Inventory Distortion: An $800B Issue for Retailers Worldwide

Source: Tyco Retail Solutions

New study from IHL Group sponsored by Tyco Retail Solutions shines spotlight on growing global issue for retailers across markets.

Boca Raton, FL – Tyco Retail Solutions (, a leading global provider of retail performance and security solutions sold through ADT and authorized business partners worldwide, and IHL Group, a global research and advisory firm, today announced the availability of the 2nd Annual Inventory Distortion study. According to the research, retailers lose the equivalent of $124 for every man, woman and child on the planet due to Inventory Distortion, a figure totaling over $818 Billion annually. Even more alarming, however, is that this statistic is increasing by nearly $50 Billion annually worldwide as emerging economies grow beyond the infrastructure to handle retail growth efficiently.

Based on the new study, inventory distortion is not caused simply by a lack of systems but rather by challenges internally among people and process as well as external supplies.   In fact, of the $818 Billion total worldwide, IHL estimates only about $366 Billion is addressable with a technology, business process or training solution. Of that amount, nearly $200 Billion is caused by internal process or training issues that lead to merchandise either not making it to the shelves in time or the company having too much of what they cannot sell without pricing for clearance.

Additional key findings include:

  • Out-of-Stocks make up 56% of the $818 Billion figure, or $456.3 Billion.
  • Overstocks account for the remaining 44%, or $362.1 Billion.
  • Worldwide nearly $1.5 Trillion of merchandise annually is in an overstock position that creates a loss in revenue.
  • The Asia Pacific region contributes 40% of all inventory distortion, or $327.5 Billion, increasing almost $24 Billion in one year. 
  • The Asia Pacific region is home to the most severe inventory distortion problem when it comes to food and daily sustenance.   The food/grocery and hypermarket segments are responsible for 63.7% of the inventory distortion in the region.
  • While North America is the most technically mature region, 54% of their contribution to inventory distortion is due to out-of-stocks.   

On average, consumers are relatively forgiving when it comes to out-of-stocks when shopping, particularly on promotional items. However, the critical issue for consumers arises when they order something online for pickup at the store, receive a confirmation message, go to the store and the item is not there.  Thirty three percent (33%) of respondents suggested they would never shop at that store again, while 41% said it depended on whether there were alternative stores close by. This underscores the critical importance of cross-channel inventory consistency in retaining customers.   

Tyco Retail Solutions and IHL Group will host a complimentary webcast to further explore the findings of the 2012 Inventory Distortion Study on Tuesday, May 22nd at 11:00 am EST. To register, and obtain a copy of the study, please visit here

For the purposes of the study, Inventory Distortion was defined as the absolute value of the sum of out-of-stocks, defined as any situation wherein a consumer entering a retail setting with the intent of making a purchase for a specific item, leaves the store without having made a purchase; and overstocks, defined as any situation wherein a retailer has on hand more stock of a particular item than is supported by current demand for that item. The data was obtained by utilizing a suite of IHL’s research tools, retailer interviews and the algorithms as well as the primary research of retailers and consumers. 

About Tyco Retail Solutions 

Tyco Retail Solutions, a unit of Tyco International, is a leading global provider of integrated retail performance and security solutions, deployed today at more than 80 percent of the world’s top 200 retailers.Customers range from single-store boutiques to global retail enterprises.Operating in more than 70 countries worldwide, Tyco Retail Solutions provides retailers with real-time visibility to their inventory and assets to improve operations, optimize profitability and create memorable shopper experiences.

The Tyco Retail Solutions portfolio for retailers is sold through ADT and authorized business partners around the world. For more information, please visit

About IHL Group

IHL Group is an independent global research and advisory firm headquartered in Franklin, Tennessee, that provides market analysis and business consulting services for retailers and information technology companies that focus on the retail industry.For more information, see, call 615-591-2955 or e-mail

SOURCE: Tyco Retail Solutions