As you probably recall, in the famous 1957 tale by Dr. Seuss, How the Grinch Stole Christmas!, the Grinch is a bitter, grouchy, cave-dwelling green monster with a heart "two sizes too small" who lives on a steep high mountain outside of Whoville. Annoyed by the Whos’ Christmas festivities, he decides to stop Christmas by stealing their presents, trees and food.

This year, retailers are facing a similar fate to the Whos, if they don’t take action. Retail sales this holiday season are projected to show only modest increases, with experts predicting a 2.4 percent growth over 2014¹ and given below-average growth in holiday sales, retailers must make the most of this holiday season – yet data disconnects, resulting in overstocks, are poised to be the Grinch who steals retailers’ holiday profits.

The final research report from IHL Group, Retailers and the Ghost Economy: The Haunting of Overstocks, underscores the severity of the data disconnects in retail that threaten profitability, not only during the holiday season, but year-round. The report details the reasons behind retail’s $471.9 billion loss in revenue worldwide due to overstocks – leading to losses of full-price sales, markdowns and loss of margin. Causes for these overstocks include:

• Forecasting failures ($170.2 billion)
• Spoilage ($80.5 billion)
• Supplier issues ($42.5 billion)
• Weather related issues ($39.8 billion)
• Improper marketing ($38.4 billion)
• Personnel issues ($32.4 billion)
• Products in wrong place ($29.4 billion)
• Price match ($13.7 billion)
• Vendor mismanaged inventory ($11.9 billion)

Data disconnects have fueled technology advancements in retail, and retailers are more focused on prescriptive analytics and data understanding than ever before. Connecting data in the retail organization and prescribing specific actions helps retailers combat such issues as overstocks and leads to increased business performance.

With DynamicAction’s SaaS this is possible. The software processes $15 billion of consumer transactions each year and provides one source of truth for every part of the organization – marketing, merchandising, operations, customers, returns and finance – across all channels: eCommerce, physical stores and mobile.

In the end, with some help from little Cindy Lou Who, the Grinch has a change of heart and returns the Whos’ holiday presents and Christmas trimmings. In the case of overstocks during the holiday season, retailers might not be so lucky, unless they plan ahead and connect their data with help from DynamicAction.

¹ "ShopperTrak Reports Increased Sales During Back-to-School, Forecasts Holiday Performance," Sept. 17, 2015. http://www.shoppertrak.com/media/press-release/shoppertrak-reports-increased-sales-during-back-to-school-forecasts-holiday-performance/