Tag Archives: Consumer

News

Economic conditions impacting Christmas spending for over 60% of consumers

Nearly half of UK respondents plan to spend less than they did in 2021, while 15% say they won’t shop at all this Christmas season

Fluent Commerce, a leading provider of a cloud-native distributed Order Management System, today released the findings of its annual ‘Top Holiday Shopper Trends’ consumer spending research, revealing that current economic conditions are impacting the spending plans of over 60% of shoppers.

The research, carried out among 1,000 adult consumers in the UK, tracks spending behaviours and intentions ahead of the holiday season. Among the headline findings, 15% of respondents say they are not going to plan seasonal shopping at all, up from 8% in 2021. In addition, 36% will spend about the same as last year but nearly half will spend less – that is a larger decrease in spend than in 2021.

 

Nearly half (44%) of consumers say they plan a mix of online and in-store shopping, while 12% will shop purely in store, same as the previous year. When choosing to spend with one retailer over another, free delivery is important to over three quarters (79%) of online shoppers, with next day delivery ‘very important’ to two thirds (65%) of all respondents.

 

Looking at product availability, most consumers (68%) said it would damage their view of a brand or store if an item they went to purchase wasn’t in stock having been informed online that it was. Unsurprisingly, three quarters said if a product was sold out, they would go to a competitor site.

 

Additional research findings include:

  • If an online order is delayed 43% say it is likely they won’t shop with that retailer in future.

  • If an item is out of stock when shopping in a store, 70% said they would purchase the item if a member of staff could find it in another location and get it to them.

  • Returns to a physical store were important even if something was ordered online. 68% confirmed that point.

 

“Because of the understandable degree of spending caution among the majority of holiday season shoppers, retailers need to raise their game and adapt quickly if they are to maximise margins on every sale at this time of year,” commented Nicola Kinsella, SVP of global marketing at Fluent Commerce. “Keeping up to date with consumer preferences and shopping trends is vital, but we know many retailers struggle to give shoppers the kind of experience that determines both engagement and loyalty. As the data reveals, failing to take control of their inventory accuracy will simply mean today’s savvy shoppers will go elsewhere. And changes are they won’t come back”

 

To download a copy of the Fluent Commerce ‘Top Holiday Shopper Trends 2022’ report, click here.

Customer Experience, News

Among IT Decision-Makers, 85% See Urgent Shift in Focus to Consumers’ Digital Experiences in New “Reprogramming the Enterprise” Report from WSO2

While a majority of 500 IT decision-makers agree on the priority around delivering digital experiences, the survey revealed gaps in organisational readiness

London, UK – 1st June 2022 – In a survey of 500 IT decision-makers, 85% agree that there is an urgent shift toward focusing on consumers’ digital experiences. Moreover, 73% of respondents say that the move to focus on the digital experience in their own organisation was sudden. The survey was conducted for a new report from WSO2, “Reprogramming the Enterprise: Keeping Pace with the Wave of Innovation”. The results highlight the factors that organisations must consider as they deliver innovative and differentiated digital experiences for their customers.

Most of the decision-makers surveyed indicate that the accelerated use of digital channels is reshaping both their organisational and technology strategies. The report from WSO2, a leader in digital transformation technology, examines these IT professionals’ strategies, as well as the roadblocks they face in delivering new digital experiences today. The full report can be downloaded here: https://wso2.com/reports/reprogramming-the-enterprise-digital-innovation/?utm_source=pr&utm_medium=pr&utm_campaign=pr_reprogramming_enterprise_220601.

Driving Customers’ Digital Experiences

How well do enterprises understand customer’s digital experiences? It depends on who you ask. Among C-level executives, 52% say their organisation understands its customers’ digital experiences extremely well compared to 30% of directors and 22% of managers. The responses suggest a possible disconnect between top decision-makers and those who are more closely involved with improving customers’ experiences on a daily basis.

