Studies Conducted Abroad And In India

Published Date: 02 Nov 2017

A stock out is defined as a situation where an item that is regularly commercialized at a point of sale and occupies a specific place on the shelves is not available to the consumer in the store at the moment of purchase. A stock out rate is precisely the percentage of all the items commercialized that should be for sale, but are not found on the shelves.

Stock outs are increasingly recognized as a retail problem by both researchers and practitioners. Estimates of stock out rates in retail stores have consistently averaged above 8 percent, despite all efforts so far, stock out rates have remained high over a prolonged period of time. Out-of-stock data is too often focused narrowly at the consumer packaged goods segment of the value chain, with much less attention to other types of consumer goods-to-retail product categories. More than 1 in every 5 consumers (21.2%) coming into the door of Consumer Electronics retailers leaves without buying at least one product they intended to purchase due to out-of-stocks – an incredible number, and one many consumers can probably relate to personal experience. The difference in the numbers between retailers in a sector can be significant. 9% of respondents, in the past 12 months, stopped shopping at a particular retailer due to their out-of-stock situation. A significant percentage of store out-of-stocks at shelf level are really for products for which inventory is available in the back room, but has not been brought to the selling floor – an area where RFID and smarter store applications could make a big difference.

So, in order to reduce this stock out rate, Supermarkets uses EOQ model, Just-in-time model, Fixed re-order stock level method to determine stock position and prevent any stock out situation. Hypermarkets, Supermarkets focuses on advanced technologies like RFID, Inventory control software etc. to prevent stock out situations.

1.2 NEED AND RATIONALE OF THE STUDY

"A Study on Consumer’s perspective towards stock out situations in retail sector with respect to FMCG." is done in order to understand the consumers’ perspectives towards stock out of the FMCG products, used regularly by them and the way they react to them, either by substituting the item, delaying the purchase or leaving the store. Through this research, it is also intended to understand how the consumers’ reaction differs towards the stock out of hedonic and utilitarian products and how they react in different situations.

1.3 PURPOSE OF THE STUDY

The study as such, helps in understanding consumers’ reaction towards stock out, extending the result of the research to the retailers and manufacturers to help them manage the stock out situation effectively, understanding various variables which affects consumers’ reaction towards a stock out and determining the importance of various variables responsible for bringing a change in consumers’ response to the stock out situation.

RESUME OF SUCCEEDING CHAPTERS

The present chapter talks about the Background of the study, the need and rationale and purpose of the study. The second chapter talks about the Literature review, how the review has been conducted, studies conducted abroad and the research gap found through the literature review.

The third chapter is about the Research methodology, the variables impacting the stock out situation, the operational definition of the variables, the sample and the population of the study, the statistical tools used etc. The fourth chapter talks about the Industry overview, the stock out situation in the retail industry, the need and purpose of the study and the limitations of the study.

The fifth study is about the data analysis and interpretation, respondent profile, hypothesis testing and analysis of data. The sixth chapter talks about the findings, suggestions, suggestions for further research and conclusion.

2.1 INTRODUCTION

A literature review is a body of text that aims to review the critical points of current knowledge including substantive findings as well as theoretical and methodological contributions to a particular topic. Literature reviews are secondary sources, and as such, do not report any new or original experimental work. Its main goal is to situate the current study within the body of literature and to provide context for the particular reader.

The literature review:

Describes how the proposed research is related to prior research in statistics.

Shows the originality and relevance of research problem. Specially, the research is different from other statisticians.

Find gaps (and possibly errors) in published research

Will justice the proposed methodology.

Demonstrates preparedness to complete the research.

Generates new original ideas.

2.2 HOW THE REVIEW HAS BEEN CONDUCTED

The review of literature has been extracted from research papers in similar fields of the topic and includes study of research papers from Proquest and online resources. A research log was created and maintained by entering summaries and variables for each paper/book individually. The research papers were examined and an understanding of the paper was undertaken to highlight the findings of various researchers and scholars. Finally, the need was recognized and a concise essay was made so that entire information flowed in a thoughtful manner ending up into the research problem.

2.3 STUDIES CONDUCTED ABROAD AND IN INDIA

Out of stock is a big problem for the retail industry. Average out of stock level for the retail industry is 8.3% (Gruen.et.al, 2002).

Various causes of out of stock situation are store ordering, store shelving, distribution center, store forecasting, retail headquarters or manufacturers (Luis Henrique Rigato Vasconcellos et al, 2009, Mauro Sampaio et al.2009). A major cause for out of stock situation is the independent sector in the store ordering process. (Jesper Aastrup et.al, 2009, Herbert Kotzab et al,2009). Suppliers are also an important factor responsible for the stock out situation. (Luis Henrique Rigato Vasconcellos et al, 2009, Mauro Sampaio et al, 2009).

