Simon Hedaux, founder and CEO of Rethink Productivity, examines why high stock levels are damaging your

In-Store Efficiency

Taking stock

Simon Hedaux, founder and CEO of Rethink Productivity, examines why high stock levels are damaging your business and advises on how to fix this.

SHREWD business owners have always understood that positive cashflow is the life blood of their business. Reports in the UK and US suggest that between 80% and 90% of small business failures are due to cashflow problems. Stock levels matter because they tie up assets and can be a major contributor to cashflow challenges. Most operators understand the impact of stock holding on their finances. What is less obvious is the impact on the efficiency of the operation. These are the top issues created by high stock levels.

1. Delivery and fill up workload

When stores receive more stock than they can fit on their shop floor, it creates work to sort the stock into items to go straight to shelf and those that should be diverted to the stockroom for storage. Or everything is moved to the shop floor, causing congestion for customers and any excess moved again to storage areas. Whichever way it happens, the team handle stock more than is strictly necessary, creating more work. This inefficiency can be further compounded when stores don’t have the best equipment for moving stock and poor access to stock storage areas. We’ve seen excess stock shipped to the stockroom by multiple journeys with a customer shopping basket or trolley. A roll cage or fit-for-purpose stock trolley would reduce trips and time taken. Back shop areas are not always set up for peak efficiency, as anyone who has had to carry stock upstairs will tell you. And perhaps worst of all is when stores incur the hire costs for a container to store their

of your profits!

overflow stock. Not only are they notorious targets for thieves, it is so easy for out-of-sight stock to become out of mind too, only to be rediscovered at a future date.

2. Stock counts and on-shelf availability

The more stock you have, the more there is to count so, stock counts take longer. And, the impact of high stock levels goes further. Retail tests tend to show that as more stock counts are completed, stock file accuracy falls, and the more stock there is, the more inaccurate they are. When lines are stored in multiple locations, counts become more inaccurate and when there is so much stock, lines get hidden behind other stock. Either all the stock must be moved every time a count is done, or items are likely to be missed. Stock count problems are the root cause of the phenomenon where stores have both high stock levels and poor on-shelf availability. As counts become more inaccurate, there is a tendency for the faster selling lines, those that really matter for your customers, to be out of stock. Most stores with a stock system will have stock counts generated for negative stock file lines and undertake gap counts. High stock levels and inaccurate counts combine to create a vicious cycle of more counts and more errors in the counts, creating extra workload for the team and poorer onshelf availability for the customer. Most retail business have a small core of higher selling lines and a longer tail of slow selling lines –and it is these slower selling lines that tend to be the part of a high stock problem. The fastest growing retailers in grocery include Lidl and Aldi, whose model is to minimise choice for customers, creating a simple and lower stock model for the store teams to run. They focus on shelf availability as it really matters if a line

In-Store Efficiency

is missing, yet it is much easier to get stock levels right when there is only one variety of baked beans to manage.

3. Stock sell-through

For date-marked lines, stock levels really matter as too much stock creates write-downs that can wipe out the profit from selling them. For fresh lines, the task of checking dates and mark-downs can become a significant part of the workload. In studies of a small supermarket chain, it was found that up to 10% of total time was spent checking dates and actioning markdowns. When the end-to-end workload was considered, the sales generated had heavy costs attached. If too much stock causes problems,

what is the most efficient stock model? Just in time delivery of singles that fit directly to shelf creates the least wasted efforts in-store and optimises stock holding. Combine this with stock counts for gaps and nearly gaps only. Negative stock lines can be auto reset to zero and all routine inventory stock counts can be abandoned in the best stock model. Many retailers are initially alarmed at the recommendation to stop regular line counts and to auto zero negatives. The reality is we have got used to being busy with stock, and counting becomes a security blanket. If you stop counting and minimise stock handling time, how much time could you free up? A retailer had a service offer in some

About the author:

Simon Hedaux is founder and CEO of Rethink Productivity, a world leading productivity partner which helps businesses to drive efficiency, boost productivity and optimise budgets. For more information see rethinkproductivity.co.uk.

of their stores and believed they couldn’t roll it out further as there was no team capacity to provide it. Measuring time spent on stock showed them that they could direct work away from stock management to provide a service that would benefit the local community and the business. A win-win that they hadn’t realised was there. And as a last thought, if you have stores with more stock than they really need, is it driven by the company’s buying and stock management policies? For example, buying volume deals for big discounts and underperforming promotions that pushes stock into stores? Or is it poor process compliance and inaccurate stock files that are the root cause? Both need different approaches to solve them and, in our experience, there is often a mix of both happening at the same time. For peak efficiency, free up your teams from the burden of high stock levels and use the freedup resources to drive additional value for your business.

