PRICE CHOPPER CHOPPING OUT OUT-OF-STOCKS, STOKING SALES

DEENA AMATO-McCOY

SCHENECTADY, N.Y. -- Having store associates respond more quickly to out-of-stocks on its shelves, part of an in-stock initiative recently rolled out chainwide, has helped Price Chopper Supermarkets here reduce out-of-stock levels by 23% in participating stores.

The aggressive 93-store rollout of Price Chopper's in-stock initiative followed a six-month study conducted in one store from April to October 1996. The first two stores went live following the study's completion in October; the last 10 stores, located in Worcester, Mass., came on board with the program two weeks ago.

The out-of-stock reductions achieved during the program "represent a significant increase in our service level," said David Golub, continuous-improvement project manager for Price Chopper.

Though he would not give specific numbers, Golub believes eliminating out-of-stocks in the chain is contributing to an increase in sales.

"I am confident that our in-stocks are improving our customer-service level and our sales, and I am comfortable saying eliminating out-of-stocks was a factor in the improvements," he said.

According to its internal study, Price Chopper has also experienced a 60% reduction in weekly rain checks since implementing the in-stock monitoring practice.

Ultimately, Golub told SN, he wants to achieve an out-of-stock level of less than 10% chainwide.

"It is unrealistic to expect a zero out-of-stock level, but I would like to achieve a very low level," he said. "I would be happy with less than 10%,; I would be even happier with less than 5%."

He added, "We have some stores performing at less than 1% out-of-stocks. I would love to see that chainwide but right now there are many variables, such as different product assortments and movement in each store, so it is tough to say if or when this can be a reality."

The retailer conducted its study in order to research how out-of-stocks affect Price Chopper's customer-service levels.

"The study identified and tracked, on a weekly basis, which items and categories were out of stock and why," said Golub. "By identifying the cause of out-of-stocks, we have seen out-of-stocks reduced by 50% in some stores throughout the chain."

Price Chopper reported that the key to its out-of-stock problem was a lack of attention by associates, who need to respond to holes on the shelves.

"In some instances, there would be empty shelves, but the product would be sitting in the back room," Golub said. "We need to quickly respond to out-of-stock conditions and supply our customers, who are expecting to find these items in our stores."

According to the Retail Problem of Out-of-Stock Merchandise study, conducted for the Coca-Cola Retailing Research Council by Andersen Consulting, Chicago, 8% of out-of-stocks can be attributed to store personnel not restocking shelves with available back-room inventory.

The Retail Problem of Out-of-Stock study reports that out-of-stock items are a contributing factor that causes 7% of customers to switch primary grocery stores.

Price Chopper conducted its out-of-stock study with Senn-Delaney, a unit of Arthur Anderson, Chicago.