Black Friday will be a test case for retailers in terms of their ability to fulfil demand in a time of supply chain disruption, and also for customers in terms of whether they will put up with poor availability or shop elsewhere, says Duncan Potter, CMO of Pricer.
Retailers are doing all they can to deal with shortages due to disruptions in the supply chain, whether caused by Covid-19 or Brexit or – more likely – both. Some larger companies have taken control of their own supply chain by bypassing many of the supply chain intermediaries and buying capacity direct. Others are thinking further ahead by acquiring their own logistics capability so that they will no longer fall prey to disruptions not of their making, while others, including Next, are considering ditching next day delivery options in a bid to smooth out supply chain bumps.
In fact, there is no end to the ingenuity retailers have employed to ensure that goods are available on Black Friday and on into Christmas. However, ingenuity at the back-end is not always followed up at the front-end, on the shelf; even companies with full inventories are not always getting them onto the shelf, leading to gaps.
It was ever thus, and consumers have got used to shelf gaps, ever since the early days of Covid they went into a spiral of panic buying. Now, as gaps widen, it is often assumed that a particular product is missing because it is subject to a serious shortage due to non-production or simply could not be moved from the original destination.
However, this awareness does not translate into acceptance but frustration, because post-Covid they are ready to buy, particularly goods that were in short supply during lockdown. A bumper Christmas is predicted for 2021 and it all kicks off with Black Friday, but if stock is not available, retailers lose the sale – and risk losing loyalty at the same time. And the consumer can see what’s going on in store. 61% of supermarket shoppers say that since the start of the pandemic they have noticed more gaps on shelves with product not available, while 50% say shelf gaps have gotten worse since Brexit.
Once the retailer starts to get a reputation for poor availability, the customer will go elsewhere permanently. In 2021 research in our latest report – Pricer UK Consumer Insight Report 2021 – showed over two thirds (68%) of supermarket shoppers said they are more likely to shop with supermarkets that have good availability of product on the shelf, while 54% are less likely to continue shopping with a supermarket brand / grocery retailer where stock replenishment is often poor.
Moreover, consumers are voting with their feet not just because of availability; 71% of shoppers say cross-channel pricing inconsistency frustrates them and 60% would shop less with retailers who have inconsistent pricing on- and off-line, and 70% would become less loyal to retailers who didn’t have pricing matched across on- and offline channels.
And 72% say their trust in a retailer is damaged when they notice pricing inconsistencies across channels; 26% said they’ve found online pricing to be cheaper than in-store items from the same retailer, while 20% said the opposite was true, with in-store prices cheaper than those available from the same retailer online. 35% found items that they’d checked online that were ‘available’ in-store were then out of stock when they reached the aisle.
This is simply a consumer that is not prepared to put up with any friction in their retail life. They are more price-sensitive than ever (59%) while 62% are now much more likely to compare prices at the shelf edge to keep their food bills down. And 49% have swapped from branded goods to own-label in a bid to keep food bills down. Further, 60% are more promotions conscious, saying they are now more likely to seek out promotional offers on products to make their money go further.
And while some of this behaviour is reverting as the pandemic eases, many consumers are sticking to their newly acquired habits and this has raised their expectations as to what needs to change in store.
57% would like to have more access to product information in addition to pricing at the shelf edge, a further 57% also said they would like to see sourcing / ingredients information at the shelf edge. 45% have been put off buying a complex or considered purchase as there hasn’t been enough product information available in the aisle. Almost half (49%) say they’ve been put off buying a product as the information on the shelf-edge in-store has been inconsistent with online – but there is a fine balance to be struck.
This is the new consumers going into Black Friday and on into Christmas. The moment of truth for them is the shelf edge so the call goes out to retailers to take a less tactical approach to optimisation and start to integrate the multiple technologies needed to present the perfect offer. This is about being able to act on advanced forecasting decisions to dynamically manage prices at the shelf edge, respond immediately to gaps, assort and promote against true demand to raise sales and reduce waste, pick more rapidly for online orders to avoid interrupting the customer and also to avoid cannibalising stock.
While it is too late to make material changes for 2021, now is the time to gather the data that will drive the business case for 2022.