There are several surveys conducted annually amongst shoppers of European Supermarkets.

Each year, "the unavailability of products" scores high amongst the irritating factors. However, this might change in the future.

In many cases, the immediate effect of a lack of stock on the shelf for the retailer is lost turnover. However, the bigger worry for the retailer is the loss of customers. This will result from continued unacceptable levels of out-of-stocks for any store format. A recent study by ACNielsen indicates that store switching is the consumer response in 20 percent of out of stock (OOS) situations. This explains why retailers are increasingly focused on suppliers reaching their target service levels. These targets can be as high as 99.5 percent of orderlines. Carrefour of France, for example, levies a penalty to those suppliers that score service levels below the targets it sets.

The supplier, in turn, also faces a loss in turnover. Damage to brand loyalty is another serious risk. The same study by ACNielsen indicates brand switching in 30 percent of the OOS situations. This may be a temporary switch, but it also could result in a first exposure to a competitive brand—with more lasting effects.

There seems to be a consensus that an out-of-stock level of about 2 percent must be accepted. However, in most European countries levels between 10 and 15 percent are not unusual. Interestingly, slower-moving items experience more out-of-stocks than items with higher rotation. A point that should be of particular interest for beer and certainly soft drink suppliers, is that still little is known about the effects of stock-outs on impulse purchases.

For years the problem of out-of-stocks has been regarded as very complex. There were myriad causes and the daunting complexity of the issue lead to a lack of corrective actions. The fact that the dialogue between retailers and suppliers was often limited to trading terms only was also a factor. However, since the era of Category Management and ECR was established—around 1995—the dialogue has broadened with positive results for both parties. One definite benefit has been a growing understanding among suppliers and retailers of the demands of each other's operations.

The problem of out-of-stocks was being unraveled, and the causes were split into three distinct subgroups:
Underperformance by the supplier;
Causes at the distribution center of the retailer;
Causes at the shop floor.

It turned out that the majority of out-of-stocks found their causes at the shop floor. Closer scrutiny brought a better understanding of these problems and has since lead to actionable conclusions.

One key source of problems is a lack of sufficient shelf space. Shelf space is, in most cases, based on "yesterday's" sales. Specifically, in the event of a growing segment—such as single-serve drinks in most European markets—it takes quite long before trends translate into extra shelf space. An extra semi-permanent display is often used as an interim solution.

A more fundamental issue is that planograms are produced at the head office of the retailer. However, these planograms are produced for the "average store" They do not deal with the details of the local catchment area in mind. This has to be tackled with micro marketing.

Another source of problems is the difficulty of accurately forecasting consumer demand. This is especially true during promotions and in the event of a launch of a new product or packaging type. The sharing of all relevant data between the supplier and the retailer is the only solution. Some suppliers have added a service to warn retailers of a spike or lift in sales due to a forecasted period of warm weather.

Finally, there is the human factor. Late arrivals of trucks, lack of personnel or lack of focus on preventing out-of-stocks etc. Retailers, who are working with automated store ordering systems, have the difficulty that their store personnel relies totally on the system to order adequate quantities. Often they do not realize that the system must be adjusted on the basis of item movement to prevent stockouts.