However, the vast majority of IT decision-makers agree that four factors are key to driving better digital experiences, as well as gaining and maintaining a competitive advantage: improved security (90%), cloud adoption (89%), API integration (82%), and total data control (81%)

Seeking Ways to Speed Innovation

The push to accelerate innovation is putting additional pressure on enterprises already facing a shortage of software developers. In fact, 51% of IT decision-makers say the talent shortage of developers has had a negative impact on their business. Over half (54%) of respondents say that the shortage of developers has delayed projects and reduced productivity while 48% report that it has slowed the pace of innovation.

To address the shortage, enterprises are relying on a combination of staffing, professional development, and technology strategies. Among IT decision-makers, 40% report that they are increasing automation, and 87% think it is likely that more non-developers will use low-code or no-code development tools over the next three years. Meanwhile, 54% of respondents say their organisation is training other employees on developer skills, and 65% identify cloud-native development as the developer skill their organisation is most in need of.

“For the majority of survey respondents, the ability to rapidly deliver innovative digital experiences is becoming a critical factor in their ability to compete,” said Eric Newcomer, WSO2 chief technology officer. “Cloud-native benefits, such as scale, resilience, and agility, are integral to the experience, but not easy to achieve. Automating deployment is also essential but adds a complexity of its own. Developers, especially those with these skills, are in short supply, and need better tools to compete and succeed.”

IoT, News

From smart vending to eco-friendly deliveries – New report unveils consumer demand for IoT-enabled, next level retail experiences

Wireless Logic research shows British consumers increasingly want ‘Everything Now’; Significant opportunity for service providers to recommend the right IoT solutions backed by ultra-resilient cellular connectivity to help retailers stay competitive

LONDON – WEDNESDAY 4TH MAY, 2022 – Wireless Logic Group, Europe’s leading IoT connectivity platform provider, has announced the results of a new Censuswide report into the ongoing digitisation of consumer behaviour and adoption of next level retail experiences. In particular, the report examines how an increase in food deliveries, omnichannel shopping and cashless payments is currently driving the need for resilient online connections across the retail sector.

Among the findings of the report is a clear desire for ‘Everything Now’, where goods and services are ordered and delivered quickly and conveniently. In addition, the results point to rising adoption of smart digital vending, as well as demand for traceability and sustainability of deliveries.

By bringing resilience to their IoT applications, retailers can innovate and thrive ahead of their competition. This report focuses on three distinct use cases – point-of-sale (POS) terminals, vending and last mile delivery – where IoT is making a real impact on the retail experience in future-proofing the sector.

Point-of-sale (POS) terminals must be available, reliable, and secure

PoS technology is critical in today’s retail market. Credit and debit card transactions have become the de facto choice of payment, with 38 per cent of respondents citing contactless/chip and pin as the payment method they use most often. For retailers looking to avoid churn, this requires immediate connectivity to ensure customers can always pay, without delay. When asked what they would do if their preferred payment method was unavailable online, one in five respondents would find an alternative retailer. When shopping instore, 21 per cent would blame the retailer if a card machine was available but it was not working when payment was attempted.

Security is also front of mind. Almost two thirds (58 per cent) of respondents are concerned about the security of their personal details or payment information when making an electronic payment. 37 per cent believe it is the retailer’s responsibility to ensure the security of the transaction.

Vending machines are growing in popularity for certain product categories

Vending, and automated retail in particular, is one of the fastest growing areas of retail today. Accelerated by the pandemic, vending machines provide an unattended retail solution that works across a diverse range of businesses and environments. The research reflects this upward trend, with almost half (46 per cent) of consumers agreeing that there should be more options to purchase goods through vending machines in the UK. When asked why, respondents cited convenience (53 per cent), accessibility (45 per cent) and friendlier operating hours (33 per cent).

Airports, hotels, and hospitality venues are popular locations for vending machine use, with the average consumer using one five times in the last three months, at one or more of these locations. Magazines and newspapers (61 per cent), non-alcoholic drinks (74 per cent), and hot food (48 per cent) are the categories consumers are most willing to purchase from vending machines. That said, alcohol (48 per cent) and vaping products (31 per cent) were also popular responses.

