Alert System to prevent a $1.1 trillion loss in Retail Annually

Image Source- Tech in Asia

The IHL report in 2015 published an astonishing report on the loss of $ 1.1 trillion annually in the retail sector. The report put the worldwide losses up to $ 471.9 billion due to overstocks and losses up to $ 634.1 billion due to out-of-stocks. Quite an intimidating figure for anyone related with retail.

Take an account of a personal incident. I went to a shop to buy an electronic gadget. The officials there assured me of its availability but after a half-hour of search, they finally accepted its unavailability. I was disgusted and they were ashamed. So, I went back home, opened my laptop and got that electronic gadget on an e-commerce website. In a way, a customer lost to brick and mortar store is gained by e-commerce store. Many customers like me are literally lost due to defunct supply chain and logistics system of big stores of retail. Their own size is big and their losses even bigger.

So what is being done till now? Supply Chain and Logistics is the spine of any retail store which can be selling apparels, watches, sunglasses, grocery items, alcoholic beverages, pizza, chocolates and many more. You just have to name it.  And the underlying problem among all the items is the unavailability of most sought after item and availability of least liked or hated item. Still, customers have options of buying it online. But to this day, they love shopping at brick and mortar stores due to its glitz and glamour.

Anyway, coming back to the electronic gadget not found, was it in the backyard of the store, was it shoplifted or was it that it never reached the store?

The major problem with all retail store is that they have enough inventory stockpile leading them to not buy anymore. The real problem is the difference between the inventory system and what the reality of the store is.  The counting of inventory is done once in a year and consumer trends keep changing each day. So how can anyone keep up with the demand? Demand forecasting can root out the problem. Predictive analytics is definitely a solution and an assurance to correct inventory distortion; a system to alert your inventory management about stock-out, over-stock or dead-stock.