Productivity

The Impact of Phantom Inventory in Retail and How to Manage It

In retail, phantom inventory refers to those products that appear in the inventory records but are not physically present. The causes can be diverse, such as errors in sales recording, losses in the product handling process, inconsistencies in inventory counting, damages during transportation, and theft, among others.

You walk through the aisles and see empty shelves and out-of-stock products. You check the system and find that there is enough inventory.

Phantom inventory harms retailers in several ways. First, it leads to revenue loss as the products registered as available are not physically present in the store, resulting in missed sales opportunities. It also creates operational inefficiencies by making employees spend time searching for non-existent products, affecting productivity and increasing labor costs. Additionally, it deteriorates customer satisfaction, as the unavailability of desired products creates a poor shopping experience that can discourage future purchases. Moreover, phantom inventory distorts reporting and analysis related to sales, promotions, and store performance, potentially leading to erroneous management decisions. Lastly, it incurs additional costs, such as hiring personnel to perform more frequent inventory counts and replenish lost inventory.

The challenge for retailers goes beyond identifying ghost inventory or immobilized products at the point of sale; it’s about managing them on time. Frogmithrough its application, transforms information into prioritized micro-execution tasks based on opportunity, enabling store personnel to immediately correct execution issues or generate corrective activities such as inventory adjustment or merchandise requests.

In conclusion, phantom inventory is a persistent problem in retail that costs companies thousands of dollars yearly, affecting customer satisfaction and generating operational inefficiencies. Therefore, it is essential to implement effective technology solutions and strategies to manage it and ensure accurate and efficient inventory management.

Contact us today to find out how FrogmiⓇ cann transform your store management.

 

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