Photo: RetailWire
How should retailers communicate supply chain snafus?
Consumers are well aware of ongoing supply chain disruptions and expect delays but want answers, according to a study from Oracle.
The survey of 1,000 U.S. adults between Sept. 9 and 10 found that:
- Eighty-seven percent have been negatively impacted by supply chain issues over the past year with many unable to purchase certain items due to shortages (60 percent), forced to cancel orders due to delays (51 percent) and rationing essential items out of fear of running out (40 percent);
- Nearly all (92 percent) are concerned that supply chain shortages will prevent them from being able to buy what they need and 66 percent are worried it will ruin their holidays;
- Ninety-one percent plan to change their buying behavior moving forward, including buying in bulk and stocking up on items (49 percent), purchasing gifts earlier to allow for delays (45 percent) and paying closer attention to global shortages of items they regularly use (40 percent).
As far as consumers’ expectations for brands or retailers, 91 percent understand that supply chains are complex, but 94 percent want more support to help ease their worries. These include:
- More regular updates about shipping status (63 percent);
- More transparency on inventory (59 percent) and potential supply chain issues (54 percent);
- Refunds (56 percent) or discounts (52 percent) if items are delayed or cancelled.
A steady stream of media reports are warning consumers of higher prices and shortages, including of coveted toys this holiday season, due to supply chain bottlenecks.
At stores, the reports are confirmed by signs of higher prices and the occasional missing item or empty shelf, but retailers have generally been sparse in their communications about the pandemic’s supply chain fallout. In September, Costco again began putting limits on toilet tissue, paper towels, bottled water and some cleaning supplies related to the uptick in Delta-related demand and supply chain strains.
Convey by project44’s fifth annual holiday survey likewise found the top concerns this holiday to be out-of-stock items, cited by 50 percent; shipping delays, 46 percent; high prices of goods, 46 percent; and higher shipping costs, 41 percent.
- Survey: 82 percent of Americans Scared That Supply Chain Issues Will Ruin Their Life Plans – Oracle/PRNewswire
- Consumers Concerned About Out of Stock Items and Shipping Delays — But They’re Not Changing Their Behavior – Convey by project44/Business Wire
- Limits On Toilet Paper And Cleaning Supplies Are Back At Costco – NPR
- Costco Wholesale (COST) Q4 2021 Earnings Call Transcript – The Motley Fool
Discussion Questions
DISCUSSION QUESTIONS: Should retailers be doing more to explain out-of-stocks to shoppers and prepare them for delays and price hikes tied to supply chain challenges? Should retailers consider offering refunds or discounts for inventory shortfalls?
Poll
Loading …BrainTrust
I don’t think consumers want a long thesis from retailers about the whys and wherefores of the supply chain problems. However retailers should be sharing information about availability, including when out-of-stock items are expected to become available. It is also important for retailers to be clear about things like cut-off times for delivery during the holidays. All of this is particularly important online and, ideally, no retailer should be taking orders for out-of-stock items without being clear about delivery timescales and potential delays.
And as Albert Einstein wisely said: “If you can’t explain it simply, you don’t understand it well enough.”
Consumers expect and appreciate retail transparency, especially if it is about something that will impact them directly. Keeping consumers up to date on the latest supply chain issues impacting their inventory status is a smart strategy. Most consumers understand that supply chain challenges will cause shipping delays, shortages and out-of-stocks. Refunds on items that are taking too long to fulfill is appropriate if that is what customers want. Retailers and consumers both need to be flexible and understand that most delays are out of their control.
The delays are inevitable given the supply chain disruptions we have experienced over the last 20 months either from COVID-19 behavior, canal pandemonium, or natural disasters. You can’t explain supply chain delays if you’re the last to know. That’s why we need to create a glass pipeline to share with the consumer. Retailers simply must use every technology available to them to gain real-time visibility for products. As usual, the retail visibility hammer sees RFID chips as the nails. Embed chips or labels as far back in the supply chain as possible, then track through purchase and beyond.
This actually offers a huge opportunity for retailers to engage with customers. Shoppers could and would, for example, lock in purchases now for the holidays if they were assured they would get the order by mid-December.
Retailers need to be transparent on supply chain issues and disruptions to keep the customer engaged and informed on delays.
Customers know there are challenges with the supply chain through increased media and what’s happening in stores. Hiding these disruptions would only alienate and aggravate the customer.
Retailers shouldn’t offer discounts as long as they are realistic and transparent about why product is late.