“There has been much debate over how the retail sector can both survive and thrive in a post-pandemic world – and businesses and consumers have had to change the way that they interact,” said Jason Vincent, Innovation & Software Director at Aeguana, an award-winning company specialising in automated retail technology and a Wireless Logic customer. “Given our focus on unique touchless vending technology, it is welcome to see increasing consumer demand for vending in this report. Digital vending machines, like all point-of-sale terminals that process cashless payments, depend on resilient, continuous connectivity to take payments and provide a seamless customer experience. So, this must be a primary consideration for organisations. Without it, there is a high risk of revenue loss should customers be unable to pay using their preferred method or unable to use other on-screen services such as redeeming a discount code, and ultimately taking their business elsewhere.”

Timeliness, traceability, and sustainability emerge as key demands for last mile delivery

The transport and logistics sector is key to keeping the retail and ecommerce sectors running efficiently, particularly as consumers express higher expectations of last mile service. When ordering takeaway food, consumers are willing to wait an average of 35.14 minutes from order to delivery, with just 0.57 per cent prepared to wait longer than an hour.

Traceability is also important for brand reputation, as a third (33 per cent) would think the retailer is more likely to lose the product if delivery tracking information was not available, and a quarter (25 per cent) would think the retailer was not legitimate. The importance of delivery tracking information seems to rise with purchase value and perishability, as consumers are most concerned with the traceability of electronics (87 per cent), white goods (86 per cent), and food and perishables (86 per cent).

Lastly, more than half (52 per cent) would pay more for an item if the delivery options were more sustainable. This includes green delivery slots, bicycle deliveries, click and collect, escooters or electric vehicles and delivery robots. This number rises to 61 per cent in the 16-34 age group.

“Timely deliveries depend on reliable connectivity to function – there are so many online interactions between delivery drivers and retailers to arrange and confirm pick-up and drop off details,” said Ian O’Connor, Managing Director at Eskuta Limited, a Wireless Logic customer. “It’s a seamless operation made possible by the rapid exchange of up-to-date information. Any failure in communication could result in missed orders, unsuccessful deliveries or frustrated customers chasing updates. Such outcomes make for bad customer experiences, potentially lost revenue, and long-term reputational damage, which can all be terminal in today’s competitive retail landscape. The survey reflects this, as consumers are increasingly demanding shorter lead times – and GPS tracking across secure, reliable cellular networks is critical. And, if a delivery experience is poor, eight in ten respondents would be wary of making future purchases with that retailer or blacklist them altogether.”

“At Wireless Logic, we understand the trends shaping today’s retail sector,” said Oliver Tucker, Co-Founder and CEO, Wireless Logic. “Our ultra-high availability SIMs are built for the IoT and can support food order and delivery services, cashless payments, parcel lockers, vending machines and more. When service providers and OEMs partner with us, we help them to become more consultative in their approach and strategic in their solution recommendations to their retail customers.”

“The research is clear – and to meet these high customer expectations of speed and simplicity, retailers need resilient and secure cellular connectivity for their online services. Without it, they may lose orders and revenue or even suffer damage to brand reputation.”

News

85 percent of UK consumers do not trust businesses with the privacy and security of their online data, but 50% prepared to overlook these concerns in favour of a better user experience

A recent study of 1,012 UK consumers, conducted independently by API management provider Axway, has revealed that the majority of Britons have serious concerns over how their data is stored and secured, however 50% are prepared to overlook those concerns in favour of a better user experience.

The study showed 85 percent of respondents are concerned about the privacy and security of their online data, with almost 75 percent agreeing that companies do not make it sufficiently transparent as to how they handle their data. Mistrust could potentially lead to detrimental effects for any organisation with an online presence: for 53 percent, a data security incident would be a reason to end the customer relationship for good. When asked more specifically, 49.4 percent replied that they would at the very least stop dealing with a company until the problem was solved or they could change their login details (30.8 percent). However, with 50% prepared to overlook those concerns in favour of a better user experience, organisations have an opportunity to build seamless digital experiences and form a foundation of trust.

The study also found that almost 70 percent of Britons would choose to work with businesses that offered a more secure approach to protect personal data. However, for almost 10%, engaging with a business still depends on how much trust they have in the company, irrespective of its approach to data protection. At the same time, just 22 percent trust “Big Tech” more with their data compared to smaller, independent or local companies, while 61.9 percent trust the large and smaller companies about the same.

