Retailers in Denial about $93-Billion Out-of-Stock Problem

The loss of sales to competitors due to out of stocks measures $93 billion, according to the 2008 Store Systems Study produced by RIS News and research partner IHL Group. If a retailer completely fixes the problem it could increase same store sales by 3.7% by converting out of stocks into transactions. Put another way, the average retailer loses the equivalent of $3.19 for every transaction it makes either through lost sales of specific items or by creating a situation where shoppers purchase nothing in the store even though they came in to buy. Other findings show PCI Compliance jumps to the top of the retail priority list in 2008 and a myth-busting datapoint that indicates self-checkout systems make no difference in terms of shrink.

Titled "Seizing the In-Store-Opportunity," the fifth annual Store Systems Study is a poll of 124 individual retailers with a combined total of $460 billion in annual revenue (about 15 percent of total retail sales in North America) and who operate more than 85,000 stores. These retailers plan to spend $9.6 billion on IT in 2008.

Other key findings in the study include:
- IT budgets for store-level systems will grow an average of 4 percent in 2008, with the Food/Grocery segment spending the most

- PCI compliance is the number one item on the priority list for 2008, chosen by 53% of respondents

- The top two reasons cited for causing out of stocks are inadequate planning by buyers and store execution, which together cost retailers $32.7 billion in lost sales

- If the specialty soft goods segment could solve the out-of-stock problem it could increase same store sales by 7.1%

- 87% of retailers who use self-checkout systems say there is no measurable difference in shrink, while 13% say shrink actually decreases

The 2008 Store Systems Study will be mailed with the January 2008 issue of RIS. It also will be featured in the Web session "Seizing the In-Store Opportunity" on Thursday, January 10, at 2 pm EST. To register for this Web session click here.