Poor record-keeping could be responsible for retailers missing out on sales or overstocking their shelves, according to Cardiff University academics.
They’re joining a European study to investigate inventory inaccuracies as they try to discover whether precise stock-taking can help increase sales.
Cardiff Business School, EM Lyon Business School and the Technical University of Darmstadt are partnering Efficient Consumer Response (ECR) – a trade association of retailers and their manufacturers based in Brussels – in a bid to unravel the truth.
Supported by the Panalpina Centre for Manufacturing and Logistics Research at Cardiff University, the €60,000 (£53,000) six-month study is led by Professor Aris Syntetos, from Cardiff Business School’s Logistics and Operations Management section, together with Professor Yacine Rekik, EM Lyon, and Professor Christoph Glock, TU Darmstadt.
Professor Syntetos said: “The project builds on a growing body of evidence that suggests retailers’ inventory records are significantly inaccurate. Earlier research has found that the share of incorrect inventory records may range between 54% and 65%, where physical counts indicate that there is either more or less in the store than the stock files state.
“These wrong inventory records can lead to the shelf not being replenished on time or far too much inventory being sent to the store. The first aspect would lead to a loss in sales, while the second one would be associated with unnecessarily high inventory carrying cost.”
To gain insights into the influence of inventory inaccuracies on sales, the project team will conduct an empirical analysis involving a large number of retail stores that belong to eight retailers associated with ECR.
Participating retail stores will be assigned either to a “test” or a “control” group, with a stock count being performed in the “test” stores during the project.
The project team will then collect inventory and sales data in the “test” and “control” stores, both prior to and after the stock counts in the “test” stores, and use statistical methods to analyse how sales differ in both types of stores.
The first of a series of workshops with retailers associated with ECR will be held in Paris in February.