NACDS posts studies on improving front-end performance

ALEXANDRIA, Va. The National Association of Chain Drug Stores on Wednesday placed two studies on improving front-end performance on its Web site for members to access, the association announced today.

The first report, A Comprehensive Guide to Retail Out-of-Stock Reduction in the Fast-Moving Consumer Goods Industry, is designed to help retailers and suppliers lower out-of-stock rates.

“Out-of-stock products are frustrating for both retailers and consumers,” stated NACDS president and chief executive officer Steve Anderson. “This study provides a flexible approach that can be utilized by any kind of retailer—large or small—to reduce out-of-stocks.”

The report examines the foundational knowledge, measurement approaches, and strategies used to reduce retail OOS in the consumer goods industry in an effort to simultaneously reduce costs associated with OOS items and improve the shopping experience.

Study authors Thomas Gruen, University of Colorado at Colorado Springs and Daniel Corsten, IE Business School, Madrid Gruen and Corsten, have estimated that retailers on average lose 4 percent of their annual sales due to OOS items, and that lost sales due to OOS items on average cost manufacturers $23 million for every $1 billion in sales. This study incorporates data on the latest trends and technologies, along with results from several pilot programs, to reveal strategies for reducing OOS.

The OOS study was funded by a grant from Procter & Gamble.

The second report, New Ways of Working Together, demonstrates how retailers and manufacturers can streamline their partnerships in mutually beneficial ways.

“With the arrival of a new year, many of us resolve to improve operating procedures and business relationships,” said Anderson. “These reports offer valuable insights and guidelines for NACDS members who seek to enhance the front-end.”

NACDS worked with a coalition of industry groups to develop a “How To” guide designed for retailers and manufacturers to incorporate principles of the guide’s New Ways of Working Together Framework into their businesses. The Framework offers a step-by-step process for initiating, preparing and implementing an initiative with trading partners. Each section also includes background information on the process, critical success factors, and examples from other projects.

The “How To” guide is based on successful practices that evolved from pilot projects conducted by a team consisting of personnel from Wegmans Food Markets, The J.M. Smucker Company and P&G. Both reports and executive summaries can be found on the NACDS website, www.nacds.org, under “Publications.”