask questions and understand what problem the customer is trying to solve. From there they can usually recommend a few products to choose from, each with pros/cons. Unless the customer specifically asks for model xyz, there are usually multiple products to fit the need.

What is missing for me is where is the online component? Typically, a retailer isn't out of stock across the chain or online and can sell the customer what they need and either ship it from the online channel, or ship from a nearby store.

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Robert DiPietro, GVP Product Strategy & Business Development, Affinion Group

The Need Factor (NF) is the first element of the shopper experience that must be understood by the salesperson. The chicken pot pie story is a good example - you needed that pie...so bad - and when the pie was not there you had to restart your thinking to figure out your NF for the dinner.

Within the shopper experience at a store by knowing the NF right at the start of the shopper interaction, the salesperson can then know if the customer needs it today or can wait. They can also help re-tune the shopper's NF to best align it with what is in stock (what to eat besides chicken pot pie).

Know the NF and sell more...Tom

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Tom Redd, Vice President, Strategic Communications, SAP Global Retail Business Unit

Doug's advice is on target. Managers should not be telling associates to avoid a discussion about a product just because it is out-of-stock. As more retailers develop advanced capabilities for shipping from store-to-store and DC to home, it will become second-nature to have a discussion about how to get that product, shipped for free to the customer's location-of-choice, not "Sorry, that product is out of stock."

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Debbie Hauss, Editor-in-Chief, Retail TouchPoints

More often than not, selling out-of-stock merchandise doesn't work.

Today's shoppers can find what they need at multiple locations. They do their homework ahead of time and set out to buy the items on their list. One of the biggest expectations is having an in-stock position. They understand when a popular item runs out, but then to actively and knowingly show and sell an item that's out of stock is a setup to disappoint. The best tip to deal with it is to provide a discount (or a future % off coupon) and free shipping to the customer - they'll remember the special treatment and appreciate the extra personalized care.

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Mohamed Amer, Vice President, Global Integrated Retail Unit, SAP

This can be done well and is done well at stores like Lord & Taylor. If the item you want is not in stock, they will locate it in their system and generally will be delivered to your home in about 3-4 days at no additional charge. Done. Tip No. 4 is the most critical.

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Zel Bianco, President, founder and CEO, Interactive Edge

If a product is temporarily out of stock, or can be obtained through another store in the chain or the company website, it's okay to push that product if it fulfills the customer's criteria. If not, don't sell it.

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Max Goldberg, President, Max Goldberg & Associates

SWAT ... Sell What's Available Today.

It might be good service in some cases to special order in an out-of-stock item, but once you calculate the added cost of moving that product around, you quickly wipe out the profit in most cases.

Staff should be trained to 'switch' the customer properly to an alternative item first. When that doesn't work, smart retailers are then introducing some great 'pay now, we'll ship it to your home' programs.

Doug's advice in the article is great ... just get everyone focused on SWAT first.

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Kevin Graff, President, Graff Retail

While easier said than done, if expectations are managed properly, selling out-of-stock products is fine.

The interesting thing about this article is the concept of available to promise, whether in or out of stock, was never referenced.

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Bill Davis, Director, MB&G Consulting

Because social media has made bad PR ubiquitous, a retailer's reputation in the marketplace is all they have.

Thus, when a merchant runs out of an item, especially one that they are prominently featuring in their advertising, it's essential they communicate this situation immediately to shoppers. They also need to offer a solution, e.g. a rain check, a substitution, or even a referral to a competitor that has the item in stock.

What's even more important for leaders and managers is to clearly communicate this situation AND the solution to all store personnel, so as they are besieged by disappointed customers, they will be able to provide an appropriate response.

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Eric Chester, Keynote Speaker, Author, Reviving Work Ethic, LLC

I think store associates need to be trained on what is in stock and out of stock, so that they are accurate in their assessment. I find that sometimes sales associates don't even know what is in stock and was surprised as the customer. If the customer is looking for a feature not available in stock and assuming the e-commerce ordering experience in store is seamless (cashiers can "check out" customers and print receipts and deliver like an in-store order), I think it is okay to sell out-of-stock items in-store.

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Kenneth Leung, Director of Enterprise Industry Marketing, Avaya

I agree with Robert - define "out of stock" these days. Just because it's out of stock at the store doesn't mean it's unavailable to the customer. As long as the employee does a good job of setting expectations before helping the customer fall in love with the product, especially in terms of how long it might take to get the product, then the employee should sell whatever best fits the customer's need.

