IHL Inventory Distortion

The day begins…
…so, it’s early December, and our intrepid shopper has her holiday shopping list and she’s heading to the mall during her lunch hour. She finds a parking space, makes it into the mall and heads off in the direction of a well-known specialty store to look for a gift for her mom and perhaps something for herself. She finds a sweater that would be nice for her mom, but her size is not available. She looks around for help but no one is available and she doesn’t have the time right now to wait. Instead, she leaves and tries another store to find a gift - the sale is lost.

Inventory Distortion Defined

Our shopper has encountered an empty shelf/fixture, which is one type of out-of-stock situation. The converse of this problem is called an overstock situation, which is where the supply of a given product exceeds its demand. We call the combination of out-of-stocks and overstocks, inventory distortion, which is a problem that retailers the world over currently experience to the tune of $1.1 trillion. Nearly 40% of that happens during the holiday season.


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