VP and Chief Catalyst at Axway, Brian Pagano says: “Whether in energy, health, finance, or retail, companies are trying to stand out and provide brilliant digital experiences while also complying to industry data privacy and security requirements, which is no simple proposition. Eliminating friction in customer experiences is the biggest competitive advantage, and these survey results point to security breaches and privacy concerns as a snag in the fabric of the seamless experience people have come to expect”.

“Experience tells us consumers will go wherever the least amount of friction is, regardless of the custody chain of your data. If people feel unsure about how their data is being handled, companies have an opportunity to build trust so that their average consumer doesn’t need to concern themselves with these details. Enterprises can rely on a suite of tools, like Axway’s Amplify API Management Platform, which will give them scalability, privacy and security audit trails, and regulatory and compliance frameworks so they can focus on delivering the best and most secure experience.”

Business, Business News, Business Research, Customer Experience, E-Commerce, ECommerce, Industry News, Logistics, Logistics Tech, London, London News, News, Retail, Retail & E-commerce, South East, South East England News, Supply Chain

Point of no return: 89% of consumers identify returns as priority for ecommerce retailers

  • 81% of consumers would write off a retailer if they saw issues with return process
  • 61% say easy returns result in exchanges over refund

London UK; 1st February 2022: 89% of consumers identify ease of returns as top priority when purchasing online. That’s according to new data from delivery experience platform Sorted, which found that retailers who get the returns process right will reap the most consumer loyalty.

The survey, consisting of 2,000 UK respondents, found that those with strong returns processes in place will also see a return on investment, with 61% saying they would be more likely to exchange a product bought online than get a refund if exchanging was made simpler.

Adversely, 81% say they would avoid ordering from an online retailer if they saw issues with their return process, a concern for retailers when 29% of consumers claim to have had an unsatisfactory returns experience in the last 12 months. The data also revealed that 44% would not re-order from an online retailer if they had experienced issues with their return process, and 36% would be reluctant to reorder from those retailers failing to provide clear returns details.

The need for seamless returns

The research also demonstrated a real hunger for proactive communications, with 77% saying that getting timely updates on the progress of their return, refund or exchange would make them more likely to purchase from that retailer again. Additionally, a quick and simple refund process (42%) and the ability to return via a local shop or a convenient location (26%) was revealed as crucial for customers.

Consumer expectations were also identified, with respondents saying they are more likely to be lenient with smaller retailers when it comes to returns. Alternatively, over nine in ten believe it is important for large corporate retailers to have a seamless returns process (94%).

The findings come at a time when ecommerce continues to soar, following a trend that has polarised retail since the onset of the pandemic. Shipping volumes through the SortedREACT platform increased by 429% during peak season (October to December 2021 vs the same period in 2020), meaning UK retailers have reached a critical point with the delivery and returns experiences they offer to consumers.

“In the aftermath of the Christmas peak, retailers are going to be dealing with an influx of returns. However, at every opportunity, a refund could become an exchange. Those who fail to offer quick and convenient ecommerce experiences will no doubt suffer in this competitive landscape,” shares Carmen Carey, CEO of Sorted.

“Retailers must learn that they can’t simply stop the brand experience the very moment an order reaches the customer’s door, but ensure a seamless process is carried right through the customer journey. With returns now a major point of differentiation for brands, retailers – big and small – must invest in the full post-purchase journey in order to both attract and retain the modern customer.”

News

October is the New November: UK and US shoppers plan to start Christmas shopping early, according to new research

Fluent Commerce, the leading provider of a cloud-native distributed Order Management System (OMS), has published new research showing many consumers plan to start their holiday shopping early in 2021. In the U.S., nearly a third (28%) plan to start before November, with more than half before Black Friday. U.K. shoppers are less likely to start as early, but over a fifth (21%) said they plan to start their holiday shopping before November, and 42% before Black Friday.

Looking at consumer spending plans, in the U.S., almost a third of shoppers plan to spend more than they did last holiday season, with 17% saying they will spend much more. Meanwhile in the U.K., 22% plan to spend more. There is also an emerging generation spending gap, with half of U.S. and U.K. consumers who are considered Generation Z — specifically, those between the ages of 18-24 — planning to spend more on their holiday shopping this year versus last year.

