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Importance of Retailers and CPG Companies Measuring On-Shelf Availability (OSA)

During a recent LinkedIn poll, I asked two questions.

First do you believe measuring On Shelf availability (OSA) are retail is important?

Clearly 93% of the respondents believed it was either extremely or very important.   

Secondly, how do you collect OSA?    Another poll delivered the following results: 

Measuring retail on shelf availability has never been more important.   The customer has the more power to secure the items they are looking for by using their phones and omni-channel retailers.   If you are looking for a printer cartridge and it is not on the shelf, simply pull out your phone and using the retailer free WIFI buy the item from your competitors’ website!

In the below study from McKinsey, 71% of respondents either bought the item from another retailer (the retailer loses) or buy another brand (the brand owner loses)

So, if 93% of the respondents believe OSA is important to measure, how do you measure OSA?   It depends on several factors:

  1. Velocity of the category – How many items sell per day?
  2. Switchablity – How likely is the customer willing to switch to another item if they one they are looking for is not available.?
  3. Product characteristics – Cameras work well for boxed items.  They do not work well for apparel.  A camera cannot tell one shirt for another.   Technologies like RFID are needed for these types of categories.   
  4. Do you have a service to the customers to shop for them and deliver the items to their cars or homes?  If so, you could use that service to measure the number of out of stocks that a customer would experience and take action to fix. 

How to measure it an important consideration.  There are several important questions.  

  1. What is the velocity of the category or items?  It it is fast moving then AI algorithms are very effective in predicting when an item has no longer on the shelf.    In the example below, these two items are clearly no longer in stock, and action need to be taken on them.

  2. Computer Vision – For lower velocity items, computer vision can be used to collect the “Real-o-gram” of the shelf to the expected plan-o-gram of the store.    In Store robots such as the ones made by Badger Technologies. 

  3. RFID – RFID is a growing technology solution where RFID tags are placed on the individual items and RFID data capture allows both correctly identify the item, update the on-hand count and ensure that it is on the sales floor for sale.

 

Net, OSA is an important KPI for retailers and CPG companies.  The method will vary based upon the answers to these questions.