STORES Magazine - July 2015 - 42
they didn't have the inventory in the right
place. Is this true for all retailers? I think it's all
over the map."
Kevin Sterneckert, chief marketing officer for
OrderDynamics, sees the issue more broadly.
"It occurs for every company, retailer or not,"
he says. "It exists when there are activities that
occur in your business that you don't have a
way to see, and it impacts your [profit and loss
statement]. In retail, there are a lot of ghosts,
not just these three. The ghosts are when the
retailer has difficulty in seeing the details and
being able to understand how to prioritize and
come to a resolution so that you have a permanent fix, and not just a Band-Aid."
MANY UNHAPPY RETURNS
Today's consumers are accustomed to returns, and retailers are responding by offering
free two-way shipping or the ability to return
online purchases in stores, which increases the
ease - and frequency - of returns.
The IHL report pegged retailers' losses due
to returns at $246 billion in North America
alone, and can come in the form of defective
merchandise, price mismatches and return
"As digital commerce continues to grow,
needless returns also continue to grow," Sterneckert says. He cites a recent contest OrderDy42
STORES July 2015
namics held, asking shoppers to send photos of
products that were shipped in error: the handbag with unattached straps, the holiday sweater
with the wrong character. "In all, we had more
than 400 images of ghost economy examples
over just a few weeks," Sterneckert says.
Perhaps the shipper sent the wrong product,
or maybe the website listing included a photo
that didn't match the product. "It isn't always
a supply chain issue where the wrong item was
picked and shipped," he says.
Regardless of how or why it is initiated, a
return presents a challenge for retailers. With
perhaps 1 million unique products online and
one-tenth of that in-store, the likelihood that
the customer is returning a product that is not
stocked at the store increases.
"I can keep it there because I'm holding it
for a customer to walk into the store and I
don't want the store to be out of stock, or it
can be directly resold to a customer online,"
Sterneckert says. "How do I continue to make
those decisions on a case-by-case basis to fulfill
customer needs? It's a careful balance in making every one of those decisions."
TOO MUCH OF A GOOD THING
The sheer scope of websites can create issues
where products are virtually invisible, leading
to overstocks. The IHL research pointed to
about $123 billion in lost revenue in this area.
Retailers are taking bold steps to handle
overstocks with better forecasting on the front
end. Hand cites the growth of retailers like T.J.
Maxx and Big Lots, which has gotten the attention of competitors.
"Retailers are getting ahead of this," Hand
says. "Nordstrom is opening hundreds of
Nordstrom Rack stores to sell through their
own merchandise. If they can use analytics to
better predict and get ahead of what product
is going to be due for a markdown, they can
reap as much profit as possible by timing the
markdown as perfectly as possible. Department stores have been particularly successful
in maximizing the return on their investment
of that product by creating their own channels
TOO LITTLE OF A GOOD THING
Consider out-of-stocks as the mirror image
of overstocks. When customers can't purchase
what they want, North American retailers take
about a $130 billion hit. That is partly reflectNRF.COM/STORES