According to the study conducted by (Mario J.Miranda and K.Jesasothy, 2008) responses for stock out differ for developing and developed countries. Malaysian shoppers react differently to the stock out as compared to their Australian counterparts. Out of stock rates in the independent sector are significantly higher than in the centrally organized sector. Independent grocery strores face out of stock challenges in more categories than the centrally controlled sector ( Jesper Aastrup et al,2009, Herbert Kotzab et al, 2009)

Consumers may respond to the stock out by either i) substituting the item ii) delaying the purchase iii) leaving the store; popularly known by the acronym SDL.(Luis Henrique Rigato Vasconcellos et al,2009, Mauro Sampaio et al,2009). The research conducted by Zinn and Liu, 2001, deeply investigated the influence of other variables such as i) urgency in purchase of item ii) promotion or brand loyalty. Jana Luisa Diole and Nicole Wiebach, 2011, explained the relevance of promotion as essential driver of differences in customers’ out of stock reaction. Consumer reaction differs for promoted and non-promoted items. Customers affected by stock out of promotional product more often postpone purchase and tend to avoid substitution. For non-promoted items, customers easily switch to alternative brands. Customers substitute unavailable items in accordance to a negative similarity effect which reduces on promotion (Jana Luisa et al 2011, Nicole Wiebach et al, 2011)

Consumers’ response is affected by consumer specific factors like price shopper, situational factors like surprise with stock out, store specific factors like like perceived distance to a competing store and geographic variables. (Walter Zinn et al, 2001, Peter C Liu et al, 2001) Katio Campo and Els Gijsbrechts and Patricia Nisel, 2001 proposed other variables affecting stock out situation such as shoppers basket size , shopping regularity, degree of opportunism and use rate. There are also some other variables proposed by Timucin Ozcan, 2008 , which affects the stock out reactions like influence of consumption goods in different usage context , shopping basket composition for a required product bundle. Thus, these were some of the variables proposed by various researchers affecting consumers stock out reaction.

According to the study conducted by (William Verbeke , Paul Farris and Roy Thurik, 2000), a certain number of people (14%) switched stores if there brand was out of stock for a longer period of time. A substantial (32%) switched brands in response to an out of stock situation. When a brand goes out of stock, low share brands tend to pick up more sales than high share brands. During the stock outs customers do shop in other outlets. When the brand is reintroduced at a higher price, a moderate positive carryover effect is generally seen (Stephen B. Castleberry et al, 1988, Brain Davis et al, 1988). As such, consumers are willing to exchange their favorite brand for another one in a stock out situation. However, they return to their favorite brand in the restoration of supplies (Luis Henrique Rigato Vasconcellos et al, 2009, Mauro Sampaio et al, 2009). According to the study conducted by (William Verbeke , Paul Farris and Roy Thurik, 2000), there are large differences of out of stock responses among the brands.

Lauren Sloot, Peter C.Verhoef, Philip Hans Franses et al,2002, proposed that consumers are more product loyal in hedonic product groups than in utilitarian product groups. Consumers are more loyal to high equity brands than to low equity brands. At the time of stock out, consumers tend to choose the alternatives that are superior on hedonic dimensions (Timucin Ozcan, 2008). Brand loyalty is found to be stronger for high equity brands in hedonic product groups (Lauren Sloot , Peter C.Verhoef , Philip Hans Franses et al,2002)

According to the study conducted by Katio Campo and Els Gijsbrechts and Patricia Nisel, 2001, stock outs lead to purchase of smaller quantities and to asymmetric choice shifts.

2.4 CONCLUSION

After going through the researches of different people, it is found that not much research has been done on the stock out situation in India and as such, India lacks research and the study on such a rampant situation of frequent stock out experienced by the people and their reactions to it. As such, such a research work will help in understanding the consumers’ perspectives towards stock out situation in retail sector in Indian perspective as well as their reaction to the stock out situation in hedonic and utilitarian products.

Through the above literature review, various factors and variables were found out which have an impact on stock out situation like, Availability of substitutes/alternatives, Brand loyalty, Brand type, Store loyalty, Availability of competing stores in the vicinity of the store with the out of stock situation, Urgency, Type of shopping trip, Required purchase quantity, Shopping frequency, Promotional intensity, Pre-visit agenda etc.

3.1 INTRODUCTION

Research designs are concerned with turning the research question into a testing project. The best design depends on our research questions. Every design has its positive and negative sides.

This chapter encompasses outlining the objectives of the research, the method adopted in terms of data collection through observation templates and embedding some aspects of qualitative aspect through informal interviews with experts. It also mentions the theoretical frame and the limitations in conducting this research.

3.2 STATEMENT OF THE PROBLEM

"A Study on Consumer’s perspective towards stock out situations in retail sector with respect to FMCG." Stock outs are increasingly recognized as a retail problem by both researchers and practitioners. Estimates of stock out rates in retail stores have consistently averaged above 8 percent, despite all efforts so far, stock out rates have remained high over a prolonged period of time. It is not just retail stores that must manage inventories. In fact, inventories pervade the business world. Maintaining inventories is necessary for any company dealing with physical products, including manufacturers, wholesalers, and retailers. For example, manufacturers need inventories of the materials required to make their products. They also need inventories of the finished products awaiting shipment. Similarly, both wholesalers and retailers need to maintain inventories of goods to be available for purchase by customers.

Thus, this research work is done in order to understand the consumers’ perspectives towards stock out of the FMCG products, used regularly by them and the way they react to them, either by substituting the item, delaying the purchase or leaving the store. Through this research, it is also intended to understand how the consumers’ reaction differs towards the stock out of hedonic and utilitarian products and how they react in different situations.

