The Impact of Inventory Inaccuracy

In-store inventory numbers are only accurate 35% of the time. - Harvard Business School Study

This key statistic may be surprising, but it should serve as a wake-up call for retailers worldwide. Quite simply, retailers are managing their inventory based on data that is wrong more often than it is right.

Perhaps less surprisingly, store out-of-stock rates are suffering as a result of inventory inaccuracy.

As a result, retailers face numerous costs that significantly reduce their margins:

• Lost sales due to out-of-stocks when not enough merchandise is on-hand
• Lost sales of ancillary items when primary item is out-of-stock
• Lost sales due to merchandise that is missing or mis-shelved
• End-of-season markdowns caused by overstocks
• Increased operational costs associated with manual counting and stocking processes

70-75 percent of out-of-stocks are a direct result of retail store practices (either underestimating demand or having ordering processes/cycles that are too lengthy) and shelf restocking practices (the product is at the store but not on the shelf). - Retail Out of Stocks: A Worldwide Examination of Extent, Causes, and Consumer Responses Study by Gruen, Corsten, and Bharadwa

 

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