Bad Leftovers – How Grocery Left Billions on the Table
Usually leftovers on the table are a good thing, taking care of lunches for the next few days. But leftovers, particularly defined by sales that grocers left on the table in 2020 due to Inventory Distortion are certainly a bad thing. Inventory Distortion is the difference between the value of the quantities of product intended to be sold (at prescribed margins), and the value of the quantities of product that were actually sold (at resulting margins), but that can be a bit cumbersome and esoteric. In practical terms, Inventory Distortion is the sum of the retailer’s Out-of-Stocks (represented by lost sales) and the retailer’s Overstocks (represented by lost margin). This distortion is a costly inefficiency that is felt industry-wide in varying degrees.
This research paper looks at the costs of inventory-distortion for grocery and mass merchants .
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