Are out-of-stocks making c-store visits less convenient?

Discussion
Photo: Getty Images/Kanawa_Studio
Feb 09, 2022

Grocery stores are not the only food retailers experiencing significant stock-outs this year.

Customers are more frequently finding shelves empty of the food they are looking for at convenience stores, according to a CNN article. One Texas-based convenience store chain, TXB, reports experiencing out-of-stocks at a rate of 12 percent to 13 percent, with 6,500 to 8,000 products per week failing to show up from suppliers. The normal rate is about 1.5 percent. In this environment, even substitute brands for out-of-stock products are proving hard to come by.

The phenomenon is particularly concerning in lower income communities where convenience stores serve as the only place to buy groceries. At one location of convenience store Arko, which operates mostly in small towns and rural areas, customers have been lining up early in the morning to try to catch the delivery trucks and get products as soon as they are stocked.

Mass out-of-stocks have been a problem in grocery throughout the pandemic. In the earliest days, panic buying frequently cleared shelves of toilet paper, paper towels, pasta and other staples. Then workers taking ill at U.S. meatpacking plants led to disruptions in meat and poultry selections on the shelf. More recently, closed overseas ports due to workers sick with COVID-19 and a scarcity of truck drivers to move product stateside have contributed to the unreliable assortment on retailer shelves.

Supply chain disruptions have also been pointed to as a factor in food price inflation, which rose in January of 2022 at the highest rate in a decade, according to Seeking Alpha. Raw material costs have also risen at an accelerating rate throughout the pandemic.

Retailers outside of food have likewise faced problems with out-of-stocks due to supply chain disruptions. In the ramp up to the holidays, apparel retailer Gap went as far as to reroute 35 percent of its holiday product through air freight, to the tune of $450 million, to try to outmaneuver port bottlenecks and get product on the shelf.

DISCUSSION QUESTIONS: Are convenience stores positioned to weather stock-outs better or worse than grocers? What should they do to better manage this situation?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"All retailers - in convenience and grocery - should be leveraging advanced analytics to combat these dynamics."
"Unlike many grocery chains they are far more dependent on third-party suppliers and in general have fewer alternatives."
"Those retailers that can normalize the look of being in-stock will be looked on favorably by consumers for normalizing their supply chain and logistics issues."

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14 Comments on "Are out-of-stocks making c-store visits less convenient?"


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Mark Ryski
BrainTrust

Being out-of-stock is a conversion killer for every retailer. Period. I think convenience stores may be in a slightly better position, since many shoppers who visit convenience stores have a generally low level of expectation, so stock-outs may be more tolerable. One approach retailers can apply to manage stock-outs is to ensure that they have at least one substitute product line for every product line – this will improve the odds they’ll have something the shopper requires and prevent them from leaving empty handed.

Gary Sankary
BrainTrust

In my Target days we assumed that customers only gave us two chances to be out-of-stock on key items. Strike two, they were shopping elsewhere and not likely to come back. When everyone is out, I’m not sure exactly how that plays out, except to say out-of-stocks disrupt consumers shopping patterns, and that’s exactly what you do not want to have when you’re a retailer.

David Naumann
BrainTrust

Convenience stores that are not positioned as consumers’ primary grocery store should be able to weather stock-outs better than full grocery stores, as shoppers are not “dependent” on a specific product and they can switch to a similar product or even switch product categories to get what they want. In areas where convenience stores are consumers’ primary grocery store, it is much more problematic for shoppers and store owners.

Richard Hernandez
BrainTrust

Hello David, as a retailer with grocery stores and convenience stores, I am having the same out-of-stock situations in both, whether it’s that branded coffee drink or that water that makes its drinker more intelligent. The best course of action is to find alternates to cover the space hoping that the customer will trade up or down. Easy to say, more difficult to execute at times.

David Naumann
BrainTrust

Good points Richard. Helping customers find substitutions is the best alternative but when adjacent products are also out-of-stock, it makes for difficult choices for customers.