3.3 OPERATIONAL DEFINITIONS OF THE VARIABLE

A stock out is defined as a situation where an item that is regularly commercialized at a point of sale and occupies a specific place on the shelves is not available to the consumer in the store at the moment of purchase.

A stock out rate is precisely the percentage of all the items commercialized that should be for sale, but are not found on the shelves.

A consumer is a person or group of people that are the final users of products and or services generated within a social system. A consumer may be a person or group, such as a household. The concept of a consumer may vary significantly by context. As such, according to the marketing concept, the consumer is the one who pays to consume the goods and services produced. As such, consumers play a vital role in the economic system of a nation. In the absence of their effective demand, the producers would lack a key motivation to produce, which is to sell to consumers.

3.4 VARIABLES UNDER INVESTIGATION

The sole purpose of the research work is to understand the consumers’ perspectives towards stock out of the FMCG products, so the variables under investigation are the consumers who react differently to different products (hedonic and utilitarian products) and to different situations. The various situations affecting consumer’s response are:

Availability of substitutes/alternatives

Brand loyalty

Brand type

Store loyalty

Availability of competing stores in the vicinity of the store with the out of stock situation

Urgency

Type of shopping trip

Required purchase quantity

Shopping frequency

Promotional intensity

Pre-visit agenda

Thus, based on the above variables, the consumers’ reaction towards stock out can be studied.

As such, above are the various independent variables having an impact on the dependent variable i.e. the consumers’ reaction to stock-out.

3.5 OBJECTIVES OF THE STUDY

3.5.1 GENERAL OBJECTIVE

Understanding consumers’ reaction towards a stock out.

Extending the result of the research to the retailers and manufacturers to help them manage the stock out situation effectively.

3.5.2 SPECIFIC OBJECTIVE

Understanding difference in consumers’ reaction towards hedonic and utilitarian products

Understanding various variables which affects consumers’ reaction towards a stock out

Determining the importance of various variables responsible for bringing a change in consumers’ response to the stock out situation.

3.6 HYPOTHESIS

A statistical hypothesis is an assumption about a population parameter. This assumption may or may not be true. Hypothesis testing refers to the formal procedures used by statisticians to accept or reject statistical hypotheses.

There are two types of statistical hypotheses.

Null hypothesis. The null hypothesis, denoted by H0, is usually the hypothesis that sample observations result purely from chance. 

Alternative hypothesis. The alternative hypothesis, denoted by H1 or Ha, is the hypothesis that sample observations are influenced by some non-random cause.

The first hypothesis made is to see if the consumers’ reaction towards a stock out differs with respect to the utilitarian and the hedonic products. So, the hypothesis formed is:

H0: Consumers react similarly to the stock out situation of the utilitarian and the hedonic products.

H1: Consumers do not react similarly to the stock out situation of the utilitarian and the hedonic products.

The second hypothesis made for the study is to check the importance of various variables affecting the consumers’ reaction towards stock out situation. So the hypothesis formed is:

H0: The store loyal customer leaves the store if the product is unavailable at the store for immediate consumption or purchase.

H1: The store loyal customer does not leave the store if the product is unavailable at the store for immediate consumption or purchase.

3.7 POPULATION AND THE SAMPLE OF THE STUDY

Population: Individuals purchasing fast moving consumer goods (FMCG) products from big established stores, retail chains and supermarkets/hypermarkets, Grocery stores.

Sample: Residents in Patna(Bihar), with more emphasis given on the residential areas like Exhibition Road, Boring Road, Kadam Kuan, Nala Road, Rajendra Nagar etc. where the possibility of getting frequent shoppers and the people who purchase in bulk is more.

3.8 SAMPLING TECHNIQUE

3.8.1 SAMPLING FRAME

Residents in Patna(Bihar), with more emphasis given on the residential areas like Exhibition Road, Boring Road, Kadam Kuan, Nala Road, Rajendra Nagar etc. where the possibility of getting frequent shoppers and the people who purchase in bulk is more.

3.8.2 SAMPLING METHOD

A survey with a well framed questionnaire will be done with the respective target segment which fulfills the required objectives of the research. An in-depth interview will be conducted for the respondents.

3.8.3 SAMPLE SIZE

Approximately 250 and above respondents.

3.8.4 SAMPLING ADMINISTRATION

Survey questionnaire will be administered to the specific target population between the hours 4:00 P.M – 8:00 P.M on weekdays. On weekends, the survey can be conducted since morning (around 11 a.m. to 8 p.m.) to get more responses during the weekends at stores.

3.9 EXPLANATION ABOUT THE INPUT

As an input method, SPSS 19 was used to analyze the responses of the people surveyed.

3.10 TOOLS ADOPTED FOR THE STUDY

TOOLS OF DATA COLLECTION:

3.10.1 PRIMARY RESEARCH

Questionnaire

Open- Ended Questions

Close-Ended Questions

3.10.2 SECONDARY RESEARCH

Research papers and articles

3.11 DESCRIPTION OF THE TOOLS

The primary data are collected through survey method. A survey was conducted by the aid of well-structured questionnaire. The questions contained in the questionnaire are of two types:

3.11.1 OPEN- ENDED QUESTIONS

Where the respondent was given a chance to reply if they felt all other options does not apply to them.

