Retail marketing mix: not buying traffic towards insufficient availability.
Key distinctions
Three conditions before calculating.
Same area, same period
Media spend, traffic, stock and sales must be aligned to the store or its catchment area and to the same time window. A weekend stock level does not describe the availability met after each exposure.
Effective availability
System stock is not always sellable. Out-of-shelf, missing variant, reserved order, inventory error or an unfulfilled click-and-collect promise must be built into a measure of effective availability.
Cross-channel effect
An improvement in delivery or availability can produce sales online and in store. The analysis must follow transfers and cross-channel spillovers instead of fully crediting the last channel observed.
Method
Deciding where additional traffic can genuinely become a sale
- 01Form the local cells
Build a store-week table with traffic, conversion, effective availability, net price, margin, local spend and events; document closures, works and commercial operations.
- 02Estimate incremental traffic
Use an experiment, control areas or a quasi-experimental method; failing that, present attributed traffic as a journey indicator and not as causal evidence.
- 03Apply the availability ceiling
Multiply incremental traffic by eligible conversion, availability and unit margin; test the cost and the lead time of a stock correction before increasing media.
- 04Steer by quadrants
Amplify stores with high availability and return, restock those whose demand is proven but constrained, diagnose weak conversions and temporarily exclude the points that cannot be served.
The traffic × availability × contribution map
Four groups of stores separate those to amplify, to restock, to diagnose or to exclude from activation.
Scale up
High return
High availability
Restock
High return
Low availability
Diagnose
Low return
High availability
Pause
Low return
Low availability
An availability correction creates €4,400 of net contribution
A local campaign of €30,000 brings 5,000 incremental visits. Eligible conversion is 20%, margin €60 and effective availability 82%. A stock plan of €4,000 can bring availability to 96%.
Without correction: 5,000 × 20% × 82% × 60 − 30,000 = €19,200. With correction: 5,000 × 20% × 96% × 60 − 30,000 − 4,000 = €23,600. The differential gain is €4,400.
The stock plan comes before the media increase. The rollout stays limited to the stores where availability can genuinely exceed 88.7%, the threshold needed to absorb the €4,000 relative to the scenario without correction.
Acceptance conditions
What must be true to act.
- 01
Exposure, traffic and availability are aligned by store-week.
- 02
Availability is measured from the customer's point of view, not only from the system's.
- 03
Incremental traffic is separated from merely attributed traffic.
- 04
The cost of correcting stock is included before the media trade-off.
Limits
What this analysis does not prove.
- Availability can be endogenous to local demand expectations.
- Cross-channel spillovers require an adapted window and geography.
- An average improvement can hide sizes, colours or references that are still missing.
References
Works cited.
- Campo, K., Gijsbrechts, E. & Nisol, P. (2000), “Towards Understanding Consumer Response to Stock-Outs”, Journal of Retailing, 76(2), 219–242.
- Fisher, M., Gallino, S. & Xu, J. J. (2019), “The Value of Rapid Delivery in Omnichannel Retailing”, Journal of Marketing Research, 56(5), 732–748.
- Verhoef, P. C., Kannan, P. K. & Inman, J. J. (2015), “From Multi-Channel Retailing to Omni-Channel Retailing”, Journal of Retailing, 91(2), 174–181.