By Will Roche, Xterprise
Let’s start with the “disease”! Once deemed incurable and just treatable, out of stocks and overstocks for retailers have always been a big hairy problem. If you do not have the right mix of product or specifically the style, size and color as in the case of footwear and apparel you pretty much lose the sale, add unneeded cost and in many cases lose the customer too! How bad is this “disease”? IHL’s President, Greg Buzek, discussed key points of the inventory distortion study in a recent webinar titled, “Inventory Distortion ― Retail's $800 Billion Global Problem.” The key points included:
- 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 study defined out-of-stocks as any situation wherein a consumer enters a retail setting with the intent to buy a specific item and does not find the item. Overstocks were defined as any situation wherein a retailer has on hand more stock of a particular item than is supported by current demand.”
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