As a retail scientist with decades of analysis of the pharmacy sector, I’ve seen firsthand how out-of-stock situations can turn loyal customers into frustrated shoppers, potentially driving them into the arms of competitors or online alternatives.
But here’s the good news: this retail headache isn’t incurable. In fact, the remedy has proven to be simpler than many pharmacies realise.
First, let’s talk numbers.
The rate of out-of-stocks across retail pharmacy is around 12% – and currently around one third of pharmacies have out-of-stock rates above 17%. This means that as many as one in six customers will find their preferred product missing when they get to your shelf.
The best-run pharmacies using our RPM software are out-of-stock just 3% of the time. This reflects their adherence to a well-defined product range and a reliance on accurate computer-generated orders.
In categories like Pain Relief or Eye Care that don’t have fashion products or a wide range of lesser-known brands, it is realistic to aim to achieve on-shelf-availability (OSA) rates of over 99%. Even in more complex categories such as Health Supplements or Skin Care, significant improvements are within reach.
The secret? It’s all about smart inventory management.
Gone are the days of relying on gut feeling, printed sales reports and hastily scribbled notes. Today’s successful pharmacies are embracing automated ordering systems using the sales and stock data in their pharmacy management software. These digital tools are proving to be game-changers, dramatically reducing human error and ensuring shelves stay stocked.
But technology alone isn’t the answer. Savvy pharmacy staff are also rethinking their ordering strategies. The trend of placing larger, less frequent orders for high-volume items is gaining traction. Aiming for 60 days of stock cover on best-selling lines might seem excessive to some, but it’s providing a crucial buffer against unexpected demand spikes.
Range rationalisation
Of course, no discussion of inventory management would be complete without mentioning the elephant in the room: SKU proliferation. It’s time for a hard truth: not every suppliers’ product deserves shelf space.
Forward-thinking pharmacies are taking a critical look at their product range by using my OTC Formulary of core products, with some boldly reducing their SKUs by as much 30%.
The result? More efficient stock management and lower inventory costs.
Skilled staff
But perhaps the most overlooked aspect of tackling the out-of-stock problem is staff training. Even the most sophisticated systems are only as good as the people operating them. Investing in comprehensive training programs for employees can pay dividends in improved stock accuracy and customer satisfaction.
The out-of-stock challenge isn’t going away anytime soon, but it’s far from insurmountable. By embracing technology, rethinking ordering strategies, streamlining product ranges, and investing in staff training, pharmacies can turn this retail headache into a competitive advantage.
The prescription for success is clear—it’s time for the industry to take its medicine.
You can download my 10 rules for ordering and stock control here: https://rpmretail.com/support-article/10-rules-for-ordering-and-stock-control/
Get in touch if you’re interested in my OTC Formulary. john.saywell@rpmretail.com
