New research report from IHL Group and DynamicAction
 focuses on retail’s lost revenue from overstocks during this critical holiday season

Silicon Valley — Oct. 5, 2015 — Retail sales this holiday season are projected to show only modest increases, with experts predicting a 2.4 percent growth over 2014¹. 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.

Retailers and the Ghost Economy: The Haunting of Overstocks, the final in the series of research reports from IHL Group commissioned by DynamicAction, underscores the severity of the data disconnects in retail that threaten profitability year-round. The report details the reasons behind retail’s $471.9 billion lost revenue worldwide due to overstocks – leading to losses of full-price sales, markdowns and loss of margin.

Leading causes of overstocks

Overstocks total $471.9 billion in lost revenue annually for retailers worldwide, with the top five leading causes being:

• 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)

“Customers’ desires for seamless shopping experiences in every channel have never been higher than they are this holiday season. Yet, retailers continue to struggle with connecting and taking action on their cross-channel data to deliver to these heightened expectations,” said Ron Offir, founder of OFFIR Consulting and seasoned retail executive who has led eCommerce efforts at Michael Kors, Coach, Gap, Nine West and many others. “Retailers who will lead, heading in to 2016, are those who can overcome the challenges of overstocks, out-of-stocks and returns and deliver both excellent experiences to their customers and increased profits to their shareholders.”

Need for connected data fuels growth in technology innovation

Retail’s data disconnects have fueled technology advancements, therefore increasing a laser focus on prescriptive analytics and data understanding as never before. This in turn has driven the growth of companies such as DynamicAction, which has seen 200% YoY growth, including recent retail adopters such as Nine West, Cole Haan, Express and Eddie Bauer.

DynamicAction connects all data in the retail organization and prescribes specific actions retailers should take to increase business performance. The SaaS 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.

“As retailers gear up for the holidays, I see a few trends still emerging. They are focused on mobile-first interactions, customer-centric programs like personalization and implementing prescriptive analytics to ensure they are meeting their customer expectations on every step of the buying journey, ” said John Squire, CEO, DynamicAction. “Consumers are now accustomed to the “on-demand” economy created by Uber, Air BnB, Starbucks’ mobile ordering and Amazon’s same-day delivery. Retail is no exception, and the category leaders are those who have their data connected and technology in place to answer customer’s demand for immediacy.”

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/