3.11.2 CLOSE-ENDED QUESTIONS

Where the respondent was given a lesser chance to reply or give suggestions.

3.12 PILOT TEST AND RELIABILITY OF THE INSTRUMENTS

In order to check the accuracy of the well-structured questionnaire, a pilot study was conducted with 20 responses. The results of the reliability test are as follows:

Table 3.1: Case Processing Summary

Table 3.2: Reliability Statistics

SOURCE: PRIMARY DATA

As can be seen from the above table, the Cronbach’s alpha is 0.757 which is greater than 70%. It depicts that the questionnaire passes the reliability test and is reliable for drawing accurate results for our study on stock out situation.

3.13 STATISTICAL TECHNIQUES AND ANALYSIS

The techniques to be used for doing the analysis are as follows:

3.13.1 Frequency distribution

3.13.2 Cross-tabulation

3.13.3 Hypothesis testing 

3.13.4 Correlation

3.13.5 Regression

3.11.6 ANOVA

3.14 CONCLUSION

With the help of the primary data collected from different age groups and belonging to different professions, the respondents’ reaction towards stock out situation can be studied. Various statistical tools will help in bridging the gap between the expected and the actual result for a stock out situation. The hypothesis formed will be tested with the help of various tests available and will be rejected or accepted accordingly. According to the results and major findings, suggestions for reducing the stock out situation and final conclusions will be drawn.

4.1 RETAIL INDUSTRY IN INDIA

‘Retail industry, being the fifth largest in the world, is one of the sunrise sectors with huge growth potential and accounts for 14-15% of the country’s GDP. Comprising of organized and unorganized sectors, Indian retail industry is one of the fastest growing industries in India, especially over the last few years.’

‘According to the Global Retail Development Index 2012, India ranks fifth among the top 30 emerging markets for retail. The recent announcement by the Indian government with Foreign Direct Investment (FDI) in retail, especially allowing 100% FDI in single brands and multi-brand FDI has created positive sentiments in the retail sector.’

‘Retail industry can be classified into two broad categories – organized retail and unorganized retail.

Organised retail - Those traders/retailers who are licensed for trading activities and registered to pay taxes to the government.

Unorganised retail – It consists of unauthorized small shops - conventional Kirana shops, general stores, corner shops among various other small retail outlets - but remain to be the radiating force of Indian retail industry.’

4.1.1 EMERGING AREAS

Some sectors that occupy a prominent position with the retail industry are:

4.1.1.1 Apparel Retail

/*Everybody understands the impact of fashion and textiles on the environment. Almost $19.5 billion were spent on online apparel shopping in the year 2009 and increasing since then.*/

4.1.1.2 Fashion & Lifestyle Retail

 /*In India the vast middle class and its almost untapped retail industry are the key attractive forces for global retail giants wanting to enter into newer markets, which in turn will help the retail to grow faster.*/

4.1.1.3 Food & Beverage Retail

/*Backed by huge potential and changing lifestyles, the food and beverage retail market is growing at a robust 30-35 per cent per year.*/

4.1.1.4 Pharmaceutical Retail 

/*Driven by therapies like anti-diabetic, vitamin, anti-infective and dermatology, it accounted for a robust 15% growth in 2011.*/

4.1.1.5 E-commerce or E-tailing – the next big revolution

/*With the advent of e-commerce in the retail industry, retail stores are facing stiff competition from e-stores. The rising demand for e-shopping has lead to a new debate cropping up in the world./*

 

4.1.2 FACTORS DRIVING GROWTH ARE

Emergence of nuclear families

Falling real estate prices

Growing trend of double-income households

Increase in disposable income and customer aspiration

Increase in expenditure for luxury items

Large working population

Low share of organized retailing

Growing liberalization of the FDI policy in the past decade

4.1.3 STOCK OUT IN RETAIL INDUSTRY

"A stock out is defined as a situation where an item that is regularly commercialized at a point of sale and occupies a specific place on the shelves is not available to the consumer in the store at the moment of purchase."

"A stock out rate is precisely the percentage of all the items commercialized that should be for sale, but are not found on the shelves."

4.1.3.1 Three Flavors of Stock outs

Establishing reliable metrics for stock outs is tricky, because there is more than just one flavor. These are the good, the bad, and the ugly stockouts.

/*"Good stockouts" occur when:

We finally sell the last unit of a slow moving, discontinued, or old item.

It’s October 31, and we just sold your last Halloween costume, card or pumpkin.

Our clearance items slim down to nothing.

"Bad stockouts" occur when we have missed an opportunity such as:

Our best-selling item is sold out three weeks into the season.

We are nearly out of the house brand of aspirin as well as three of the national brands.

The "best" part of our "good, better, best" selection is severely depleted.

Finally, "ugly stockouts" occur when:

The customer is counting on us always being in stock, because the item is fundamental to our value proposition – yet we are out of that key item.

A traffic-driving item that is part of a current promotion is out of stock.

The prominent item in a planogram is thin.*/

4.1.3.2 Anatomy of a Stock out

/*Like most analysis in business intelligence, differentiating between a good, bad and ugly stock out requires a clear definition of an item’s value, both to the customer and as part of our overall assortment. The following list of attributes can help us filter the good from the bad and ugly.