I believe that you can’t communicate enough — in business or with customers. Nature abhors a vacuum and people will make up their own narratives in the absence of one provided, and the made up one is probably worse than the truth.
Most consumers have “tolerated” the out-of-stocks and rising prices during the period of the pandemic. However as shipping delays linger and signs of recovery wane, shoppers will become frustrated.
Unfortunately blame will likely be placed on the retailer without a great deal of sympathy toward the upstream supply chain challenges — refunds and discounts may help a bit. The reality is that this is rather like putting a bandage on a broken arm — systemic issues of the supply chain must be fixed by reinventing the entire process.
The normal for the foreseeable future is shortages, delays, and OOS’s — it’s going to get worse before it gets better. This is why retailers need to over-communicate with consumers. Be straight and forthright about the situation. Although it’s not great news, shoppers appreciate the honesty and will remain loyal if they know the retailer is keeping their best interest at heart. A lack of communication, or worse, an attempt to obfuscate the situation in order to get a short term sale will create more damage than realized.
Building and retaining trust is important for retailers. The continued supply chain challenges provide retailers the opportunity to exhibit the right behaviors.
Customers are OK with just about anything – so long as they are provided with visibility and transparency. That means accurate inventory – not having back orders after the item is paid for, detailed shipment tracking, disclosing if the product is being shipped directly from overseas, correct expectations on shipment and delivery times. And when things go wrong despite the best intentions, having a strong customer focus to make it right by the customer.
Brands that try to dodge and obfuscate are the ones that will get into trouble now and later.
Simple signs apologizing and explaining that there are supply chain issues and they hope to have the problems resolved shortly. Don’t offer refunds or discounts – it’s not your fault.
Out-of-stocks and delays are now almost table stakes for retailers. It’s happening everywhere — across so many product categories that it’s almost impossible for consumers to be sensitive to the issue. So the retailers who do the best job of communicating current status and updates will win the most trust from customers. Availability and delivery are part of a brand promise. That promise needs to be delivered on, across every customer interaction.
A little knowledge can be dangerous. Over the past few days, parts of the UK media have run headlines about shortages and panic buying supposedly taking place in the UK grocery sector – illustrated by shoppers queuing outside a branch of Costco (normal for a Saturday morning) and a consumer leaving Costco with a cart full of toilet paper (the smallest pack size available in Costco). Some might consider this “fake news” but the reality is that it could well influence consumer behavior and create panic buying.
Providing information regarding reasons behind any delays or stock-outs could potentially be misunderstood or misrepresented by the media, drive panic buying and make any issues worse.
So consumers want:
More regular updates about shipping status (63 percent);
More transparency on inventory (59 percent) and potential supply chain issues (54 percent).
They are not the only ones – many retailers themselves are not yet able to solve for this internally, let alone pass the the information to the end-customer.
Of course from a CX POV retailers absolutely should provide visibility like this, but they need to first solve for it internally to make better decisions that might avoid the situations to begin with.
Yes. Product availability is the most urgent retail issue this holiday season. Retailers that promptly communicate with honesty, empathy and consolations can lessen loyalty erosion.
While discounts can be cost-prohibitive, retailers that can afford them will gain a desirable advantage.
At a recent dinner event, retailers said a flat “no” to signs explaining inventory shortages, saying there are already too many signs in the store. They think that consumers are well aware of widespread problems and are attempting to buy early to address the problem. And as long as COVID-19 is here, there’s no end in sight.
I agree. There’s no need to explain. Everyone knows. What they don’t know (and there’s no real need to call it out) is that it is no longer COVID-19 related. It’s now greed related. I see NO reason why crash courses in CDL couldn’t get us more truck drivers and why overtime couldn’t help clear port congestion The only words I have are “the carriers are making money in buckets, so what do they care?”
First off, EVERYONE has been impacted by supply chain disruptions over the past year. The 13 percent of people who say they haven’t been impacted are either naïve or living on a self-sufficient commune somewhere (in which case I doubt they’d be responding to surveys).
The more real-time visibility to inventory the retailer can share with customers, the better. The technology exists – Amazon is using it. I understand that shoppers are fickle and the t-log data at retail can’t accurately present inventory on-hand at any given moment because no one can know what customers have in their carts before checking out. Retailers can and must get much better at this or risk losing even more market share to Amazon and other primarily digital players.
Simply state: “We are experiencing significant delays in transporting [certain] merchandise from its point of origin to our stores. Please be patient as the industry (don’t accept direct blame) resolves these issues. Thank you for your understanding.”