I think stores lose a lot more sales than they think they do by not leveraging all of the retailer's inventory to make a sale - no matter where it might be located.

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Nikki Baird, Managing Partner, RSR Research

Good specific advice all around on this topic, but I would suggest it is worth exploring another angle....

In the new world of omni-channel consumers, selling from a "virtual shelf" is becoming a requirement, not an option.

A very high percentage (70%+) of consumers have already shopped online before entering a store. They have researched the vast array of choices available, for a particular retail store, and across retailers. They are highly informed about choice, selection, price; they know what is available beyond the shelf.

The very largest stores can stock tens of thousands of SKUs. Amazon stocks millions and can get them to your door in 24-48 hours. The best way for stores to prevent "showrooming" is to be able to offer the consumer more variety and choice, with fulfillment in a comparative time frame.

In Europe where shelf space is limited and expensive, there are stores operating now with NO inventory in-store. Yet, they have hundreds of thousands of SKUs for sale. The absolute keys to their success are consumer-centric experience in-store, and very rapid fulfillment that matches or beats ecommerce.

The challenge with many retail stores is that they are pushing products in stock because they are desperate not to lose a sale today. A single sale in-store today is very temporary in the consumer's omni-channel world, which crosses all channels.

Retail survival going forward is less and less about selling products, but more about earning the trust relationship that will create consumer loyalty and repeat traffic (online or in-store) that creates lifetime value. Amazon understands this very well!

I highly recommend studying John Lewis in the UK as a very successful retail case study of how to create the "seamless consumer experience" to serve consumers with both in-store and virtual shelf options.

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Chris Petersen, PhD, President, Integrated Marketing Solutions

Funny. Once again, we are dealing with perennial retail challenges. In the 1947 film, "Miracle on 34th Street," the prominent retailer started suggesting the shopper go to their competition to purchase an item that is out of stock. This won over the shopper like never before, and drove true loyalty. Yes, it was "only" a movie, yet until shoppers start telling merchants how many items they will purchase before the store orders the products, we will continue to have out-of-stock situations.

Bottom line, take care of the shopper: 1) Offer an appropriate substitute, or 2) Tell them when they can get the product, or 3) Tell them where they can but the exact product today... at the competition or wherever!

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Ralph Jacobson, Global Consumer Products Industry Marketing Executive, IBM

Put the customer's best interest first. If it's served by a "walk out with this in your hands" substitute, great; if it's a "find it in another store that they can pick it up in a short drive from there," also good. If it's a "deliver to your home a bit later...." Hard part here is establishing a single rule for what is a judgement situation that I suspect most store associates are capable of making. (Well maybe that depends on the type of store and tenure of associates.)

Maybe that would be a question for another thread. Are your store associates 1) capable, 2) empowered to make discretionary calls?

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Peter J. Charness, SVP America, Global CMO, TXT Group

A little off topic, but an effective resolution to the issue.

If this condition exists for more than one or two times a quarter, it reveals 2 critical management failures: Inventory management and staff management.

Solution: Management must understand the correct category, brand and model mix suitable for the identity management wants to use to attract consumers. Develop effective min/max inventory levels. Monitor regularly. Select reliable suppliers. Successfully deliver the message to the floor including which categories, brands and models best fit management's identity goal for top line sales and gross profit margin goals for the store.

It seems that the floor's lament is wrong brands, not enough inventory and not enough traffic. Management's lament is the floor can't sell, they just clerk, staff does not use good judgment to check inventory prior to making a presentation, the floor lets consumers walk without trying to present an alternative.

Manage the inventory properly. Hire the right staff. Continually communicate (train) staff how to deliver an effective and consistent message to the consumer. It isn't necessarily easy. That is why they call it work. BUT it certainly is not too hard.

Ray Windsor, President, German Maestro

Sometimes scarcity of product makes it more desirable. The key is to promise the customer the realistic delivery date. Is the item worth the wait? Is there an incentive to waiting? The risk to the customer is that the item won't show up by the date that's promised. All that said, it is important to disclose upfront to the customer that the item is out of stock. Find out if that is an issue.

If the customer is set on getting the item right away, you have a chance to be a hero. Find out where else the item might be, even if it is from a competitor. Call the competitor and have the item put on under your customer's name. When the customer sees you are more interested in helping them find what they want versus making the immediate sale, they will appreciate you and reward you with future business. In other words, care more about the customer than the sale, and the sale will eventually come.

