What Is On-Shelf Availability (OSA) and How Can You Improve It?

On-shelf availability (OSA) is a critical metric in retail management that measures whether items are available for sale where and when customers expect to find them. By focusing on OSA, retailers can improve the in-store experience, minimize waste, and boost their bottom line. On-shelf availability is vital to succeeding in today’s competitive retail landscape.

How is on-shelf availability calculated?

OSA is calculated as the percentage of products readily available for customers to purchase in a store. For example, if a brand wants ten of its best-selling Stock Keeping Units (SKUs) to be present in a store, but only five are available on the shelf, the OSA for that particular product assortment would be 50%.

How OSA impacts retail success

Retailers can drive sales, improve customer satisfaction levels, optimize inventory management, and maintain a strong competitive position in the market, all by improving on-shelf availability. Here are several ways in which OSA significantly impacts retail success:

Sales and revenue

High OSA directly increases sales and revenue. According to research by McKinsey & Company, improving OSA by just 1% can boost sales by 20 to 35 basis points. Additionally, an IHL study estimates that retailers globally lose $1.77 trillion annually due to inventory distortion.

Customer satisfaction and loyalty

Consistent product availability improves customer satisfaction and encourages repeat business. When products are unavailable, customers may turn to competitors, potentially damaging customer trust and loyalty.

Inventory management

According to a global study on out-of-stocks by Corsten and Gruen, when shoppers encounter out-of-stock items, 36% either buy the item at another store (27%) or do not make a purchase at all (9%). Improved inventory accuracy means lower risk of understocking or overstocking, which reduces additional costs and lost sales opportunities.

Employee productivity

Poor OSA negatively impacts employee productivity. Employees spend an average of 12.5 hours per week on restocking activities, diverting them from other tasks and increasing labor costs. Improved OSA can make this task more efficient and cost-effective.

Demand forecasting

Focusing on on-shelf availability also supports accurate demand forecasting. By examining sales data and inventory levels, brands can more effectively anticipate future demand for their products, and adapt production and supply chain processes.

Competitive advantage

Retailers maintaining high OSA gain a competitive edge in the market by providing a reliable shopping experience and meeting customer demand. It can also improve brand image, as brands that consistently ensure product availability are perceived as reliable and trustworthy by consumers.

Inventory turnover

Improved OSA leads to better inventory turnover, reducing the risk of overstocking and minimizing holding costs. 

On-shelf availability and inventory management

Inventory management and on-shelf availability are inextricably linked. Stockouts and excess inventory can lead to lost sales revenue and increased storage costs. By optimizing their inventory management practices, retailers can reap the rewards and benefit from improved on-shelf availability as well.

Let’s take a look at approaches that can benefit both on-shelf availability (OSA) management and overall inventory management:

1. Real-time inventory tracking: Implement systems that provide accurate, up-to-date information on stock levels both on shelves and in backrooms. JRTech plays a role in bringing intelligent and interconnected inventory management solutions to retailers by integrating inventory scanning robots developed by our recent acquisition BrainCorp, ESL technology, and AI. These technologies make it possible for retailers to rely on a seamless solution that elevates inventory tracking, analysis, and management. Groundbreaking solutions like ours allow retailers to achieve higher levels of speed and accuracy in ensuring shelves are always stocked and products are correctly priced.
2. Demand forecasting: Use historical sales data, market trends, and predictive analytics to anticipate customer demand and optimize stock levels.
3. Automated ordering systems: Employ technology to trigger reorders when inventory reaches predetermined thresholds, so it can be replenished in time.
4. Regular cycle counting: Conduct frequent inventory checks to maintain accuracy and identify discrepancies between system data and actual stock.
5. Planogram compliance: Verify that products are placed correctly on shelves according to store layout guidelines, which improves visibility and accessibility.
6. Supply chain coordination: Collaborate closely with suppliers to minimize lead times and maintain consistent product flow.
7. Store-level forecasting: Monitor and adjust inventory levels based on individual store performance and local demand patterns.
8. Integrated retail management systems: Use platforms that combine inventory management, sales tracking, and customer relationship management for a holistic view of operations.
9. Task management for frontline employees: Assign and track restocking and inventory check tasks to confirm that tasks are completed on time, to prevent stockouts.
10. Alert systems for low stock: Implement automated notifications to prompt quick action when products are running low.

Practical strategies to reduce stockouts: technology is key

Today’s retailers know that technology plays an important role in managing inventory and preventing stockouts for better OSA. With the right digital infrastructure, your store can benefit from a significant increase in efficiency and therefore profit. By strategically combining advanced technologies with well-planned initiatives, retailers can significantly improve on-shelf availability.

In-store OSA strategies

• Barcode scanners or RFID systems: Tracking inventory in real-time significantly improves accuracy. By using the right technology to verify that stock levels in the system match what’s actually on the shelves, you can reduce discrepancies that can lead to stockouts.
• Electronic Shelf Labels (ESLs): These are digital displays attached to store shelves that show product information and prices. ESLs can be updated remotely and in real-time. RFID scanners and ESLs can work together in retail environments for highly efficient inventory management, and can even be integrated into warehouse environments via IoT for state-of-the-art stocking and supply chain management.
• Automated inventory management: Using software that tracks stock levels in real-time and automates reordering processes helps optimize stock levels. Products are replenished before they run out.

Supply Chain Strategies

• Set reorder points: Calculating and setting reorder points for each product is one way to make sure new stock is ordered before existing inventory is depleted.
• Reduce lead times: Working to minimize the time between placing an order and receiving stock allows for more responsive inventory management and improved on-shelf availability.
• Supplier relationships: Developing strong relationships with suppliers can lead to more reliable deliveries and better communication about potential supply issues. 

Data-Driven Approaches

• Identify stockout patterns: Regularly auditing and monitoring stock to identify days and times when stockouts tend to peak is a target approach that allows for adjustments in replenishment schedules, improving overall on-shelf availability.
• Analyze customer trends: Studying market trends and customer behavior helps in forecasting demand more accurately.

JRTech is a leading provider of technology solutions for on-shelf availability

JRTech is the leading provider of Pricer Electronic Shelf Labels in North America. We are proud to provide supermarkets, pharmacies and other major retailers with top-quality digital signage and ESL solutions that help retailers prevent stockouts and guarantee consistent product availability on shelves.

With the right solution, you can streamline your operations, reduce waste, improve customer experience and more all by implementing successful on-shelf availability strategies. Contact us to learn more.