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As CPG brands, ensuring that products are available when and where customers expect them is crucial for maintaining customer satisfaction and driving sales. Afterall, in a store, what is seen is what is sold.
This concept, known as On-Shelf Availability (OSA), plays a pivotal role in a store's success. OSA measures the percentage of products that are available for customers on shelves at any given time, with a perfect score being 100%. For instance, if a store's OSA is at 92%, it means that 8% of its products are unavailable for customers to purchase, which can lead to missed sales opportunities and customer dissatisfaction. Even a small percentage of unavailable items can have a significant impact on both the customer experience and the retailer's bottom line.
In this article, we’ll explore the critical elements of OSA, how poor availability affects sales, and how CPGs can implement strategies and technologies to improve their on-shelf availability and boost revenue. By optimizing OSA, brands can not only enhance customer satisfaction but also drive consistent sales growth.
What is On-Shelf Availability (OSA)?
On-shelf availability (OSA) is a key metric in retail that refers to the availability of products for purchase directly on store shelves. It focuses on ensuring that customers can easily find and buy products at the right time and place in the store, rather than having them stuck in a stockroom or unavailable due to poor replenishment. While OSA is closely related to the concept of being "in stock," it highlights the importance of efficient stock management practices to ensure that products are not just in the store but are accessible to customers on the sales floor.
The table given below summarizes the differences between In-Stock and On-Shelf Availability (OSA):
Maintaining high OSA is essential for satisfactory shopping experience and retail success. Without it, retailers can face several negative consequences, such as:
- Customer dissatisfaction: Frustration builds when customers can’t find the products they want.
- Decreased sales: Products not on shelves lead to lost sales and revenue as customers will either choose the same product of another brand or look for the same product elsewhere
- Shifting customer loyalty: Frequent lack of OSA may drive customers to switch to competitor brands altogether
By focusing on effective replenishment and stock management, CPGs can prevent these issues, ensuring smooth operations and maintaining strong customer loyalty.
Common Challenges in Maintaining On-Shelf Availability
Maintaining optimal on-shelf availability (OSA) can be a challenging task for CPG brands due to various operational and logistical hurdles. Several factors can prevent products from being consistently available on shelves, impacting both sales and customer satisfaction. Here are some of the common challenges that CPGS face when striving to maintain high OSA levels:
- Poor Inventory Management
Spoilage, theft, and mismanaged stock can contribute to discrepancies between actual inventory and what is available on the sales floor. Without proper tracking, retailers may face unexpected stockouts.
- Inaccurate Forecasting
Relying on outdated or incorrect data can lead to inventory issues, with either too much or too little stock being ordered. This can result in overstock, waste, or stock shortages.
- Ordering Problems
Late or inconsistent orders from suppliers can disrupt stock levels, leading to empty shelves during peak shopping periods.
- Poor Execution and Replenishment
Even when items are in stock, delayed or inefficient restocking can prevent them from reaching the shelves in a timely manner, reducing availability for customers.
Addressing these challenges requires more than just manual effort; adopting technologysolutions can significantly enhance the ability to maintain on-shelf availability (OSA) and streamline stock management processes. Let's explore some of the key technologies that can help retailers overcome these hurdles.
Technological Solutions to Improve On-Shelf Availability
To tackle the challenges associated with maintaining on-shelf availability (OSA), CPGs can leverage various technological solutions that enhance operational efficiency and stock management. These advancements not only streamline inventory processes but also enable timely replenishment, ultimately contributing to a better shopping experience for customers. Here are some key technologies that can improve OSA:
- Image Recognition Systems: Tools like Paralleldots’ retail execution software ShelfWatch use image recognition to monitor stock levels in real-time. These systems help managers identify when products are missing from shelves, ensuring quick replenishment.
- RFID Tagging and Labeling: RFID technology improves inventory accuracy by tracking products more efficiently. It enables CPGs and retailers to identify stock levels instantly, preventing stockouts.
- AI and Machine Learning: By leveraging predictive analytics, AI-powered systems can forecast demand more accurately, ensuring optimal stock levels at all times. This reduces the risk of stockouts while minimizing overstock.
