UK retailers could lose an estimated £147 million of revenue this Christmas due to missed sales opportunities through out-of-stock products, and an additional £1.7 billion to their competitors as consumers move to other websites for their Christmas gifts.
The research, which is commissioned by NetSuite, and based on economic models provided by the Centre for Economics and Business Research (CEBR) found that across 100 UK retail IT managers and 2,000 UK consumers the average retailer is losing 10 percent of their Christmas revenue through out-of-stock situations. Ageing IT systems are partly blamed.
More than half of retailers surveyed (66 percent) were out-of-stock of particular products last Christmas, with clothing (52 percent), food and drink (44 percent) and electrical goods (44 percent) most commonly out-of-stock.
With 41 percent of consumers surveyed stating they plan to go to a competing website or retailer to get the Christmas gifts they want, retailers are set to lose as much as £1.7 billion to competitors this Christmas.
On average, retailers who were affected by stock-outs could not fulfill 21 percent of Christmas orders due to a lack of product availability, leading to a potential overall revenue loss of £147 million through missed sales opportunities.
UK consumers are now looking for a multi-channel experience and this Christmas will see the average consumer conducting 43 percent of their shopping in-store and 57 percent online according to the study.
About 20 percent of consumers say they will shop through a mobile device this Christmas, and almost one in 10 of consumers under the age of 35 said their mobile device is their primary shopping tool.
A quarter of consumers surveyed also plan to spend more on their Christmas shopping this year, with 68 percent expecting to spend more online compared to in-store.
Andy Lloyd, general manager of commerce products at NetSuite, said, “Retailers need to take steps to avoid stock-outs wherever possible, and investing in improved demand planning is the best way to mitigate this risk."
Half of retailers surveyed said their biggest order fulfilment challenge this Christmas is "aging IT systems", while almost a third (29 percent) cited human errors when processing orders.
Just over half (52 percent) of retailers surveyed also blamed out-of-stock situations on inaccurate demand planning, while 34 percent said they lacked a holistic view of the business.
Looking ahead, almost three quarters (72 percent) of retailers surveyed plan to invest in additional IT in the next 12 months, including online (59 percent), mobile (45 percent) and social commerce (38 percent), as well as CRM systems (41 percent).
However, only around 30 percent of retailers surveyed are looking to invest in ERP or demand planning software.