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We Lost Australia! Retail’s $1.1 Trillion Inventory Distortion Problem

We Lost Australia! Retail’s $1.1 Trillion Inventory Distortion Problem

Building upon previous research from IHL, this research study looks at the true cost of Inventory Distortion (Out-of-Stocks and Overstocks) to retailers worldwide. Beyond just looking at empty shelves or the discount rack, this report brings clarity on the size of the problem that heretofore had been missing in the industry.

Retailers historically rely upon their IT systems to tell them what their Out-of-Stock levels are. While this might be a satisfactory solution for the enterprise as a whole, it does not take into account the realities faced by retailers and consumers at the store level. A retailer’s systems may cite a 6% Out-of-Stock level, but the consumer, having been in three of their stores before finding the item, sees an Out-of-Stock level that is often 3 or 4 times this figure. The difference is retail execution, ie, having the product available and accessible at the point of decision when the consumer wants to buy it. Anything else is a missed opportunity.

Likewise, for their Overstocks, retailers tend to rely upon their IT systems, which can provide a very different view from what the store manager or consumer is experiencing. The big issue here, however, is that the cost of those goods are lost forever; they provide a severely red contribution to the bottom line for these retailers.

The regions and retail segments addressed in this study can be found at the FAQ tab. For an outline and sample pages, see the Preview tab.

The report is designed for use by Retailers, Software and Service Providers and others who might have a vested interest in the merchandising problems found in retailers worldwide.

In total, Inventory Distortion costs retailers collectively nearly $1.1 Trillion globally. Or put another way, same store sales could increase 7.5% if this problem was completely fixed. Some Key Highlights include the following:
Inventory Distortion costs retailers nearly $158 for every man, woman, and child on the planet.
Over $252.3B a year is the cost of Inventory Distortion in North America, an amount the equivalent of the annual revenues of Kroger, Home Depot and Target combined.
The Asia/Pacific region contributes 39% of all inventory distortion.