These technological advancements not only help monitor stock but also enable proactive management, ensuring that shelves remain stocked and sales opportunities are maximized.
Benefits of Improved On-Shelf Availability
Improving on-shelf availability (OSA) not only mitigates stock-related challenges but also yields significant advantages for CPGs and their customers.
- Enhanced Customer Experience: Shoppers are more satisfied when they can find the products they want at the right place, leading to positive shopping experiences and increased brand loyalty.
- Increased Sales: Full shelves help influence purchasing decisions and ultimately drive sales. Ensuring that in-demand products or Must-Stock List (MSL) items are consistently available can significantly boost revenue.
- Better Supplier and Retailer Relations: Improved inventory management leads to better collaboration between retailers and suppliers, helping both parties achieve their business goals through efficient stocking and ordering processes.
Implementing Effective OSA Strategies
To enhance on-shelf availability, CPGs must adopt targeted strategies that tackle the unique challenges they face. One critical approach is data-driven demand forecasting. By leveraging analytics and historical sales data, retailers can accurately predict customer demand and ensure that products are stocked appropriately. This proactive method not only minimizes the risk of stockouts but also helps in optimizing inventory levels.
Another vital strategy is efficient supply chain management. Streamlining operations—from order placement to product delivery—ensures that merchandise arrives at stores on time and is restocked promptly. Efficient logistics prevent stock outs during peak shopping periods and contribute significantly to maintaining optimal OSA.
Additionally, investing in regular staff training is essential. Equipping employees with knowledge about stock management and replenishment processes enhances operational efficiency. When staff are well-trained, they can quickly identify which items need restocking and ensure that shelves are consistently filled, leading to improved on-shelf availability.
Also read: Boosting Store Sales by Improving On-Shelf Visibility - A Complete Guide
As rCPGs refine their OSA strategies, they should also keep an eye on emerging trends that could shape their inventory practices moving forward.
Future Trends in On-Shelf Availability
As the retail industry continues to innovate, technological advancements are playing a crucial role in transforming how on-shelf availability (OSA) is managed. AI-based real-time solutions are at the forefront of these changes. With automation and real-time tracking systems, CPGs will gain even more precise control over their stock levels. AI-driven platforms enable accurate demand forecasting, automatic replenishment, and real-time monitoring, ensuring that shelves are consistently stocked without manual intervention. This reduces human error and maximizes efficiency, allowing retailers to respond instantly to stock issues.
In addition to technological advancements, global market growth is driving competition among CPGs, making OSA a pivotal strategy for capturing greater market share. With rising competition and increasing consumer demands, global CPG manufacturers are focusing on improving OSA to stand out, attract more customers, and boost sales. Ensuring optimal stock levels is no longer just a local issue—it’s a global necessity to remain competitive in the fast-paced retail environment.
Moreover, the future of OSA lies in integration with inventory management systems. By adopting a more holistic approach that integrates OSA solutions with broader inventory systems, retailers can streamline their operations and optimize stock levels across multiple channels. This integration helps ensure that stock is not only available on shelves but is also efficiently managed throughout the entire supply chain, from suppliers to stores.
Also read: Boosting On-Shelf Availability for Packaged Food Brands Using Image Recognition Technology
As the retail industry shifts towards more tech-driven and data-focused approaches to stock management, it’s clear that keeping shelves fully stocked will remain a key priority for retailers aiming to maximize both sales and customer satisfaction.
Conclusion
On-shelf availability plays a critical role in ensuring customer satisfaction, boosting sales, and maintaining a competitive edge in the retail industry. By focusing on improving OSA through data-driven strategies, efficient inventory management, and the adoption of advanced technologies, retailers can significantly improve their operational efficiency and sales performance.
Paralleldots offers AI-powered solutions to streamline retail execution and improve on-shelf availability. By leveraging tools like image recognition and real-time data analytics, retailers can ensure that products are always available to customers.
Ready to elevate your retail strategy? Book a demo with Paralleldots today and discover how our cutting-edge solutions can transform your business.
