The over-under on inventory buying
- 43% of respondents in a recent survey choose "overbuying inventory" as a challenge within their company, and 36% said the same for underbuying. The survey of 200 "senior decision makers" in U.S. retail companies was conducted by Coresight Research and Celect.
- Nearly 50% of respondents said inventory mishaps were the reason they didn't sell more items at full price, the survey found.
- Greater competition and increased customer choice were cited by respondents as forces driving their companies to make better merchandising decisions.
"Ever-expanding choice and rapid changes in consumer behavior are increasing the pressure on retailers to make smart merchandising decisions, and these pressures show no signs of easing," CEO and Founder of Coresight Research Deborah Weinswig said in a statement.
Making the wrong decision can cost a retailer quite a bit of money. The report found only 60% of non-grocery retail items are sold at full price, which resulted in an estimated $300 billion in lost revenues in 2018.
But the survey wasn't all gloom and doom. There are signs that increased use of technology, specifically better forecasting tools that leverage machine learning, can help retailers know what to keep in stock and when.
The survey found respondents using basic or manual inventory management processes were more likely than the average retailer to say they were struggling with overbuying or underbuying of inventory.
Retailers seem to be aware of the potential benefits of advanced technology for inventory forecasting. A majority (86%) of respondents were "able to identify specific ways in which advanced analytics could help their retail sector sell more product at full price," the report said, and 43.5% of respondents said advanced analytics could help with inventory management tasks like ordering the correct amount of stock.
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