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Here's how much store inefficiencies cost retailers

Inefficient store operations can incur significant costs.

Retailers are experiencing significant challenges related to managing operations across the store.

More than 70% of retailers have lost at least 5% operating margin in each area of out-of-stocks, price and promotion execution, planogram compliance and allocation and assortment planning, according to a survey of 150 retail-decision makers from Simbe and Coresight Research. 

On average, respondents lost 4.5% of revenue to these inefficiencies. Addressing the issues would drive an additional revenue opportunity for retailers of $127.9 billion in 2024, growing to $143.3 billion in 2027, according to Coresight Research estimates.

 In addition, "The State of In-Store Retailing: Opportunities To Redefine Operations" report revealed significant challenges with core business functions, including executing price and promotions (96%), planogram compliance (93%), assortment planning (93%), and managing out-of-stocks (92%), 

The majority of respondents say they have seen improperly executed promotional campaigns (81%) and high mispricing rates (75%), with nearly one in five reporting a mispricing rate of more than 15%.

One-third or more of respondents also report low visibility into out of stock (45%), planogram compliance (43%), price and promotion (40%) and assortment planning (32%).

The study also found that most respondents are investing, or planning to invest, in new in-store technology solutions to improve performance across inventory management, operations and planning. Retailers are turning to new in-store technologies that operate seamlessly within retail settings and leverage artificial intelligence (AI), data analytics, and automation to optimize store operations and drive revenue:

  • Close to six-in-10 (58%) respondents will allocate six to nine figures toward enhancing their in-store intelligence capabilities.
  • Half of all respondents are currently investing in store intelligence technologies to manage out-of-stocks, execute pricing and promotion, ensuring planogram compliance, and allocation planning. For each function, at least four in five respondents that are not currently investing have plans to do so within the next 12 months.
  • More than half of respondents indicate a strong interest in in-store intelligence platforms that automate inventory tracking (63%), optimize promotion and pricing (56%), and provide advanced data analytics (59%).
  • Among surveyed retailers that are currently investing in store intelligence technologies, the highest proportions are investing in advanced data analytics solutions (62%), promotion and price planning/optimization (60%) and automated inventory tracking systems (58%).

Roughly half (49%) of retail respondents to a recent survey from Rackspace Technology and Amazon Web Services credited AI with providing “substantial” benefits. Of these respondents, 51% said AI benefits include innovation, 49% cited reduced risk, and 45% said increasing sales.

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