Empty shelves: what stockouts really cost you, and how to spot them
· 4 min read
An empty shelf costs you more than the margin on the units you didn't sell. Add the baskets of customers who shop elsewhere instead, and in the worst case a regular who doesn't come back. On a good seller, ten days out of stock easily adds up to a few hundred euros. You can spot gaps in stock levels, in sudden zeros in daily sales, and in what customers ask for at the till.
Stockouts get underestimated because they're invisible. Your till shows what sold, not what didn't sell because it wasn't there. And a customer facing an empty shelf doesn't complain. They leave.
Day 10 without oil
| Lost bottles | €25 |
| Lost baskets | €24 |
| One fewer regular, one year | €320 |
| Total | ≈ €370 |
What customers do when the shelf is empty
The best-known study on this comes from grocery retail (Gruen, Corsten & Bharadwaj, 2002). Faced with a stockout, on average almost one shopper in three bought elsewhere (31%) and just under one in ten didn't buy at all (9%). The rest switched brand or waited. It varies a lot by category: for cosmetics, almost six in ten went elsewhere or bought nothing. In a specialist shop people come to on purpose, the share going elsewhere is likely higher. We'll still calculate cautiously.
Worked example: ten days without olive oil
Your best olive oil sells 6 a week. It retails at €14.90 and costs you €7.50. The supplier is late, and it's gone for ten days.
Lost bottles. Over 10 days you'd have sold about 9. After 19 percent VAT you keep €12.52 a bottle, so €5.02 margin. Say 4 customers wait or pick another oil and 5 buy elsewhere: €25 gone.
Lost baskets. People who come in for the oil also pick up bread and cheese. With a typical €28 basket carrying about €8 margin, if 3 of those 5 do their whole shop elsewhere, that's €24.
One fewer regular. If one of them notices the other shop has the oil too and is closer to their office, they may not come back. 40 visits a year at €8 is €320.
| Item | Calculation | Margin |
|---|---|---|
| Lost bottles | 5 × €5.02 | €25 |
| Lost baskets | 3 × €8.00 | €24 |
| One fewer regular, one year | 40 × €8.00 | €320 |
| Total | about €370 |
One gap, one item, ten days, calculated cautiously. Whether that regular actually leaves, you can't know. But you can't know they'll stay either, and it'll never show up in your numbers.
What prevention costs
One more week of stock is 6 bottles, €45 at cost. Even at a generous 25 percent a year for tied-up cash, that buffer costs about €11 a year. €11 against up to €370: for fast sellers, a small safety stock is almost always the better deal. For slow sellers it's the other way round. More in How much stock does your shop need?
How to spot stockouts
Stock at zero. Every Monday, list items with zero stock, sorted by revenue. But careful: after shrinkage or a wrongly booked delivery, the system may say "3 in stock" while the shelf is empty. It happens more than you'd think: a study at one retail chain checked almost 370,000 stock records across 37 stores against what was actually there, and 65% were wrong (DeHoratius & Raman, 2008). So recount your most important items now and then.
Sudden zeros. An item that sells almost daily has four days in a row with no sales. That's hardly chance. Go and look.
What customers ask for. A note by the till: "asked for, not in stock". After a month you'll have gaps no report shows.
Seeing gaps coming
Reorder while you still have what you'll sell during the lead time, plus a buffer. For the oil, with a one-week lead time, that means reordering at 8 or 9 bottles, not at 4. Watch for stretched lead times, like the August closures at many Italian and Greek producers. Most gaps are in your numbers a week or two before they happen.
Sources
- Gruen, T. W., Corsten, D. S. & Bharadwaj, S. (2002): Retail Out-of-Stocks: A Worldwide Examination of Extent, Causes and Consumer Responses. Grocery Manufacturers of America.
- DeHoratius, N. & Raman, A. (2008): Inventory Record Inaccuracy: An Empirical Analysis. Management Science 54(4).