Brand loyalty evaporates with 'out of stocks'

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By: Wise Marketer Staff |

Posted on July 1, 2010

Brand loyalty evaporates with 'out of stocks'

Top brands and well known supermarket chains spend billions of pounds each year to secure brand loyalty, but a survey by UK-based Scala Consulting has found that there is little point in doing so if the products customers want aren't on the shelves.

Almost half of the consumers questioned said they would only tolerate products being out of stock two or three times before switching to another supermarket, and nearly half said that, if they couldn't find their favourite brand, they would simply buy an alternative.

According to Scala managing director, John Perry, "It comes as no real surprise to me that shoppers' loyalty to a particular supermarket lasts only as long as they can buy the products they want. If they're not on the shelves, the customer will go elsewhere and it is the same story for brands themselves. If what they want isn't on the shelves, customers will simply pick an alternative."

Supermarkets can take some comfort, however, in the fact that less than one third of those questioned found any products regularly out of stock and this, Perry asserts, is due to the supermarkets' supply chain logistics programmes being so reliable.

"Competition between supermarkets is fierce and the criteria are very high for companies to get their products on the retail shelf, so effective management of supply chain is critical," Perry explained. "Looking at the results of this survey, it seems the common perception of brand loyalty is something of a myth, as customers' tolerance levels for out of stock products is very low in the grocery sector."

Despite this, many brands still seem unconcerned. Scala also commissioned a survey of some of the biggest global brands, and over one quarter of those questioned (26%) - representing a cross section from the FMCG and grocery sector - did not view 'on-shelf availability' as a key success factor for their company.

According to Perry, supplier and retailer supply chains are very sophisticated and generally achieve high service performance throughout, but achieving the ultimate goal of peak on shelf availability is elusive and requires supreme levels of collaboration between the major brands and retailers.

The survey also noted that over three quarters of those interviewed shopped in the supermarket rather than online, with 18% saying they did both. When asked whether supermarkets or online provided better availability, over half said that supermarket shopping was superior to the online version.

"There are highly developed supply chain systems in place, however the margin for human error in the last 50 metres to shelf can ultimately determine the reputation of our favourite brands," Perry concluded.

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