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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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.
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