Author: Nick Scheffers
Date of publishing: 1st January 2026
Retail has changed a lot over the years; the retail sector needs to react faster than ever, while adapting to new situations with high precision.
It’s a huge task, but something I see all too often is that retailers are using the same tools for stock management today as they did 15 or 20 years ago. This certainly doesn't make it any easier.
It means that, despite the immense complexity of modern retail (or perhaps because of it), decision makers are relying on ‘gut feeling’ instead of hard data and clear insights.
The result: the same profit-killing problems.
Breaking the overstock-understock cycle
Typically, organizations will use different toolsets for stock and inventory management, depending on their scale. Larger retailers may use legacy systems and long-trusted ERPs for their stock management needs, for example, while smaller organizations use spreadsheets to track their stock.
Unfortunately, all of these make it hard for purchasers and merchandisers to easily access the information they need to make the right decisions, fast.
Especially in high-intensity areas like Fashion, the effects of small errors in stock positions become greatly magnified. An enterprise may span multiple physical stores, warehouses, outlets, social commerce, and omnichannel sales.
A wrong decision in one area has inevitable knock-on effects that constrain your growth.
The familiar results of bad stock decisions:
Overstock – Cash is locked up in inventory, resulting in sharp discounts, waste, erosion of market position, and poor margins.
Understock – Missed sales eat away at potential revenue, disappoint customers, and drive them to the competition.
Mis-allocation – Items should be where they are selling the most, yet stock is too often ‘stuck’ at one location and ‘sold out’ elsewhere. This combines the worst parts of overstock and understock with the addition of extra handling costs, too.
In our experience, these problems come from just three main areas. These challenges can be easily overcome once you give retailers the right tools for stock management. In fact, we find that their operations can keep improving, year on year.
3 challenges that stand in the way of optimized stock
There are three main challenges that every retailer needs to face if they want to shake off the cycle of unprofitable operations and move into a new age of growth.
Visibility
This is the #1 challenge for decision makers. The data is there, it’s just not visible. Poor visibility means you have no real-time insights about stock positions, sales velocities, and returns. This makes it far too easy to have unoptimized stock allocation. This causes a lot of knock-on effects, including extra costs for stock transfers and markdowns.
Speed
Retailers cannot grow fast enough because decision making is always behind the curve. Speed is critical in fast-moving areas like Fashion or Beauty, because trends can come and go in the blink of an eye. When legacy systems don’t allow you to react fast enough, your organization misses opportunities. Predictive capabilities are a key part to unlocking speed.
Siloed data
It’s still very common for individual departments to use their own spreadsheets and other tools to collect data. Without the full picture, buyers and merchandisers cannot make accurate stock decisions. Very often these data sources are never combined, or the consolidation process is slow, error-prone, and inefficient.
By addressing these three challenges head-on, you can gain the actionable insights you need to optimize your stock journey and seize every opportunity.
However, many retailers greatly underestimate the negative effects of not addressing these issues.
So, what is the cost of unoptimized stock positions in the 21st century?
The real cost of your leaky SKUs
When your stock is unoptimized, your business is losing much more profit than you might realize.
Retailers are often surprised when we really dive into their data with them and highlight where they are leaking revenue.
On average, most retailers experience missed sales of between 10% and 30% due to poor insights and stock issues.
This can vary a lot, of course, depending on the complexity of your assortment and the number of SKUs you carry. But all those common problems – slow replenishment, incorrect allocation, overstock, etc., – they all add up.
It’s easy to underestimate these costs, because you cannot measure it without digging into the details at the SKU level. Outdated systems make this very difficult, and this is exactly why you need a modern solution for managing your stock positions.
When retailers have a system that gives clear and actionable stock insights, the turnaround can be very dramatic. We typically see that retailers reduce missed sales by 25% in the first year, and then by 50% in the second year, as operational behaviors adapt to their new and improved toolset.
Instead of needing to work with multiple spreadsheets and legacy systems, or ask other departments for key information, buyers can have all the data they need in one place. It means they can take action today instead of weeks later – which is too late.
Very often, allocation, replenishment, and transfers can be fully automated. This simultaneously eliminates all those daily manual fixes and optimizes stock performance across all channels using advanced algorithms and AI capabilities.
Leveraging the power of AI to optimize stock management
We don’t see a future where key decision-makers like purchasers and merchandisers are fully replaced by AI tools, but they can certainly help them to make smarter decisions.
The fact is, we will always need that human expertise and experience as the driving force behind any decisions.
Buyers and merchandisers are irreplaceable. They know the contexts of purchase decisions in a way that a machine never will. They understand their customers and they’re great at maintaining good supplier relationships. So those expert roles like purchasers and merchandisers aren’t going anywhere.
However, in an industry as complex as retail, it’s a strong advantage for these roles to empower themselves with AI tools that help them to cut through the noise.
By combining human expertise with AI’s ability to process massive amounts of data and model complex scenarios, buyers and merchandisers are perfectly positioned to optimize their stock performance.
This is exactly what we strive for at Thunderstock!
Interested in how these technologies can improve your operations?
Send me a DM, or check out more information on our website
All the best,
Nick.
Quote: On average, most retailers experience missed sales of between 10% and 30% due to poor insights and stock issues.
