The True Cost of Out of Stocks


True Story: A friend is stocking up for her daughter’s return to college and plans on spending most of her dollars at Target. Her main purchase is a flat-screen TV for the dorm room, but she also plans to buy toiletries. One specific goal is the L’Oréal True Match Roller in a color she found works for her and she planned on buying her daughter one, too.

 

As a backdrop, Target and most other mass merchants have spent two years attempting to limit inventories. There are fewer items on pegs; brands have been reduced. While this creates an instant positive blip on the bottom line, there are concerns about sending shoppers to other stores when their item isn’t in stock. Some research suggests shoppers will leave the store one in four times, if the item they want isn’t there. In this scenario, poor service in electronics and an out-of-stock in beauty cost Target about $500. Here’s how:
The visit to electronics was the first stop. Although the shopper found two TVs in her budget, there was no service person available. She decided to abandon that need and move to beauty. She had a list, consisting of hair care, shower wash, feminine hygiene and the True Match Roller. She started in cosmetics and was astounded to find the color out of stock. Rather than buy the other items, she decided to leave for the Wal-Mart across the street. A few years ago, she said she probably wouldn’t have bothered shopping elsewhere. But her mind-set now is to get what she wants and with so many stores vying for her in the same market, her dollar is more powerful. While not as snazzy, the store was always stocked, she said, and had adequate service. An electronics whiz helped her with a TV that was $75 cheaper than Target. The full array of L’Oréal items were in stock and well priced. Total tab at the end of the trip including two True Match Rollers was $562.

 

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While there is much to be said about getting inventory under control, there are also compelling reasons to keep the right colors and right items in stock. In this case, one item not in the store costs the retailer the price of the item times eight. At this crucial time with shoppers back in stores for back-to-shopping needs, retailers need to make sure they are in good “in stock” conditions. Various studies predict a variety of scenarios for this season from up to down. However, there will be needs for fresh cosmetics and health and beauty care items and the right mix could mean a better season. This is not the season to hold back.

People, Places and Things

A few words with Karen Grant, vice president and global industry analyst for The NPD Group, on the research firm’s latest study that nearly nine in 10 makeup users use makeup with skin care benefits.

WWDBeautyNews: What is notable about this study?

 

K.G.: As consumers seek to simplify their beauty routines, the opportunity is ripe for products that provide the benefits of both the makeup and skin care categories. Over the past few years, a greater number of makeup products are incorporating treatment benefits that consumers would previously get from a skin care product. From protective benefits to increasingly advanced antiaging ingredients to the more specialized focus of antiacne and redness reduction benefits, more and more makeup manufacturers are offering consumers a wider variety of skin care options today.

 

While the beauty industry continues to look for new opportunities, this convergence of makeup and skin care is a burgeoning platform to build upon. Our younger consumers are still learning and experimenting to determine what works for them. Our older consumers are facing the ever-changing needs of their skin along with the need for a pragmatic, time-saving approach to beauty. Understanding the way consumers are approaching their beauty regimen and where their needs cross categories will help guide us in reengaging the younger consumer and  the older consumer.

What’s In Store

 

Kroger Expands Own Brand: Kroger has more than doubled its number of store-brand beauty items. The primary label is Mirra, which is targeted at family-focused women seeking “effortless” beauty.


New Ulta Market:
Ulta, which has 356 stores now, will open its first Charlottesville, Va., site this fall. Ulta is also engaging in many more in-store events, including a recent visit to an Illinois Ulta by Leigh Anne and Collins Tuohy, whose life story inspired the The Blind Side movie. They gave beauty tips to shoppers in the store.

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