Simple, consistent communications on the website (not clogging up the aisles) about the issues and expected resolution dates can certainly help, but in my mind this is also an opportunity. Help shoppers by recommending alternative options wherever possible, and perhaps consider promotional incentives on those alternatives.
There’s a fine line here between informing customers and offering excuses. I think a good approach is prioritizing information about specific items, especially high demand items, and supporting customers with rain checks or extra touches like home delivery when an outage occurs and items arrive later.
I like transparency. Explain the situation, give updates and share information with customers to give them a sense of being part of the situation, not just a victim of the situation. Retailers should help their customers find alternatives, even if it means sending them to the competition. That will show the retailer is more interested in the customer than the sale, and that is good for building a better relationship.
If you tell people there are likely to be shortages, you can guarantee there will be because it starts panic buying. If a retailer wants to clear stock quickly just let it out that there are likely to be shortages — job done. If I read the list of the research findings 91 percent are going to change their pattern of behavior and do exactly what retailers would like them to do – Buying in bulk, stocking up and buying earlier. This is the perfect answer for retailers who need to get stock through their supply chains as early as possible to get stock. Maybe we should try this every year!
Customers want transparency and to be kept informed but then they act irrationally when they are informed. This is a no-win situation for the retail industry. They will be criticized whatever they do.
The supply chain constraints and challenges have become evident and are all over Twitter and our national news networks. Retailers have a sense of urgency to meet their delivery commitments and drive an outstanding customer experience while managing and mitigating their way through a global supply chain disruption.
It will be critical for retailers, especially with the digital commerce experience, to be as transparent as possible around product availability, expected delivery dates, fulfillment options, in-store pickup options, and back-ordered or not available statuses. Customers ultimately want choice and the ability to trust the retailers they shop with.
Driving trust, transparency and doing everything possible to meet delivery commitments with products they have available will make or break this holiday season for many retailers.
For those larger retailers such as Walmart and Home Depot, they have a slightly different story to tell their shoppers. They in fact are proactively chartering ships to circumvent the current clogged system that is often mired in governmental policies, labor shortages, and inefficiencies. Communicating this proactive approach would very likely be an appreciated message to frustrated shoppers. Furthermore, if indeed they are successful in staying in-stock on commonly affected categories when their competitors cannot, they will reap not only incremental sales but likely shopper respect and loyalty going forward.
This is all about expectations. That is, before-the-fact knowledge. Consumers don’t want to know the details of the supply problems when they are ready to buy.
Online retailers do a fairly good job of handling expectations. For example, advising the shopper there are only one or two items left. Or noting that the product won’t ship for XX days.
I am not sure what the rationale is for offering refunds or discounts for inventory shortfall. But one BIG thing the retailer can do in these days of supply chain disruption is to limit purchases of key items for each customer.
The situation demands more than transparency, because most shoppers are aware of the problems. Retailers need to avoid overpromising, and they need to avoid taking orders for anything that they can’t deliver on a timely basis.
And, as Shep points out below, retailers need to provide solutions as well. What’s an alternative to the product I want (but can’t get) available at your website or a competitor’s? Remember “Miracle on 34th Street”? When Kris Kringle sent shoppers to Gimbels, the goodwill rebounded to Macy’s after all.
Went shopping in a large grocer this weekend, and they actually had it on their shelf tags that the item out of stock was a supply chain issue.
They have always been transparent and this is a way of telling customers it is no longer COVID related, but supply chain related.
Consumers have a new-found appreciation for the people and processes that control the flow of goods and services. Providing accurate inventory availability, meeting delivery commitments and communicating any delays or discrepancies as soon as possible will go a long way to meeting customer expectations.
Just think about the opposite action. Let’s not tell the consumer anything. Keep them in the dark about the problem. Just raise prices without any explanation.
Not a smart move.
This isn’t about inundating customers with detailed information about supply chain woes the retailer is experiencing. It’s about timely information both pre-purchase and post-purchase that allow customers to make well-informed decisions. Customers need to know inventory levels, and they need to know if there is a risk of replenishment taking longer than normal so they can adjust their purchase pattern. If issues arise after a purchase is made, then of course customers want to be kept informed about why there is a delay and what they should expect. The key is transparency, and simple, to-the-point information delivered to every customer in a timely manner. Anything else will result in unhappy customers.
Consumers will understand supply chain delays due to the pandemic. They will also appreciate alternative solutions, suggestions of early shopping for the holidays, and online orders of items not available at the store.
Refunds or discounts should not be considered as they will not address the problem. Instead, customer service will need to be enhanced as sales associates become shopping coaches and stewards to help meet customers’ needs.