Improving inventory position can help retailers secure consumer loyalty and capture impulse spending
ToolsGroup, a global leader in AI-driven retail and supply chain planning and optimization software, in collaboration with IHL Group, a global research and advisory firm for the retail and hospitality industries, today released a study on the role of inventory in consumer loyalty and what retailers can do to win and keep customers.
In July 2022, IHL and ToolsGroup surveyed U.S. consumers on their loyalty to and trust of retailers, as well as their reasons for choosing online or in-store shopping.
The survey report: How Retailers Win Customer Loyalty in an Omnichannel World tracks the change in U.S. consumer trust in retailers over the last two years as a result of out-of-stocks. Key findings include:
- Across sectors such as specialty apparel, mass merchants, department stores, home décor, electronics, and home improvement, the percentage of consumers decreasing trust in retailers to be in stock ranges from 28-36%.
- However, in contrast, 32% increased their confidence in online retailer Amazon during the same period. Across other retail sectors, customers have increased their trust in inventory availability from 1-7%.
- When shopping in-store and facing stockouts, 21% of shoppers will leave and buy from a competitor’s store.
- As a result of ecommerce and omnichannel shopping, impulse buying has declined. This is a critical issue for retailers as up to 22% of the consumer’s total bill when shopping in physical stores comes from impulse items.
- Retailers can counter a staggering $1.9 trillion in annual losses due to inventory distortion (the combined cost of lost sales from out-of-stocks and deep discounting) by improving their stock position.
“Our retail customer loyalty study confirmed that there is an increasing concern on the part of consumers that stores will have the items they need in stock,” said Caroline Proctor, CMO at ToolsGroup. “There is a huge opportunity for retailers to use inventory optimization to improve product availability as a differentiator, which Amazon does so well.”
Unlock the full consumer report: How Retailers Win Customer Loyalty in an Omnichannel World
The report offers advice to retailers for how to get customers back into the store, specifically ways to improve their stock position. These include AI-supported retail planning software such as demand forecasting, inventory optimization, real-time inventory visibility, and order fulfillment optimization to create a healthy inventory balance.
“The survey results show that, while retailers have multiple inventory distortion challenges, there are many ways they can begin to reclaim market share,” observed IHL President Greg Buzek. “Despite ongoing and protracted supply, labor, and industry disruption, the smartest retailers are doubling down on the improvements necessary to create differentiation and revenue growth.”