Out-of-Stocks Cost Retailers $93 Billion
A new study from RIS News and IHL Group concludes retailers are losing $93 billion in sales annually as a result of being out-of-stock on the products consumers are looking to buy in their stores.
According to the companies, retailer could increase store sales by an average of 3.7 percent if they could manage to keep in-stock.
RIS News and IHL came up with their figures after surveying 124 retailers who operate more than 85,000 stores and generate $460 billion in annual sales.
The two biggest reasons given by respondents as to why stores run out-of-stock are buyers making planning mistakes and store management failing to execute.
All channels have a large upside opportunity if they can maintain stock levels. The vertical with the biggest upside is specialty retail, which could increase same-store sales performance by 7.1 percent if it could optimize assortments and keep product on the floor.
Discussion Question: Why have out-of-stocks remained such a big issue in retailing for so many years with so little apparent progress? What has to happen to finally make this a minor if not a total non-issue?
[Author’s commentary] For nearly 35 years working in and around the retailing business, we’ve always heard about the frequency of out-of-stocks and how they damage merchants’ top and bottom lines. The story hasn’t changed. Why is that?