Eli5 How do grocery stores around the world afford to be fully/half stocked in a product 24/7 simultaneously even in small towns where not everything’s bought?
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Not sure if anyone’s mentioned it, but I used to work for a gas station. There were a couple different vendors/suppliers. Most of them were as you’d expect. You say you need x amount of y products, you pay for that, and they deliver it and it’s now 100% your responsibility. But there were also vendors that would supply us products, but we’d only have to pay once they were sold. It’s only technically the stores property for a split time when you check out. For these products, if they go expired, it wouldn’t be the stores problem. We’d set it aside and when the vendor would come next time, they’d pick up any products that is still technically theirs and expired, and gave the store a bit of credit for the loss of goods
>simultaneously even in small towns where not everything’s bought?
In reality, they don’t.
There’s a reason most small grocers have gone out of business to regional Walmarts. In more urban areas it’s easy, but most of rural America is a [food desert](https://en.m.wikipedia.org/wiki/Food_desert). In fact,. [13.5 million Americans](https://www.usda.gov/media/blog/2011/05/03/interactive-web-tool-maps-food-deserts-provides-key-data#:~:text=The%20Locator%20identifies%20about%2010,to%20sources%20of%20healthful%20food.) live in food deserts. And even for areas that don’t meet the qualifications for food desert, it’s not uncommon in rural America for the only grocery store option in town to be a Dollar General and the nearest fresh foods to be the Walmart 30+ minutes away. And Walmart only survives in those locations by surviving multiple towns over a huge geographic area.
Small towns don’t have grocery stores any more because it isn’t affordable.
I was at a grocery store in the middle of no where that got milk delivery on Thursday. If you went on Wednesday you likely wouldn’t get milk. Also minimal selection. Eg They had cereal but only certain types
This is what precisely inventory management and supply chain management are all about. A competent company will have mechanisms in place to quickly and accurately keep track of the inventory on hand, as well as create forecasts for how much needs to be ordered.
Due to how sales and buying for those products works, some items sell very slowly and are ordered very infrequently, while other items sell quickly and the store buys the appropriate amount to support those sales (usually 4-14 days of product at the big places).
In terms of how they afford it, most suppliers are on a Net 14 or Net 30 payment structure, so the store gets 14 or 30 days to sell the product and make money from sales before payment is due for those items to the supplier.
In a small town or shop where things sell slowly, they will only need a small amount of product to support demand, whereas in a busy store they will frequently have larger and more regular deliveries to compensate for the demand on their inventory. That’s how they “stay full” at different volumes.
I oversee purchasing for a grocery store chain with some very high volume locations and some very low volume locations, this is basically all I talk about at work.
I had meetings about selling a product in a major retailer.
They stock my product. I get paid as it sells. There is a reason you don’t see many small, hometown, type brands in major retailers. They can’t afford to carry the overhead required to stock stores. They also tell you what they’ll be paying for it. It’s take it or leave it.
They also sell shelf space. The most valuable shelf space in a grocery store is the frozen food section. It’s insanely competitive.
I was a Produce Manager for 5 years for a big chain Grocery Store.
We used precise inventory management to keep shrink down. Inventory shrink goals were to be between 2.5 and 5%. Anything more you would have to go through a correct action plan and hounded by your District Specialist and Loss Prevention until you fixed your numbers. Bad managers often would get moved around/bumped down if they couldn’t keep good numbers.
There’s a ton of data involved when ordering product. Whenever you see someone with a scan gun, they can pull up sales and order data for whatever item they want. Let me give you perspective. Say I scan Bananas PLU code 4011. I can see that on Mondays I average the sale of 7 cases, Tuesday 8, Wednesday 10, Thursday 12, Friday 4, Saturday 12, and Sunday 13. Armed with this data and knowledge of my inventory shipments, I can order the correct amounts of product required to keep my shelves full.
Sales forecasting is also a major factor in this process. The number crunchers over at corporate will run numbers of past years and forecast the amount of cases of product I’ll sell for the upcoming period. Based off sales forecasting numbers and my own site level knowledge, I make as accurate an order as I can of the product. Woe to the manager who UNDER orders on a sale product. This is why you there is so much waste in the produce industry.
There’s a lot of waste mitigation options available for a produce manager. They can transfer product over to a sister department (say Fresh Foods/Deli). Perhaps the Deli can use some Lettuce or Tomatoes I have that are perfectly ripe. Perhaps the Chef Case can use this batch of zucchini in their soup of the day. Another option I have is to transfer it over to a sister store in the area. Too many cases of strawberries? Maybe the sister store down the road can use some!
There’s a ton more nuances to the industry, but hopefully this gives you a good picture of what goes behind keeping your shelves full.
Supply chain. Most grocers are big corporations, or they participate in a sort of co-op. The central warehouse has lots everything and ships it out to the stores as they need/order. That’s part of the job of the store manager, to make sure the product is ordered from the warehouse at the correct quantity to minimize waste while maximizing profit. Most stores take a semi truck delivery once a week. Particularly busy stores can see a truck daily.
Fully stocked displays of product look more appealing to customers, making them more likely to get noticed and bought (psychology is a really big part of retail). Those additional sales make up for a bit of shrinkage due to product expiry. Also, having some additional stock helps ensure that you do not miss some sales due to shortages.
Sometimes the vendors require a certain amount of shelf display and prominence and to have a lot of stock as part of the agreement to sell their items. Sometimes they pay extra for it.
I don’t think OP does much grocery shopping, because things are *constantly* out of stock. I’m not talking about items like produce or meats & fish which run out because of being on sale or related to a holiday (think burger buns on the 4th or elbow mac around thanksgiving). But run of the mill things.
I was just at the store last Sunday for the weekly grocery run and for the 5th time in the past year individual bottles of either soda or tonic were out. Until a few months ago, the small 8oz bottle of Ocean Spray cranberry juice were missing and even Costco didn’t have them by the case for about 4 months.
Sliced kalamata olives was another that will go missing every now and then at my Ralphs.
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