Managing Stock in Trade

The following metrics for stocks in trade are useful in managing the stocks in the lower trade:

  • Forward stock: Stock in the store’s selling area which can easily be accessed by customers. Includes stock placed on shelf, on special display, on the shop floor space, inside chillers, freezers, cabinets and so on.
  • Total stock: Stock in the store’s selling area plus stock in the backroom (stock room).
  • Stock cover (stock cover days): Number of days that stock would last, assuming sales continue at the same rate.
  • Out of stock: Percentage of stores handling the product in the audit period but having no stock at the time stock was counted.

These metrics are supported in the retail audit data for the lower trade (non-scan) channels. For scan channels, though retailers keep track of some of the metrics, the information may not be readily available. In sectors such as apparel, footwear and luxury goods, where some retailers are adopting radio frequency identification (RFID) tags for storing electronic product codes (EPC), the process of collating and maintaining this type of information will become much easier.

The danger signals that manufacturers and retailers need to take note of are declining forward stock and growth in the incidence of stockouts. Both metrics are indicators of supply issues or loss of distribution.

Stock cover needs to be substantially greater than the manufacturer’s sales cycle or retailer’s procurement cycle. Whenever stock cover days fall below the average sales cycle, incidence of stockouts will soar.


Exhibit 30.10   Declining forward & backroom stock and growth in the incidence of stockouts are indicators of supply issues or loss of distribution

Trends in forward stock and out of stock distribution reveal distribution and stock management issues in trade. Exhibit 30.10, for instance, depicts a brand that is experiencing supply shortages resulting in reduction in inventory and high stockouts. From January to September, stocks in the channel have depleted from 2,176 units to barely 251 units. During the same period stockouts have soared from 11% to 24%.

Previous     Next

Note: To find content on MarketingMind type the acronym ‘MM’ followed by your query into the search bar. For example, if you enter ‘mm consumer analytics’ into Chrome’s search bar, relevant pages from MarketingMind will appear in Google’s result pages.







Online Apps to train Category Managers

Online Apps to train Category Managers


The Plannogrammer is an experiential learning facility for category managers, trade marketers, and retailers in consumer markets. Ideally suited for hybrid learning programmes, Plannogrammer imparts hands-on training in the planning and evaluation of promotions and merchandising.

It supports a collection of simulation and analysis platforms such as Promotions and Space Planner for optimizing space and promotions, Plannogram for populating shelves and merchandising, a Due To Analysis dashboard that decomposes brand sales into the factors driving sales, and a Promotion Evaluator to evaluate the volume, value and profit impact of promotion plans.