Why Phantom Inventory Harms Loyalty - and How Grocers Can Fight Back

The biggest supply chain disruptions in recent memory have passed but their impacts are still being felt by cautious consumers. According to a recent Ipsos poll, nearly two-thirds (65%) of Americans say that grocery stock availability is worse today than before the pandemic—a challenge that threatens not only immediate sales but long-term customer loyalty.

“Poor availability, in particular, is a huge problem, not just operationally but, ultimately, in customer experience,” said Paul Boyle, CEO of Retail Insight. “Stock inaccuracies caused by phantom inventory have a significant impact on a retailer’s ability to ensure products are replenished effectively. Retail Insight’s research shows that 78% of U.S. shoppers already experience out-of-stocks on their favorite items, and that directly affects customer loyalty. In fact, three in ten U.S. consumers would question their loyalty to a supermarket if out-of-stocks became a regular occurrence, the same Retail Insight survey showed.”

The cause of this “phantom inventory” can originate at many points along a retailer’s supply chain, but it is often a case of faulty data. A study by ECR Retail Loss Group found that as much as 60% of inventory records are inaccurate, which can lead to replenishment lags, lost sales, and reduced customer loyalty.

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