The Ticking Clock. The changing season has much to do with whether a stockout is good news or bad news. If we are sold out of Christmas ornaments on December 24, that's an ideal position to be in.

Out Date. If possible, every seasonal or fashion item should have the desired "out date" as a filter criteria. This may vary based on selling location. For example, it’s fine to be out of rock salt in Kentucky in early March, but not so Minneapolis.

Seasonality. Some retailers go to great lengths to attribute items to particular seasons, changing as many as six times a year. In these cases, the items within a season share the same out date. For example, if the season lasts 13 weeks, stock outs four weeks into the season are ugly; between 5-10 weeks, they're bad. However, after week 11, stock outs are not only good they may likely be desirable.

Fashion, Basic, Seasonal. In classifying stock outs, it is important to know the selling life of the item. Fashion items live for six months or less; seasonal items sell for 13 weeks or less, but can be repeated 12 months later; and basic items sell all year long, usually for 12 months or more. Each type of merchandise will have its unique stock out business rules.

Replenishment cycle. Another important factor in determining the severity of a stock out is its replenishment cycle. Can we get more product on a timely basis? The answer is always yes. But at what cost and effort? When it is impractical to replenish and we have stocked out in season, it’s a bad stock out. In looking at our replenishment cycle, we should also keep in mind which stores stock out more than others, and which vendors have the most stock outs.

Discontinued. A special case of the replenishment cycle is when the manufacturer has discontinued the item. In most cases, we are selling the successor item, so selling out of a discontinued item would be considered a good stock out.*/

4.1.3.3 Stock outs and Inventory

/*It is important to measure the margin and the customer loyalty value of stock outs, as illustrated by the examples below.

Margin-Killing Stock outs. It’s good to stock out of lower margin items, but bad to run out of items where our margins are at plan or above. And of course, the worst is stocking out of our margin leaders; when this happens, the impact on profits can be ugly.

Stock outs that Kill Customer Loyalty. It is important to understand the market basket value of a stocked-out item. If an item tends to attract high-value customers, is present in a lot of baskets, or is the largest purchase in many multi-item transactions, a stock out is always bad or ugly, regardless of the item’s margin performance.

Destination Item Stock outs. We need to identify "destination items" – those that show up in a disproportionate number of baskets in contrast to the number of units available. From their popularity, we can infer that customers count on these items always being in stock. This is an independent customer gauge that exists outside any buyer-assigned attribute.*/

4.1.3.4 Promotions, SKU Rationalization and More

It’s important to consider the differing motives for each individual promotion: traffic-building and inventory-depleting. Each type presents a different context for out-of-stock metrics.

"Traffic-building promotions. In this first type, we have promoted individual items in an effort to increase store traffic. However, if we stock out during the promotion period, it’s ugly. The customers that walk away empty-handed may tell their friends, and our next promotion may not result in any traffic increase."

"Inventory-depleting promotions. Conversely, if our purpose in promoting a group of items is to address an overstock problem, stock-out metrics measure our success toward that goal. It’s a good idea to measure the balance of the promoted category prior to sale in order to identify stores that have an inadequate supply or bad balance across the range."

SKU Rationalization. Sometimes, we may decide to purposefully stock out of an item because it doesn’t fit certain success criteria. It is vital to consider the customer in such decisions.

"Stock outs and Merchandise Selection. Stock outs play an important role in measuring the effectiveness (or lack thereof) of entire merchandise groups. It is vital that planners begin to measure the impact of stock outs in season as well as in hindsight. Thus, they need to distinguish between the good, the bad and the ugly."

"Core. It is important to distinguish between "core" items – those that are integral to our presentation – and non-core. When core items run out, it’s always bad news. When non-core items are out of stock, it may actually be a good thing. The overall service level for core items should be four or five points higher than non-core."

"Substitutability. In hard lines, the range of the assortment often includes several like items with very similar features. To a merchant, these highly substitutable items usually do not result in a lost sale. If the shopper wants aspirin, she’ll buy aspirin regardless of whether her preferred brand and size is available. In the mind of the vendor, however, the stock out is clearly a lost sale."

"Assortment-Breaking Stock outs. Stock outs help measure the health of an overall assortment or planogram. For apparel and shoe assortments, if more than 30 percent of the overall size and colors are out of stock, it’s time to break the assortment. Up until that time, stock outs are ugly; after that, they're good."

Assortment Anchors. Each assortment usually has one or more key items that anchor the presentation. When they go, the assortment goes, no matter what their supporting cast.

"Space-Killing Stock outs. Similarly, every planogram has its key items – typically, the SKUs on the end cap or the most prominent facings. When these items go out of stock, the whole group can suffer. If replenishment is not possible, the whole planogram must be reprogrammed."

"Stockouts are multi-faceted and must be critically analyzed with retail-focused BI and analytics in order to fully understand their ramifications. Not all stock outs are bad, but the worst kind of stock outs should be identified as quickly as possible so immediate action can be taken, minimizing the effect on sales and customer loyalty."

4.2 PURPOSE OF THE STUDY

Stock outs are increasingly recognized as a retail problem by both researchers and practitioners. Estimates of stock out rates in retail stores have consistently averaged above 8 percent, despite all efforts so far, stock out rates have remained high over a prolonged period of time.

