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Store Operations
'Tis the Season: How Will You Address Inventory Distortion
For immediate release
August 7, 2013

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Michelle Tinsley
Intel/Platt Retail Institute
October 2012

As retailers gear up for this upcoming Holiday sales period, the biggest question is: How will they address the perpetual challenge of inventory distortion? Inventory distortion is defined as the cost of out-of-stock merchandise plus lost sales, combined with the losses resulting from overstocks that retailers must discount deeply in order to sell.
The annual cost to retailers is estimated at $818 billion, and it’s predicted to increase by $50 billion each year. This distortion is comprised of both out-of-stock inventory and over-stocked inventory. Some of the biggest challenges retailers will face when grappling with the inventory distortion problem are:
• Lack of accurate, up-to-the-minute insight into what’s on store shelves.
• Siloed sales channels between online and in-store inventory.
• Trouble managing inventory between the supply chain, the warehouse, the back room, and the   store.