The latest research from ECR Retail Loss highlights the significant commercial impact of improving inventory record accuracy. The study set out to answer three important questions:
- How inaccurate are retailers’ inventory records?
- How does inventory record accuracy decline over time?
- How much can retailers increase sales by improving inventory accuracy?
Working with seven European retailers, the research found that around 60% of inventory records contain inaccuracies. More importantly, correcting those records resulted in a 4–8% increase in sales.
For many retailers, improving inventory record accuracy could deliver substantial revenue growth without the high investment and risk often associated with other sales initiatives.
Why Inventory Record Accuracy Matters
Previous academic and industry research has shown that inventory record inaccuracies (IRI) are widespread across the retail sector. However, until now there has been limited evidence showing exactly how these inaccuracies affect sales performance.
This new research provides that evidence.
For a typical European grocery retailer generating €10 billion in annual sales, improving inventory record accuracy could deliver between €400 million and €800 million in additional sales.
The study also suggests retailers could benefit from:
- Reduced labour spent on gap scans
- Lower inventory investment
- Improved stock availability
- Better operational efficiency
While these additional benefits were outside the scope of the research, they represent significant opportunities for retailers.
How the Research Was Conducted
The study involved seven European retailers operating across the grocery, general merchandise and fashion sectors.
Researchers compared approximately 100 stores using a structured test-and-control methodology. Test stores completed stock counts to correct inventory records, while control stores continued operating without intervention.
The analysis covered around one million stock-keeping units (SKUs), making it one of the largest inventory accuracy studies undertaken to date.
The scale of the project provides a high level of confidence in the findings.
Key Findings
The research revealed several important insights:
- Around 60% of SKUs contained inventory record inaccuracies.
- The average discrepancy was +6.6 units for overstated inventory and -6.0 units for understated inventory.
- Correcting inaccurate records increased sales by 4–8%.
- Even retailers with relatively accurate inventory records benefited from improving accuracy further.
The research also found that the relationship between inventory record accuracy and sales depends on product value. Retailers with higher-margin or higher-priced products can achieve significant gains by maintaining accurate inventory records.
The findings demonstrate that retailers of all sizes can benefit from continuously improving inventory accuracy.
Retailer Perspective
The webinar also explored the research findings in greater detail and discussed practical actions retailers and manufacturers can take to improve inventory record accuracy.
Following the presentation, Hannah Newton, Business Intelligence Manager at Tesco PLC, shared her perspective on the findings and what they mean for retail organisations.
Download the Full Report
To learn more about the research, including the methodology, findings and practical recommendations, download your free copy of the ECR Loss Inventory Accuracy report.
See also the ECR study on self-checkout in retail.
