Inventory "distortion" hit US retailers hard, with losses reaching $349 billion last year

Inventory “distortions” (overstocking and out-of-stocks) could cost the global retail industry up to $1.77 trillion in losses by 2022, according to new research from analyst firm IHL Group.

IHL Group stressed that inventory "distortions" continue to pose challenges to retailers around the world, especially in the U.S. In 2022, U.S. and Canadian retailers will lose a total of $349 billion in sales due to inventory "distortions".

While consumers are seeing improvements in the availability of merchandise on store shelves, rapid increases in theft and organized retail crime are overshadowing advances in America’s inventory supply systems and processes.

“Over the past year, improvements in global supply chains and product availability have been significant, resulting in more abundant products on store shelves,” said Greg Buzek, president of IHL Group. “Unfortunately, in the U.S., increases in theft and organized retail crime have outpaced these improvements, resulting in a 17.7% increase in out-of-stock rates in North America over the previous year.”

Besides high prices, other main reasons that prevented consumers from making a purchase included unavailability of sizes, lack of staff help, products being locked in stockrooms or empty shelves, the report said.

In 2022, the losses caused by global inventory "distortions" reached $1.77 trillion, $172 billion less than the previous year. Out-of-stocks accounted for 68.2% of the total losses ($1.2 trillion), and overstocking accounted for 31.8% ($562 billion).

Other important conclusions of this study:

- Supply chain issues remain the biggest driver of inventory "distortions" at $418 billion

-Theft and organized retail crime jumped to $379 billion, with the largest increase in the United States.

-People issues (lack of staff or poor training) caused $291 billion in losses. Inadequate systems ($239 billion) and inefficient processes ($173 billion) were other major causes of inventory distortion.

-There were significant improvements in corruption and pandemic lockdown issues, but losses still amounted to $67.4 billion, but this was a significant drop from the nearly $570 billion in losses in 2020.

Editor ✎ Nicole/

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