As such, this study helps in focusing on such a rampant environment of stock out, its causes, its impact on various hedonic and utilitarian products and in turn will help in deriving solutions in order to avoid stock out situations.

4.3 SIGNIFICANCE OF THE STUDY

Maintaining inventories is necessary for any company dealing with physical products, including manufacturers, wholesalers, and retailers. Both wholesalers and retailers need to maintain inventories of goods to be available for purchase by customers.

As such, the industry overview helps us to understand the stock out situation prevailing in Indian retail industry and the consumers’ reaction towards the situation. It helps in understanding various concepts related to stock out and their implications. It also entails various retailers and manufacturers and the way they manage the stock out situation effectively.

4.4 LIMITATION OF THE STUDY

The above industry overview do not consist of the stock out situations in all the existing sectors of the retail industry and as such, much of research work needs to be done in order to understand the existing stock out situation and its implication on the whole industry.

5.1 INTRODUCTION

The analysis is done in order to understand the reactions of the respondents to the stock out situations of various product categories under FMCG sector. This analysis will also help in understanding the respondent reaction to the utilitarian and the hedonic products and the difference between them. Various hypothesis will also be able to be tested and the results will be drawn accordingly.

5.2 RESPONDENT PROFILE

5.2.1 GENDER OF THE RESPONDENTS

Table 5.1: showing the gender of the respondents.

MALE

122

FEMALE

128

Chart 5.1: Showing the gender of the respondents

SOURCE: PRIMARY DATA

INTERPRETATION:

As depicted by the table and the chart above, there is almost an equal representation of males (122) and females (128) for the survey. This type of representation reduces any type of biases towards any particular gender.

5.2.2 THE AGE DISTRIBUTION OF THE RESPONDENTS

Table 5.2: Showing the age distribution of the respondents

AGE

Frequency

18 AND BELOW

41

19-29

112

30-39

42

40-60

48

60 AND ABOVE

7

Chart 5.2: Showing the age distribution of the respondents

SOURCE: PRIMARY DATA

INTERPRETATION

The above graph represents the age distribution of the respondents with maximum no. of respondents depicting the age bracket of 19-29 years (112) followed by 40-60 years (48) and 30-39 years(42 respondents).

5.2.3 THE PROFESSION OF THE RESPONDENTS

Table 5.3: Showing the profession of the respondents

PROFESSION

Frequency

STUDENT

111

EMPLOYED

69

HOUSEWIFE

70

RETIRED

2

Chart 5.3: Showing the profession of the respondents

SOURCE: PRIMARY DATA

INTERPRETATION

As can be seen from the table and the chart above, maximum of the respondents are students (111) followed by housewives (70) and employed people (69).

As such, this survey generally represents the study on the stock-out situation with the help of the responses collected from students and housewives.

5.3 QUANTITATIVE ANALYSIS

The sole purpose of the research work done is to analyze the stock out reaction of the respondents at the time of purchase of household products. Thus, the sample characteristics for my research are:

The people of different age group with different profile like students, employed people, housewives, retired etc.

The frequency of their purchase of household products.

The day preferred by them for the purchase of household products.

The place preferred by them for the purchase of household products.

No. of stores around their locality and their preference for buying from 1 single store.

The products and the area in which stock out is experienced the most.

The feelings of the respondents when faced by the stock out situation.

The causes of stock out as specified by the respondents and the occasions on which they experience the stock out the most.

Thus, such samples were surveyed who were able to provide the responses to the above questions.

5.3.1 THE FREQUENCY OF PURCHASE OF THE RESPONDENTS

Table 5.4: Showing the frequency of purchase of the respondents

Frequency of Shopping

Customer Purchasing Frequency

Almost every day(1)

28

Once or twice a week(2)

103

Once in 2-3 weeks(3)

45

Once in a month(4)

48

Once in 2-3 months(5)

15

Once in 6 months(6)

6

Never(7)

2

Chart 5.4: Showing the frequency of purchase of the respondents.

SOURCE: PRIMARY DATA

INTERPRETATION:

As depicted by the chart above, most of the respondents (103) go once or twice a week for the purchase of household products followed by 48 respondents who go once a month for their purchase of household products.

5.3.2 THE FREQUENCY OF PURCHASE OF THE RESPONDENTS PROFESSION WISE

Table 5.5: Showing the frequency of purchase of the respondents Profession wise

Profession

 

 

Frequency

 

 

 

 

1

2

3

4

5

6

7

Student

10

57

20

11

7

4

0

Employed

9

20

8

20

7

1

2

Unemployed/ Housewife

9

26

17

15

1

1

0

Retired

0

0

0

2

0

0

0

Chart 5.5: Showing the frequency of purchase of the respondents Profession wise

SOURCE: PRIMARY DATA

INTERPRETATION

Even if we consider profession, it can be seen from the above table and chart that, all, the students, the employed and the housewives prefer to go once or twice a week for the purchase of household products.

The students prefer going to purchase of household products once or twice a week followed by once in 2-3 weeks. The employed prefer going to purchase of household products once or twice a week or once in a month due to their time constraint. The housewives prefer going to purchase of household products once or twice a week followed by once in 2-3 weeks.