David Spear
BrainTrust

By their very nature, c-stores should weather the stock-out situation better than grocery chains, but no one is immune from the many supply disruptions we are seeing across the board. And no retailer is immune from the spike in prices in nearly every category. Every time I visit a c-store or grocery store, the prices are climbing higher by the day. All retailers – in convenience and grocery – should be leveraging advanced analytics to combat these dynamics. All retailers ought to be looking at their product affinities, where they can capitalize on bundles that consumers are willing to pay more for. All retailers should be as creative as possible in delivering value and great experiences. No retailer is immune from the macro market forces, but pushing and pulling some of these smaller levers can and will keep them top of mind with their shopper base.

Ken Morris
BrainTrust

My usual take on fixing out-of-stock situations is to remind retailers about their not-so-secret weapon against them: RFID. But the supply chain disruptions are likely even harder for C-stores to react to than for soft goods retailers, as an example. C-stores are heavily reliant on vendor-managed inventory, so they have less control over stock supply, delivery timing, and availability. Plus, they have such small footprints, virtually no back room to store inventory, and they are fully optimized for just-in-time delivery. So, they’re the most vulnerable to the current supply chain nightmares.

Doug Garnett
BrainTrust

One of the lessons of the pandemic seems to be that the shopper and our stores are more resilient than we sometimes expect. The problem must be managed. Yet customers are unlikely to abandon stores as a result. In fact, we may find that our “best practices” had grown too aggressive and set our own expectations into territory which was hurting our stores more than we might have known without the pandemic.

Camille P. Schuster, PhD.
BrainTrust

Out-of-stocks hurt all retailers. Those retailers that can normalize the look of being in-stock will be looked on favorably by consumers for normalizing their supply chain and logistics issues. Those retailers that do not focus on supply chain and logistics improvement will find themselves at a competitive disadvantage when other retailers improve faster.

Gene Detroyer
BrainTrust

While all retailers have and are experiencing out-of-stocks, the size, leverage, and resources of the very large grocers far surpasses the ability of convenience stores to manage their inventory under any conditions.

Steve Montgomery
BrainTrust

The sales mix for a convenience store is certainly less dependent on grocery staples than a traditional grocery store but they face the same supply chain issues. Unlike many grocery chains they are far more dependent on third-party suppliers and in general have fewer alternatives. That being said, I believe they will be better able to meet customers’ expectation because of their product mix.

Ryan Mathews
BrainTrust

Convenience stores are at a distinct disadvantage when it comes to out-of-stocks simply because of the optics. Five hundred out-of-stocks in a large supermarket? Not so visible. The same number in a c-store? Looks like the fall of Rome. Richard Hernandez correctly points out the only option is to trade one SKU for another and hope the consumer accepts the alternative. The problem is that c-stores have always led with big brands so, at best, substitutions make them — well — less convenient.

Rich Kizer
BrainTrust

When we talk about the “out-of-stock” damage factor between convenience stores and grocers.There is a more substantial hit taken by the convenience stores. Why? It’s all about the convenience factor; and how the frequency of visits to the convenience store compares to the large grocery store. Most customers flow to the grocery store once or slightly more a week. Out-of-stocks are recognized there. Convenience store customers may visit the convenience store two or three times, a week, thus experiencing more frequent outages each week.

Oliver Guy
BrainTrust

Convenience stores have a hard time with out-of-stocks due to the relatively small range. A full-size supermarket may well have 5 choices of a given product type (plus creative alternative possibilities if it is not available) compared to a c-store only having one or two. In this situation, an out of stock of one item in a supermarket reduces choice by 20% compared to a c-store by 50%. Add to this the fact that c-stores are convenient because of that “key item” you ran out of or forgot in the main shop and the danger of stock-outs becomes huge. Focusing on these items and making sure these are available — almost at any cost — because these drive traffic is essential otherwise your ability to try to sell the customer something they did not plan to buy — the main focus of a c-store — is undermined.

wpDiscuz
Braintrust
"All retailers - in convenience and grocery - should be leveraging advanced analytics to combat these dynamics."
"Unlike many grocery chains they are far more dependent on third-party suppliers and in general have fewer alternatives."
"Those retailers that can normalize the look of being in-stock will be looked on favorably by consumers for normalizing their supply chain and logistics issues."

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