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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I know Bimbo Bakeries owns many different brands in category and actually has outlet stores for almost expired product. I imagine, because they have their own merchandisers, they cycle out the older product at each retail location and then bring all of that product to their outlets to sell at a lower price. The one near me is branded as a Friehofer’s Outlet Store but it carries Sara Lee breads, Ball Park hot dog rolls, Entenmann’s baked goods, Utz chips and snacks and a large list of other similar items. I can buy a $9 danish for $2.50. Loaves of Artesano bread for $0.99-$1.50.
Possible by **very long shelf life**. The products don’t expire fast and don’t need constant flux of replacements, very small waste, if any, at the end of each batch. One transport once in a blue moon is enough to stock anything necessary. So it’s a small cost for having a lot of products available on the shelf all the time.
With short shelf life everything is reversed, costs grow exponentialy, being permanently supplied gets next to impossible.
Bakery department manager here, most perishable departments are considered to be run at loss. But honestly once you are in a store for a bit you learn the buying habits of your customer base and you then account for your levels on the sales floor for that. Say a tub of brownies has a 10 day sell code and I know that on average that 15 will sell in that time I will keep that product level around 15 items on the sale floor, if a box of donuts only sells 4 in its 5 day code I only ever keep the 4 out there. Even with a hundredish products you get the gist of it and can have low losses
They analyze the data for long how each product sits on average and compares it to the shelf life. Then they overstock to be safe, and to have a buffer against spikes in demand.
In 2019, I drove from Toronto to Tofino BC through Canada, and back through the US Northwest. We stopped at a gloriously named ‘Kum and Go’ in some small town in Montana for gas and snacks.
Tired of the usual chips and chocolate bars, I was amazed to find Ritter sport bars, and *flavoured* Perrier. I remarked to my GF that the North American distribution system is a wonder; that here we were, in the relative middle of nowhere, but German chocolate bars and varieties of French sparkling water were available in a gas bar, not some specialty shop or even a supermarket.
This is Adam Smith’s ‘invisible hand’ in action. Who ever the buyer was for that store, he had no idea I was coming, or that I would be sick of chips and diet Coke at the time. But at some point, some buyer must have tried an order of Ritter bars, and when they sold, kept ordering them. Presumably, if the demand for them was high, he’d order even more. If the demand dropped off, he might not order any more. At some point, a steady state is reached where the orders and the sales more or less match.
So, that’s the answer, OP. Through an organic process of trial and error – some stores will buy products that don’t sell, and eat the loss on those, e.g. – retail outlets match their orders to what sells. If I were a retail buyer, I’d certainly allocate some percent to ‘new products’, so that I can see what new things my customers like or don’t like, but in a high volume retail space, managers can do a good job of matching orders and sales for existing products.
The most direct answer is that food is cheap for them and there’s a lot of waste. Also, it’s pretty normal that the store doesn’t own or manage much of its own product. Like when you see a shelf of coke… That’s probably from a coke vendor basically leasing space on those shelves. And so some of those costs are pretty distributed.
They do basic math to see what sells more and what sells less on each location. That way they can optimize their stock per location to have the less waste as possible.
Different products are reordered at different intervals. So the jar of off-brand mayo you’ve never heard of has probably been there a while, but the soda aisle might get refilled multiple times a week.
Software. Stores use barcodes to track each individual item, and then looking at purchasing trends, buyers make decisions on what to buy and how much. Sometimes they succeed and sometimes they don’t (that clearance section is when they fail). The rest is just part of the amazing supply chain, of farms, distributors, trucks etc. Source: I worked in the supply chain industry.
this is b/c of all the attention to Inventory management and supply chain organization. People get university degrees in that.
common approach that the store is visited by a supplier truck daily. The truck carries many different products in it, and truck driver (or a dedicated merchandiser) re-fills the shelves with whichever products are running low. The science is used to compute how many units of product is “running low”, and how many to put on the shelf when restocking.
Despite this, stores do run out of things. They try to hide it by rearranging remaining products so you cannot see any “empty shelves”.
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