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Out of Stock: What does it cost?

4% of Sales are lost!

Retailers simply have too many SKUs to manage every one efficiently. And high shrink items are more often out stock, leading to lost consumers.

Gareth Pearson

Retailer's in-store out-of-stock rate continues to cost billions in lost revenue, with global studies showing the rate has remained unchanged at 8% over the past 10 years.

Research reveals that the out-of-stock rate costs retailers around 4% of annual revenue and the manufacturers around 2.5%. Surprisingly, this rate has remained static but what's even more surprising, is that the majority of problems occur in the last few metres of a product's journey to the store shelf.

Only 30% of out-of-stock issues arise between the factory and the store site, whereas 70% of problems result from on-shelf activities getting product from the store site or warehouse onto the shelf. When there's no stock on the shelf, customers will either substitute the brand, cancel the purchase or buy from another store.

Source: Gareth Pearson, BMi Research