Summary of Findings
1.0 Introduction
Introduction/Background and Objectives
Out-of-Stocks Defined
Overstocks Defined
Inventory Distortion Defined
Methodology
Limitations of This Study
2.0 Worldwide Numbers
2.1 Worldwide Retail Inventory Distortion
2.2 Worldwide Out-of-Stocks
2.3 Worldwide Overstocks
3.0 North America
3.1 Inventory Distortion
3.2 Regional Retail Issues That Impact Inventory Distortion
3.3 Retail Segments
4.0 EMEA
4.1 Inventory Distortion
4.2 Regional Retail Issues That Impact Inventory Distortion
4.3 Retail Segments
5.0 Asia/Pacific
5.1 Inventory Distortion
5.2 Regional Retail Issues That Impact Inventory Distortion
5.3 Retail Segments
6.0 Latin America
6.1 Inventory Distortion
6.2 Regional Retail Issues That Impact Inventory Distortion
6.3 Retail Segments
7.0 References
List of Figures
Figure 1 – 2010 Worldwide Retail Inventory Distortion
Figure 2 – Worldwide Inventory Distortion by Region
Figure 3 – Worldwide Retail Out-of-Stocks by Region
Figure 4 – Worldwide Retail Out-of-Stocks by Segment
Figure 5 – Worldwide Retail Overstocks by Region
Figure 6 – Worldwide Retail Overstocks by Segment
Figure 7 – North American Inventory Distortion
Figure 8 – North American Out-of-Stocks by Segment
Figure 9 – North American Overstocks by Segment
Figure 10 – North American Food/Grocery Inventory Distortion
Figure 11 – Food/Grocery Out-of-Stocks
Figure 12 – Food/Grocery Overstocks
Figure 13 – North American Drug Store Inventory Distortion
Figure 14 – Drug Store Out-of-Stocks
Figure 15 – Drug Store Overstocks
Figure 16 – North American Hypermarket/MM Inventory Distortion
Figure 17 – Hypermarket/MM Out-of-Stocks
Figure 18 – Hypermarket/MM Overstocks
Figure 19 – North American Department Store Inventory Distortion
Figure 20 – Department Store Out-of-Stocks
Figure 21 – Department Store Overstocks
Figure 22 – North American Specialty Softgoods Inventory Distortion
Figure 23 – Specialty Softgoods Out-of-Stocks
Figure 24 – Specialty Softgoods Overstocks
Figure 25 – North American Specialty Hardgoods Inventory Distortion
Figure 26 – Specialty Hardgoods Out-of-Stocks
Figure 27 – Specialty Hardgoods Overstocks
Figure 28 – EMEA Inventory Distortion
Figure 29 – EMEA Out-of-Stocks by Segment
Figure 30 – EMEA Overstocks by Segment
Figure 31 – EMEA Food/Grocery Inventory Distortion
Figure 32 – Food/Grocery Out-of-Stocks
Figure 33 – Food/Grocery Overstocks
Figure 34 – EMEA Drug Store Inventory Distortion
Figure 35 – Drug Store Out-of-Stocks
Figure 36 – Drug Store Overstocks
Figure 37 – EMEA Hypermarket/MM Inventory Distortion
Figure 38 – Hypermarket/MM Out-of-Stocks
Figure 39 – Hypermarket/MM Overstocks
Figure 40 – EMEA Department Store Inventory Distortion
Figure 41 – Department Store Out-of-Stocks
Figure 42 – Department Store Overstocks
Figure 43 – EMEA Specialty Softgoods Inventory Distortion
Figure 44 – Specialty Softgoods Out-of-Stocks
Figure 45 – Specialty Softgoods Overstocks
Figure 46 – EMEA Specialty Hardgoods Inventory Distortion
Figure 47 – Specialty Hardgoods Out-of-Stocks
Figure 48 – Specialty Hardgoods Overstocks
Figure 49 – APAC Inventory Distortion
Figure 50 – APAC Out-of-Stocks by Segment
Figure 51 – APAC Overstocks by Segment
Figure 52 – APAC Food/Grocery Inventory Distortion
Figure 53 – Food/Grocery Out-of-Stocks
Figure 54 – Food/Grocery Overstocks
Figure 55 – APAC Drug Store Inventory Distortion
Figure 56 – Drug Store Out-of-Stocks
Figure 57 – Drug Store Overstocks
Figure 58 – APAC Hypermarket/MM Inventory Distortion
Figure 59 – Hypermarket/MM Out-of-Stocks
Figure 60 – Hypermarket/MM Overstocks
Figure 61 – APAC Department Store Inventory Distortion
Figure 62 – Department Store Out-of-Stocks
Figure 63 – Department Store Overstocks
Figure 64 – APAC Specialty Softgoods Inventory Distortion
Figure 65 – Specialty Softgoods Out-of-Stocks
Figure 66 – Specialty Softgoods Overstocks
Figure 67 – APAC Specialty Hardgoods Inventory Distortion
Figure 68 – Specialty Hardgoods Out-of-Stocks
Figure 69 – Specialty Hardgoods Overstocks
Figure 70 – LATAM Inventory Distortion
Figure 71 – LATAM Out-of-Stocks by Segment
Figure 72 – LATAM Overstocks by Segment
Figure 73 – LATAM Food/Grocery Inventory Distortion
Figure 74 – Food/Grocery Out-of-Stocks
Figure 75 – Food/Grocery Overstocks
Figure 76 – LATAM Drug Store Inventory Distortion
Figure 77 – Drug Store Out-of-Stocks
Figure 78 – Drug Store Overstocks
Figure 79 – LATAM Hypermarket/MM Inventory Distortion
Figure 80 – Hypermarket/MM Out-of-Stocks
Figure 81 – Hypermarket/MM Overstocks
Figure 82 – LATAM Department Store Inventory Distortion
Figure 83 – Department Store Out-of-Stocks
Figure 84 – Department Store Overstocks
Figure 85 – LATAM Specialty Softgoods Inventory Distortion
Figure 86 – Specialty Softgoods Out-of-Stocks
Figure 87 – Specialty Softgoods Overstocks
Figure 88 – LATAM Specialty Hardgoods Inventory Distortion
Figure 89 – Specialty Hardgoods Out-of-Stocks
Figure 90 – Specialty Hardgoods Overstocks

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