As such the housewives and students are similar in their frequency of purchase.

5.3.3 THE DAY PREFERRED FOR PURCHASE OF HOUSEHOLD PRODUCTS

Table 5.6: Showing the day preferred for purchase of household products

DAY

FREQUENCY

Monday(1)

25

Tuesday(2)

19

Wednesday(3)

28

Thursday(4)

19

Friday(5)

29

Saturday(6)

98

Sunday(7)

154

Chart 5.6: Showing the day preferred for purchase of household products

SOURCE: PRIMARY DATA

INTERPRETATION

As can be seen from the table and the chart above and very easily predictable, most of the respondents (154) prefer Sundays for their purchase of household products followed by Saturdays (98 responses). Many people (29) prefer Fridays for the day of purchase followed by Wednesdays (28), may be due to some offers available on the purchase on these days in various supermarkets.

5.3.4 THE PLACE PREFERRED FOR PURCHASE OF HOUSEHOLD PRODUCTS

Table 5.7: Showing the place preferred for purchase of household products

Places

Frequency

Hypermarkets(2)

44

Grocery Stores(3)

83

Supermarkets(4)

118

Others(5)

11

Chart 5.7: Showing the place preferred for purchase of household products

SOURCE: PRIMARY DATA

INTERPRETATION

Due to the various types of products available under one store, maximum of the respondents (118) prefer Supermarkets for the purchase of household products followed by their nearby grocery stores (83).

5.3.5 THE PLACE PREFERRED FOR PURCHASE OF HOUSEHOLD PRODUCTS, PROFESSION WISE

Table 5.8: Showing the place preferred for purchase of household products, Profession wise

Profession

Hyper Market

Grocery Stores

Super Markets

Others

Student

23

35

57

5

Employed

10

21

26

5

Unemployed/ Housewife

11

27

34

1

Retired

0

0

0

2

Chart 5.8: Showing the place preferred for purchase of household products, Profession wise

SOURCE: PRIMARY DATA

INTERPRETATION

Even if we consider profession, all, the students, the employed and the housewives prefer Supermarkets for their purchase of household products followed by Grocery stores and Hypermarkets.

5.3.6 THE AMOUNT SPENT BY THE RESPONDENTS PER VISIT TO THE STORE

Table 5.9: Showing the amount spent by the respondents per visit to the store

Amount

Frequency

Less than Rs.1000(1)

113

Rs.1000-2500(2)

54

Rs.2500-Rs.4000(3)

38

Rs.4000-Rs.5500(4)

16

Rs.5500-Rs.7000(5)

13

Rs.7500-Rs.9000(6)

8

Rs.9000 and above(7)

4

Chart 5.9: Showing the amount spent by the respondents per visit to the store

SOURCE: PRIMARY DATA

INTERPRETATION

As depicted by the table and the chart above, most of the respondents spent around Less than Rs.1000 per visit to the store followed by 54 respondents who spends around Rs.1000-Rs.2500 per visit to the store for the purchase of household products.

5.3.7 THE AMOUNT SPENT BY THE RESPONDENTS PER VISIT TO THE STORE, PROFESSION WISE

Table 5.10: Showing the amount spent by the respondents per visit to the store, Profession wise

Profession

 

 

Amount spent

 

 

 

 

1

2

3

4

5

6

7

Student

74

18

12

3

2

0

1

Employed

25

10

10

7

5

6

2

Unemployed/ Housewife

14

27

16

6

5

1

1

Retired

0

0

0

0

1

1

0

Chart 5.10: Showing the amount spent by the respondents per visit to the store, Profession wise

SOURCE: PRIMARY DATA

INTERPRETATION

Considering the profession for the amount spent by the respondents per visit to the store, it can be seen that most of the students (74) spends less than Rs.1000 per visit to the store followed by Rs.1000-Rs.2500. The employed people also spends less than Rs.1000 per visit to the store followed by Rs.1000-Rs.2500 and Rs.2500-Rs.4000. Comparatively the housewives spends more than the students and the employed people, Rs.1000-Rs.2500 and Rs.2500-Rs.4000 per visit to their store for the purchase of household products.

5.3.8 THE NO. OF STORES AROUND THE RESPONDENTS LOCALITY

Table 5.11: Showing the no. of stores around the respondents locality

No. of Stores

Frequency

1-3 stores(1)

78

3-5 stores(2)

90

5-8 stores(3)

84

More than 8 stores(4)

116

Chart 5.11: Showing the no. of stores around the respondent’s locality

SOURCE: PRIMARY DATA

INTERPRETATION

As can be seen from the table and the chart above, there is no dearth of stores around the respondent’s locality. Most of the respondents have more than 8 stores (116) around their locality followed by 90 respondents who have 3-5 stores around their locality.

As such, non-availability of the stores around the respondents locality cannot be a cause for the unavailability of the products.

5.3.9 THE NO. OF RESPONDENTS MAKING PURCHASE FROM 1 STORE

Table 5.12: Showing the no. of respondents making purchase from 1 store

Preference of the store

Number of customers

Purchase from 1 Store

134

More than 1 store

112

Chart 5.12: Showing the no. of respondents making purchase from 1 store

SOURCE: PRIMARY DATA

INTERPRETATION

As depicted by the table and the chart above, most of the respondents (134) prefer one store for the purchase of their household products followed by 112 respondents who prefer purchasing from more than 1 store for the purchase of their household products.