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Shep Hyken, Chief Amazement Officer, Shepard Presentations, LLC

The simple answer to the question posed is that the customer should be told of his or her full range of options. The customer should be told that the item desired is not in stock, when the expected restock date is, and informed of possible alternatives that are currently available. Knowing what the potential alternatives are requires knowledgeable and caring sales people, supported by sophisticated data analyses that provide insights into product substitutability - crucially - targeted to the particular customer's preferences.

But if an approach to mitigating the consequences of out-of-stock items is a key aspect of the retailer's strategy, the wrong issue is being addressed. Study after study shows that a top three complaint of customers is that the item that brought them to the store is not available. Often, a sale is lost. Often, a substitute purchase is made. But, in either case, it is difficult to overstate the negative impact on customer loyalty of the desired item not being available. Loyalty-driven retailers realize this, and employ scientific methods to forecast demand, set appropriate inventory levels, proactively monitor inventory to prevent out of stock, and quickly react when out-of-stocks do occur.

Thus, while a retailer should have procedures in place to minimize disappointment when a desired item is not available, the successful business model is to first and foremost strive to make this a rare event.

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Dr. Paul Helman, Chief Science Officer, KSS Retail

While this is an interesting question, I would argue that a true omni-channel experience could solve this problem before it even starts. By equipping employees with on-the-floor technology that tracks all inventory, they will be able to sell all products and fulfill them in a way that is convenient for the customer. Getting the right product to the right customer is crucial for long-term customer retention, engagement and loyalty. If this means having a customer purchase an item in-store and having it sent to their house by mail, or picking it up later, this will be a far better experience than trying to right-size a product that may have similar features.

Inventory management needs to be considered as part of the overall customer experience and brought into the entire omni-channel integration. Nordstrom has done a great job of this already - employees can quickly see where all items are at all times and get them to the customer regardless of where they are.

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Jesse Karp, Omnichannel Consulting Manager & Loyalty Practice Lead, Cognizant Business Consulting

Much also depends on the industry here. In the supermarket space, our research clearly shows that out-of-stocks lead to significantly lower trip satisfaction. Not sure that trying to sell a customer on an out-of-stock item in this environment would make much sense. Although some will, the majority of shoppers won't wait for the item to come in, especially if they want to incorporate the item for dinner that evening. But rather than forcing the shopper to visit a competitor, certainly trying to find an acceptable substitute can help reduce lost sales.

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Brian Numainville, Principal, The Retail Feedback Group

Thanks everybody for some great insight and the different perspectives. I think we can see that by all the different responses that there is no one-size-fits-all solution. To me, the key is that the staff and leadership is aligned on what is the preferred approach for that retailer. Thanks again.

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Doug Fleener, President and Managing Partner, Dynamic Experiences Group

Let's use the chicken pot pie example Doug related as the starting place. I want to know if what I want is available now and not be disappointed later in the sales presentation.

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Ed Rosenbaum, CEO, The Customer Service Rainmaker, Rainmaker Solutions

The manager is wrong. It is the kind of mentality that exists with retailers who haven't moved on with the times and still operate each of their channels in isolation. Many retailers have also cut down their store staff numbers to the point where the associates are looking to keep conversations as minimal as possible and this naturally would promote the kind of behavior that this manager displayed (why bother when the chances of interesting the customer in an OOS stock product is small to begin with?).

If a customer has walked into your store, you should do everything possible to help them with whatever they are looking to buy (even if the product is OOS in that store). You don't engage with customers only if you can do business with them at that moment in time. Even if nothing materializes out of that transaction, showing customers alternate products (even up-selling), showing customers alternate stores/locations from where they can still buy the product they are looking for is important. Customers will always prefer retailers who are willing to help.

But don't do anything in half measures. If you want to talk about OOS products, show the willingness to stay with the customer till you have helped them completely, including if required contacting the alternate facility and helping block the needed inventory for the customer. This is easier said than done, because the store associate usually gets no credit for helping his company "save the sale" and hence no incentive to actively spend the time doing it.

Arun Channakrishnaiah, Sr. Manager, Accenture

Smart, well-trained salespeople know what is in stock, what is out-of-stock for an extended period, what is out-of stock temporarily, what is available in other locations, and what is available online at a warehouse.

Well-trained salespeople do not get into extended conversations about products that they cannot deliver on. Not every retailer has the infrastructure, operational and logistical excellence to either rely on limited inventory positions in a warehouse or to rely on a manufacturer's next supposed shipment.

Be honest with your customers and set real-world expectations. Working with in-stock positions is safe and not necessarily a bad managerial move.

Alan Cooper, Contract Trainer/Training Consultant, Independent/Freelance

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