Asked about their plans to shop in-store vs online, 17% of U.S. and 11% of U.K. consumers plan to do all of their holiday shopping in-store. In addition, over three-quarters of U.S. consumers and nearly 9 in 10 of U.K. consumers plan to do at least some of their holiday shopping online, with women favouring online more than men.

“For many consumers, October is clearly the new November when it comes to holiday season shopping and they are looking to get organised early and hunt down bargains before the traditional rush in November and December,” said Nicola Kinsella, vice president, global marketing, Fluent Commerce. “As a result, retailers need to ensure their processes and critical technologies are agile enough to meet demand and continue to give consumers the kind of high quality shopping experiences that have become so crucial to omnichannel retail success.”

To download a full copy of the Fluent Commerce eBook, “Top Holiday Shopper Trends 2021: U.S. vs U.K.,” click here.

News

Not Just a Number: two-thirds of UK consumers return to brands who treat them as an individual

New research from OpenText reveals the extent to which the pandemic has changed customers’ expectations of brands, and the increasingly important role of a streamlined digital experience post-COVID.

The new data – from a survey of 2,000 UK respondents – reveals that 62% of UK consumers are more likely to buy again from brands which treat them like an individual, rather than the same as any other customer. This demand for brands to engage with customers as an individual is mirrored across Europe – in Italy (70%), Spain (63%), France (59%) and Germany (55%).

Four out of ten (43%) UK consumers only buy from brands that make them feel they understand their preferences, such as communicating with them through their favourite channels or providing tailored deals.

 

Customer Experience is King

More than half (56%) of UK consumers would be put off buying again from a brand due to a bad experience. In fact, six out of ten (60%) do not believe there is such thing as a ‘customer for life’ anymore in 2021, suggesting that brands cannot rely on customer loyalty stretching far enough to recover from bad experiences.

Creating a frictionless experience for customers is key to providing a good experience. When buying products or services online, nearly three out of four (72%) UK consumers say that an easy search is very important to them. Furthermore, half (48%) prefer to shop with brands that auto-fill and remember their details for next time. There is, however, pressure on brands to store that data correctly: half (54%) would even be willing to pay more to do business with a brand that is committed to protecting their personal data.

“The COVID-19 crisis has been a dramatic catalyst for digital acceleration across all sectors, forcing businesses to change how they communicate with customers,” said Lou Blatt, Senior Vice President and CMO at OpenText. “As a result, customer expectations have also shifted. They now expect more from brands – more communication channels, more personalisation and, above all, a more continuous and connected digital experience. The ability to deliver rich, ultra-personalised communications at scale, across all touch points and channels, is now mission-critical for acquiring, developing and retaining customers.”

 

The importance of digital in a post-COVID world

For 54% of UK consumers, the pandemic has changed their expectations of what a brand’s digital offering should be. One fifth (19%) won’t use brands if their experience isn’t excellent when buying online.

Nearly half (46%) are now more comfortable with digital only businesses as a result of the pandemic. For more than 4 in 10 (43%) UK consumers, a personalised digital experience is now vital to them if they are to come back to a brand time and time again.

The research also reveals consumer perspectives on which organisations have risen to the challenge of providing an optimal experience during the turbulence of the last year. Four in 10 (40%) say bigger established brands have been able to offer a smoother digital experience than smaller ones during the pandemic.

“Creating a positive customer experience is all about removing friction and increasing relevance: the easier something is to do and the more relevant it is to each customer, the better the experience.” said Guy Hellier. Vice President, Product Management at OpenText. “Today, customers expect their journey, from researching products to tracking orders, to transition seamlessly from one digital platform to another while retaining a consistent personalised feel – delivered across any device, at any time. For brands, this means investing in a digital experience platform which enables them to integrate data, information, and assets seamlessly across different environments. Without this in place, brands will struggle to create and deliver the cohesive and personalised experiences needed to win and retain customers.”