Get your game face on with Nivea Men

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The Pet Set!

Premiumisation is driving growth in the pet food sector, as we treat our four-legged friends to the finest products available on the market.

DESPITE contracting volume sales of pet food, pet care in Ireland is maintaining steady value growth in 2020, according to the latest report into the sector by Euromonitor International. Consumers, especially millennials, are willing to spend more on pet care as pet humanisation and the premiumisation of products accelerate. Human trends, such as positive nutrition, natural ingredients, clean label (no artificial colourings or preservatives), free from and paleo foods, have crossed over into pet food. Other key trends include high protein and high meat content, which is related to pet owners’ search for higherquality pet food products. Euromonitor predict that the value growth of pet care in current terms is expected to be higher in over the coming years, due to the continued premiumisation of pet care as consumers seek the best for their beloved pets.

Dog food

Increasing urbanisation in Ireland continued to lead to a growing number of owners choosing smaller or specialist breeds, as dogs continue to be regarded more as companions rather than working animals. This resulted in a wider range of products aimed at particular breeds/sizes, such as adult/ senior/puppy, as well as large/small dogs in 2020, according to Euromonitor. In addition to the positive nutrition trend, whereby dog owners seek natural ingredients or clean label, free from, paleo or high-protein products, consumers are also looking for environmentally-friendly or organic dog food, Euromonitor reveal. Authenticity and the local sourcing of ingredients are also becoming crucial, influenced by the humanisation and premiumisation trends. Although dry dog food recorded slightly lower retail volume sales than wet dog food in 2020, retail value sales remained higher. Irish dog owners are increasingly prepared to purchase premium dry dog food in order to provide high-quality nourishment for their dogs. The trend towards veganism also crossed over into dog food with the launch of the first vegan dog food on the Irish market.

Cat food

Wet cat food remained the most popular variant in Ireland, with strong value growth in 2020 as both manufacturers and customers focused on this product type, due to the convenience of single-portion pouches. Cat food packaging is shifting away from metal food cans towards pouches, according to Euromonitor, who also reveal that continued urbanisation is leading to steady growth of the cat population. The Cat treats category is expected to record the strongest retail volume growth within the overall Irish pet care market over the coming years, according to Euromonitor, with an excellent retail value performance also anticipated. Cat treats are more expensive than dog treats, while dog treats are much more developed than cat treats, resulting in strong opportunities for growth of cat treats going forward. Manufacturers continue to respond to Irish cat owners’ preference for high-quality nutrition for their pets, investing in more premium products with extra added value, not only in the premium but also the mid-priced segment, according to Euromonitor.

Naturo

Since launching in 2013, the Naturo brand presence from Mackle Petfoods has grown exponentially, with the Dungannon based business, now generating multi-million euro sales each year. This growth is reflective of the changing attitudes to maintaining the health and wellbeing of pets, with many pet parents now switching from other brands to a natural pet food offering. Humanisation and natural are terms which are helping to drive the dog food category as dogs are now often seen as a member of the family and should be treated as such in all manners and respects, especially when it comes to what we’re putting in their tummies - we want our pets to eat as healthily and have as

Naturo launched a Grain Free Naturo Dry food to the market in late 2019, with both a chicken and a turkey flavour offering.

much choice and variation in their diet as we do! In recent years, the Naturo range has increased from four varieties to over 30, as a result of constant innovation and new product development in response to these customer desires and market trends. One of these desires is an undeniable demand for a Naturo Dry product to complement the popular wet food range. Customers asked and Naturo answered by launching Grain Free Naturo

Dry food to the market in late 2019, with both a chicken and a turkey flavour offering. At Naturo, everything starts with the health and wellbeing of pets and so ensuring they have access to a well-balanced, nutritious diet is key.

Feeding dogs a mixture of both wet and dry food can help achieve this, as dogs

will be able to avail of the advantages that both diets offer; for example, wet food may aid them when it comes to hydration, whereas dry food may help aid in the dental hygiene of dogs.

With the Naturo wet food brand having built such trust and reliability with its customers and consumers, it was only natural to add a dry food offering to the portfolio to complement the wet! Naturo Grain Free dry food is a complete pet food for dogs which is 100% natural, omitting artificial colours, flavourings and preservatives and with no dairy, no soya and no wheat. Both the chicken and turkey variants have 50% meat content with 33% vegetables and the essential vitamins and minerals to help keep dogs in a healthy condition. With even more innovation currently in the Naturo pipeline across both wet and dry variants, this is definitely a brand to watch in the upcoming months. For more information, visit www.naturopetfoods.com and follow them on Facebook, Twitter & Instagram (@naturopetfoods) for all of the latest news!