What does service level measure in retailing?

Service level in retailing specifically measures the percentage of time an item is available in the store for customers. This indicator is crucial because it reflects inventory management effectiveness and directly impacts customer experience. When a retailer maintains a high service level, it ensures that products are in stock when customers want to purchase them, leading to higher sales and improved customer loyalty.

This concept is vital for businesses as it helps balance the need to keep adequate stock levels while minimizing excess inventory. A higher service level often indicates good inventory control and supply chain efficiency, as it signifies that the right amount of product is being stocked in tune with customer demand.

In contrast, the other options focus on different retail metrics. Profit margin pertains to the profitability of individual products rather than their availability, stock turnover reflects how efficiently inventory is being sold and replenished, and customer satisfaction rates indicate how well a retailer meets customer expectations overall, but do not specifically measure product availability.