News

Hermes can now deliver to any 3 metre square in the UK using what3words

Hermes, one of the leading consumer delivery companies in the UK, has partnered with innovative addressing company what3words to provide even more accurate deliveries. From today, Hermes can now accept what3words addresses from any retailer or e-commerce client and deliver to that exact location.

what3words is a simple way to talk about, and share location. The system divides the world into 57 trillion 3 metre squares, giving each square a new, simplified address made up of three dictionary words. For example, the exact 3 metre square of the front door of what3words London HQ is at ///filled.count.soap.

what3words provides a simple, innovative and robust way for couriers to deliver parcels right to a customer’s doorstep or desired delivery point. Street addresses across the UK can be inaccurate: pins can drop in the centre of the building, leaving couriers struggling to find the correct door or access point, and postcodes often cover a large area. what3words addresses are even more accurate than postal addresses and allow customers to specify their precise delivery location, whether a doorstep or a safe place in their garden.

Hermes delivers over 400 million parcels each year on behalf of some of the UK’s largest online retailers including H&M, Next, ASOS, JD Williams and Debenhams. At the height of lockdown, Hermes delivered 2.5million parcels in one day – beating their previous record during Christmas 2019 of 2.1million.

As online shopping continues to grow, what3words has seen a 833% increase in adoption of its addressing technology on the checkout pages of retailers around the UK, who are looking to provide customers with a way to ensure their delivery makes it to the correct place or a safe contact-free location.

Using the Hermes app, customers can add the what3words address to their profile. The driver will then have the what3words address in addition to the traditional address information, such as postcodes, providing an extra layer of detail for the last mile of the delivery.

Clare Jones, CCO at what3words explained that, “Hermes is leading the way in the UK, delivering on the promise of fast, efficient deliveries for its customers. Traditional street addresses aren’t accurate enough to deliver your online orders smoothly every time. This year has shown the importance of e-commerce, and the role it plays in the UK – with record numbers predicted this Christmas period. This means more deliveries, more new delivery drivers on the road and more customers with increasingly high expectations for fast and seamless deliveries.

Hermes app users only have to update their preferred what3words delivery address once, and every subsequent order, dispatched by Hermes, will arrive at that precise three-metre square. For the retailers, our integration means that Hermes e-commerce clients can deliver to any 3m square in the UK.”

Chris Ashworth, CIO at Hermes UK, said: “We’re really excited to team up with what3words and become the first delivery company in the UK to provide what3words addresses for any parcel. This marks the latest development in our innovation portfolio that we had been planning for some time, however given the pandemic, when we have experienced five years’ growth in five months due to online shopping behaviours changing, we have expedited the use of this tech to further enhance our contact-free deliveries option, at a time when both our clients and their customers need efficient, safe deliveries.”

The Hermes Parcels app is free and can be downloaded for iOS and Android.
Hermes customers can discover the what3words address for their property entrance or safe place via the free what3words app available for iOS and Android, and the online map.

 

Business Advice, Business Research

41% of consumers delaying major purchases due to lockdown

New research from Mapp, the cloud-based digital marketing provider, has revealed the extent to which consumers are delaying major purchasing decisions due to the effects of the Coronavirus lockdown.

The Covid-19 Consumer Confidence Report, published by Mapp Digital, has revealed that 41% of UK consumers are delaying major purchasing decisions due to the current situation.

The most likely products to be delayed are white goods (15%), followed by cars (9%) and properties (6%). Forty percent of consumers plan to spend as little as possible for the coming months. Indeed, 47% of UK consumers believe that the Coronavirus crisis will have a significant impact on their spending habits over the next 12 months.

Furthermore, 37% have revealed that they are visiting e-commerce sites a lot less than usual; and 60% admit that they are more careful with what they spend their money on.

One consumer commented:

“I hope things go back to normal, but I fear that things will just get more expensive as shops try to recover lost revenue.”

Such consumer apprehension is unsurprising when considered alongside the fact that when asked the question “How has the current situation affected you financially? (1-10)”, more consumers than any other group replied: 10.

As an indication of the changing importance of shopping for customers, the most frequently used words in response to the question “What is the first thing you will do as soon as the isolation is over?” are “family”, followed by “work” and “friends”. The word “shop” came fourth. One consumer commented: “Have family and friends round like it’s Christmas Day, have a big dinner/lunch together.”