5.3.10 NO OF RESPONDENTS MAKING PURCHASE FROM 1 STORE, PROFESSION WISE

Table 5.13: Showing the no. of respondents making purchase from 1 store, profession wise

Profession

Purchase from 1 Store

More than 1 store

Student

43

67

Employed

44

21

Housewife

45

24

Retired

2

0

Chart 5.13: Showing the no. of respondents making purchase from 1 store, profession wise

SOURCE: PRIMARY DATA

INTERPRETATION

Compared to the employed people and the housewives, the students prefer purchasing from more than 1 store. 67 students prefer purchasing from more than 1 store followed by 43 students who prefer purchasing from 1 store. The employed people (44) prefer purchasing from 1 store followed by 21 employed respondents who prefer purchasing from more than 1 store. The housewives (45) prefer purchasing from 1 store followed by 24 housewives who prefer purchasing from more than 1 store. As such, the employed and the housewives are more store loyal as compared to the students.

5.3.11 NO OF RESPONDENTS MAKING PURCHASE BEFORE THE ITEMS ARE OVER TO AVOID STOCK-OUT

Table 5.14: Showing the no. of respondents making purchase before the items are over to avoid stock out

Profession

Making purchase before items are over

Not Making purchase before items are over

Student

35

74

Employed

17

48

Housewife

28

41

Retired

0

2

Chart 5.14: Showing the no. of respondents making purchase before the items are over to avoid stock out

SOURCE: PRIMARY DATA

INTERPRETATION

As can be seen from the above table and the chart, most of the students, the employed and the housewives do not make purchase before the items are over to avoid stock out.

Only 35 of the students, 48 of the employed people and 41 of the housewives make purchase before the items are over to avoid stock out.

5.3.12 NO OF RESPONDENTS CHANGING THE PREFERRED STORE DUE TO FREQUENT STOCK OUT

Table 5.15: Showing the no. of respondents changing the preferred store due to frequent stock out

Profession

Change of Store

No change

Student

70

40

Employed

40

25

Housewife

38

29

Retired

1

1

Total

149

95

Chart 5.15: Showing the no. of respondents changing the preferred store due to frequent stock out

SOURCE: PRIMARY DATA

INTERPRETATION

It can be seen that the respondents change their preferred store due to frequent stock out. 70 of the students, 40 of the employed and 38 of the housewives change the preferred store due to frequent stock outs.

5.3.13 NO OF RESPONDENTS GETTING THE PREFERRED BRAND AND REQUIRED SIZE AT THE TIME OF PURCHASE

Table 5.16: Showing the no. of respondents getting the preferred brand and required size at the time of purchase

Profession

Yes

No

Student

90

20

Employed

58

6

Housewife

52

17

Retired

2

0

Chart 5.16: Showing the no. of respondents getting the preferred brand and required size at the time of purchase

SOURCE: PRIMARY DATA

INTERPRETATION

As depicted by the above table and the chart, the students, the employed and the housewives get the preferred brand and required size at the time of purchase. As such, most of the respondents surveyed do not experience so much of stock out situations.

5.3.14 THE NON-AVAILABLE PRODUCTS AND THE DURATION OF THEIR NON-AVAILABILITY

According to the survey done, the respondents experiencing the stock out situation experienced the stock out situation mostly in the products like:

Hair care products

Cosmetics

Biscuits

According to the survey done, the respondents experiencing the stock out situation experienced the stock out situation mostly in the areas like:

Exhibition Road

Boring Road

Kadam Kuan

The above products were unable at the particular stores mostly for the time period of 1-3 days.

Table 5.17 Non Availability of Products

PRODUCTS

AREA

Hair care products

Exhibition Road

Cosmetics

Boring Road

Biscuits

Kadam Kuan

5.3.15THE RESPONDENTS REACTION WHEN FACED BY A STOCK OUT SITUATION

Table 5.18: Showing the respondents reaction when faced by a stock out situation

Reactions

Frequency

Frustrated(1)

53

Dissatisfied(2)

123

Not affected much(3)

68

others(4)

2

Chart 5.17: Showing the respondents’ reaction when faced by a stock out situation

SOURCE: PRIMARY DATA

INTERPRETATION

As depicted from the above table and the chart, most of the respondents (123) feel dissatisfied when the product is out of stock at the store of purchase followed by 68 respondents who are not affected much because of stock out situation.

5.3.16 THE MAIN CAUSE FOR STOCK OUT, AS PER THE RESPONDENTS

Table 5.19: Showing the main cause of stock out, as per the respondents

Cause

Frequency

Transportation problem(1)

55

Hoarding(2)

40

Improper procurement of goods(3)

88

Store forecasting(4)

52

Others(5)

10

Chart 5.18: Showing the main cause of stock out, as per the respondents

SOURCE: PRIMARY DATA

INTERPRETATION

According to most of the respondents (88), the main reason for the stock out is improper procurement of goods followed by store forecasting. Most of the respondents (55) feel the transportation problem to be the cause for the stock out.