Will a less is more strategy solve Target’s out-of-stock problem?
Target has a big out-of-stock problem. It also has a plan to fix it. According to reports, Target’s latest solution is to shrink the variety of products it carries. The assumption is that carrying fewer items will make it less likely that empty shelves will appear in the chain’s stores.
Target’s approach is fascinating (the nicest word I could come up with). The company, according to Fortune, is “deploying workers to pour through the many categories of products it sells to see how many different formats and pack sizes of products like bottled water or soap it really needs to stock in its stores.”
The Fortune article continues: “The store will start by removing some items at one location, and then roll out to other stores in its 1,800-store fleet if it doesn’t face customer feedback.” I had to use the quote because I couldn’t make this up myself if I tried. Those who know that I research assortments for a living can just imagine my reaction.
This is not the only tactic Target is using. It is also trying to optimize case pack sizes in the belief that putting a full case of product on the shelf, rather than a portion of the case, will improve the out-of-stock situation. What they do with product already on the shelf wasn’t discussed, or whether they only re-stock when completely out of the product.
Target’s latest decisions raise three questions for me:
- In this day and age, is assortment complexity really the issue causing out-of-stocks and is a reduction in complexity the solution?
- Granting it is, would you bet on the workers in one store picking the right assortment? Would you bet that there are enough shoppers who would complain to ever overturn their decisions?
- Are they on the right path with reducing case packs? And will their vendors comply with that request, given that it may mean retooling their factories?
- This Is How Target Is Solving Its Out-of-Stock Problems – Fortune
- Target executives focus on better groceries and new stores near colleges – Minneapolis Star Tribune
- Target ramps up spending on suppliers – The Associated Press/The Salt Lake Tribune
- Target hires supply chain help from Amazon – RetailWire
Target, Clark, NJ – March, 2015 – Photo: RetailWire
DISCUSSION QUESTIONS: Do you see assortment complexity as a major issue for Target and other food, drug and mass retailers? Where would you focus your energies if you were charged with fixing the out-of-stock issue at Target?