Analyzing out-of-stock in independent grocery stores: an empirical study

Purpose - The purpose of this paper is to examine out-of-stock (OOS) challenges in the independent grocery sector with a special emphasis on in-store root causes. The analysis aims to assess the extent and root causes for OOS in the independently controlled retail sector and provide a comparison of these results with the centrally controlled chain sector in Denmark. The paper also seeks to examine the practices and challenges of store ordering and store replenishment processes in the independent sector and identify practical implications for store management and other members of the grocery channels. Design/methodology/approach - The research design includes two studies. Study-I surveys and compares the extent and root causes of OOS of 42 stores from eight chains in the two sectors. Study-II identifies, based on qualitative interviews with 17 store managers/owners of independent stores, specific insights on store operations. Findings - The quantitative study shows that the OOS rates in the independent sector are significantly higher than in the centrally organized sector. Furthermore, the independent grocery sector faces OOS challenges in more categories than the centrally controlled sector. The study also reveals a very large variation in the performance of independent stores. Contrary to the centrally controlled chain store sector, the major root cause for OOS in the independent sector is found in the store ordering process. The qualitative study shows that the main discriminating issues between stores with a low and a high OOS rate are: store management emphasis and commitment to OOS issues; the resulting priority and managerial guidance in store ordering and store replenishment tasks; the stability of staff and the proper planning for replenishment peaks; the store size and resulting space conditions; and the use of appropriate decision heuristics and use of inventory in store ordering. Practical implications - The findings have practical implications for store management as it reveals practices to pursue and to avoid. Also, it is argued that the findings have implications for the other members of the grocery channels. Originality/value - Empirically, this paper explores two issues not being dealt with in depth in previous research, i.e. the OOS challenge in the independent sector and the emphasis on store operations.