$93B Lost Annually Due To Unavailable Product

By Evan Schuman  |  Posted 2008-01-14 Email Print this article Print

Out of stock items and misplaced merchandise create even more lost revenue opportunities than the numbers suggest.

Retailers lost about $93 billion in possible sales in 2007 because customers couldn't get the products they expected, according to a study performed by the IHL Group and RIS News.

The report identified these as out-of-stocks, but it used a rather expansive definition of out-of-stocks, including in-stock products that had an incorrect price, as well as in-stock but misplaced product that neither the customer nor the associate could easily locate.

But IHL President Greg Buzek said the figures "did not factor in any increase for the holidays" and used September as a standard month. "So the figure in real life is about one and a half times this number," he said.

The report broke down the $93 billion as: can't find help (22.8 percent); price on product higher than the price from the ad or online (13.5 percent); associate can't find inventory (11.3 percent); empty shelves (28.7 percent) and customer "left for some other reason" (23.7 percent).

Another problem that Buzek found were related to global supply chain issues that prevented stores from getting adequate notice when merchandise delivery was going to be delayed.

"They had no work in process inventory information until it hits the docks in China," Buzek said. "So they don't know it's late until it's too late."

Evan Schuman is the editor of CIOInsight.com's Retail industry center. He has covered retail technology issues since 1988 for Ziff-Davis, CMP Media, IDG, Penton, Lebhar-Friedman, VNU, BusinessWeek, Business 2.0 and United Press International, among others. He can be reached by e-mail at Evan.Schuman@ziffdavisenterprise.com.

Submit a Comment

Loading Comments...
Manage your Newsletters: Login   Register My Newsletters

Thanks for your registration, follow us on our social networks to keep up-to-date
Rocket Fuel