52% of consumers expect to be in isolation for up to three months.

Ricardas Montvila, Senior Director, Global Strategy, Mapp Digital, comments:

“It is a great reminder for brands to continue going the extra mile for their vulnerable customers, but also to focus their marketing efforts on brand values and maintaining trust.”

This report was produced to help UK brands to align their strategies in priorities in line with consumer confidence in the short-term during the isolation as well as in the long-term post Coronavirus.

Mapp surveyed 1,194 UK consumers between 23rd and 24th March, 2020.

Retailers who wish to receive a free copy of the UK Consumer Study, may do so by answering 10 questions about the impact on their business: https://mapp-survey.typeform.com/to/ks67co?source=pr

Research, Retail

Improved accuracy in stock reporting could boost retailer’s sales up to 8%

Retail stores are missing out on millions of pounds in increased sales due to inventory record inaccuracy, according to new research from emlyon business school. In fact, the researchers found that retailers could boost their sales by up to 8% annually if their stock record was more accurate.

The research was conducted by Yacine Rekik, a professor of operations and supply chain management at emlyon business school, alongside research colleagues from Cardiff Business School and TU Darmstadt, and in collaboration with the industry and trade body for shrinkage and consumer demand, Efficient Consumer Response (ECR). Though it is a common knowledge that inventory record inaccuracy has a negative impact on sales in the retail sector, this is the first study which has put an actual specific figure on the financial implications of inaccuracy in inventory reporting.

To understand this real financial impact, the researchers worked with seven well-known retailers – across four European countries – in the grocery/general merchandise and fashion/apparel sectors. They studied data on around 233,000 different individual products throughout the whole research project.

To collect these findings the researchers conducted a 24-week inventory experiment where they compared two different stores per retailer, with each store having a different stock take method. In one of the stores the researchers completed a thorough stock take at the beginning and end of the 24-week period but not during this, whilst for the other store the researchers completed a thorough stock take at the beginning and the end, but also in the middle of the 24-week period, re-correcting any errors in inventory stock numbers.

Researchers then compared the differences in profit margins per store, finding that the store which had a more accurate and frequent stock take had on average 4-8% better profit margins. The researchers also found that at any point in time, around 60% of the retailer’s inventory records are likely to be wrong. This not only impacts the firm’s sales and turnover, but also the stock that is available to customers, often leaving shelves unfilled. Correcting these inaccuracies can lead to an increase in the average sales of the retailer between 3.83% and 8.38% with an average of 5.98% across all retailers, according to the researchers.

Professor Yacine Rekik says,

“There can be a number of reasons as to why these stock records can be so inaccurate. Most of the time it comes down to damages to products, misplacement problems such as products being moved to different shelves, human or computer errors when entering stock levels into systems, or even the products being stolen. It is extremely important that retailers look to report their stock levels more accurately and more regularly so that they are not under or over reporting stock levels – as this inaccuracy either way has a negative effect on annual turnover.”

When looking into these inventory inaccuracies, the researchers also found that the type of product also had an impact on how accurately it was reported for inventory purposes. The researchers found that products which can be described as fast-moving goods, generating up to 75% of the whole turnover, are much more likely to be inaccurately reported in stock takes compared to slow-moving goods.

Professor Yacine Rekik also says,

“There are a number of ways that retailers should be looking to improve their stock accuracy, which would consequently boost sales and annual turnover. Firstly, looking into technological solutions, such as intelligent products identification which are able to update inventory levels when purchased is a way to remove human error and shrinkage risk, but of course costly and fairly untested. Whilst more simply, improving the efficiency, frequency and intelligence of current stock taking practices is a practical way to do so. Though this would take more time and be more costly in the short-term, it would ensure inventory is more accurately reported, eventually saving money long-term. Whilst another option would be to employ business intelligence, such as data analytics to stock-taking in order to better identify stock evolution patterns and improve the record accuracy.”

The researchers are now looking into the second phase of this research project. After confirming and identifying the specific financial implications of inaccurate stock inventory in the first phase, they will now be researching innovative and effective ways that retailers can use for more accurate inventory reports thereby improving their financial performance. Conclusions are soon to be published.