Over & Out – Retail’s Inventory Distortion Matrix – 2022

Over & Out – Retail’s Inventory Distortion Matrix – 2022

IHL has been tracking the cost of overstocks and out-of-stocks for over 15 years down to the segment and region level. Instead of relying just on what retailers tell us their systems say, IHL interviews consumers to see what is really happening. How often are they leaving the stores without purchasing something they intended to buy? Depending on the segment, this can be as high as 1 in 4 items. This model breaks down those reasons and assigns a loss figure to those individual retailers involved.

While the industry has made significant progress in some areas, the problem continues to grow as retail has grown around the world. While in North America and Western Europe, major strides have been made in performance, worldwide the problem of inventory distortion has only grown to a $1.9Trillion issue around the world.

IHL’s Over & Out – Retail’s Inventory Distortion Matrix tracks these costs by segment around world showing historical changes and where improvements have been made and where challenges still exist. This is designed for retailers to see where the big problems are to benchmark themselves against their competition as well as for vendors that are looking that offer solutions to attack these issues. Because of the granularity of the data, vendors can target the true costs by segment and reasons.

Highlights

We share data from the last 7 years broken into the following categories:

Empty shelves
Customers couldn’t find assistance to get items locked up or hidden
Customers find associates, but they cannot find the items (system says in-stock, but can’t find it)
Price/offer didn’t match online or ad price
Buying/planning Issues
Marketing not aligned with merchandising
Vendor Issues
Training/employee Issues
Spoilage/consumer Lockdown
Competitive price match
Some Other Reason
As well the index provides insight from retailers on who is to blame for the issues. Data provided for costs associated with the following:

Internal processes
Internal data/systems issues
Personnel issues
Supplier issues
Employee theft
Consumer theft
COVID Surge/lockdown Issues
Other issues
The data is provided for 4 regions of the world (North America, Europe/Middle East/Africa, Latin/South America, Asia/Pacific) to the level of the following 10 segments:

Food/Grocery
Drug Stores/Pharmacies/Perfumeries
Hypermarket/Supercenters/Mass Merchants
Department Stores
Specialty Soft Goods (apparel, shoes, luggage)
Specialty Hard Goods (DIY, books, furniture, electronics, pets, sporting goods, etc.)
Convenience/Gas/Forecourt
Bar/Table Service Restaurants
Fast Food
Other Hospitality