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03/25/2021

Out of stocks cost U.S. retailers hundreds of millions of dollars in 2020

Toilet paper topped all categories in sales losses from out of stocks, according to NielsenIQ data, seeing more than $830 million flushed.
Dan Ochwat
Executive Editor
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Out-of-stocks throughout 2020 cost retailers millions of dollars, according to NielsenIQ data.

Toilet paper, paper towels, multi-purpose cleaners and more essential goods swooped up during panic-buying sprees saw the biggest losses, to the tune of $837 million for bath tissue and $689 million for paper towels to lead all categories.

Add up losses from all categories in the top 10, and out of stocks cost retailers more than $3 billion in sales.

Categories finishing out the top 10 didn’t get hit as hard as bath tissue and paper towels, but they recorded significant losses: multi-purpose cleaners ($352 million), dog food ($274 million), cat food ($209 million), ready-to-eat cereal ($137 million), laundry detergent ($136 million), bath and shower soap ($111 million), multi-serve pizza ($104 million), and soup ($84 million).

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“As one of the easier retail problems to fix, managing out of stocks is clearly critical as it significantly affects the revenue of manufacturers and retailers. Not only can retailers lose a significant amount of their sales if the products are not on the shelf, but out-of-stocks also result in reduced customer satisfaction and lower loyalty levels,” said Richard Cook, intelligent analytics leader, NielsenIQ. “Our research shows that 30% of shoppers will visit new stores when they can’t find what they are looking for in their stores, and 70% of shoppers will buy a different brand when a product they are seeking is out of stock.” 

NielsenIQ looked at U.S. retailer sales between May 2020 and February 2021. In an additional survey of American shoppers, the Chicago-based analysts found 30% of respondents said they look to new stores when they can’t find what they’re looking for in their preferred store, and 70% of shoppers said they will buy a different brand when a product they’re seeking is out of stock.

The analysts also don’t see out-of-stock issues going away anytime soon either. “As we see vaccinations rise in the U.S., with people yearning to socialize and be with their families, we might see out of stocks on Easter items — similar to what we measured during the Thanksgiving and Christmas holidays last year,” said Cook. “Warmer weather and the reopening of schools could put pressure on categories like sunscreen, lunch meat, and insect repellant in the coming months. Getting the right analytical models in place to avoid out of stock is essential to ensure retailers and manufacturers don’t miss out on millions in value sales."