{"id":16329,"date":"2025-11-30T12:04:20","date_gmt":"2025-11-30T12:04:20","guid":{"rendered":"https:\/\/dmsretail.com\/RetailNews\/retails-most-expensive-blind-spot-balance-on-hand-and-on-shelf-availability\/"},"modified":"2025-11-30T12:04:20","modified_gmt":"2025-11-30T12:04:20","slug":"retails-most-expensive-blind-spot-balance-on-hand-and-on-shelf-availability","status":"publish","type":"post","link":"https:\/\/dmsretail.com\/RetailNews\/retails-most-expensive-blind-spot-balance-on-hand-and-on-shelf-availability\/","title":{"rendered":"Retail\u2019s Most Expensive Blind Spot: Balance on Hand and On-Shelf Availability"},"content":{"rendered":"

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If you run a retail business, you already know your numbers may not tell the truth, or at least not the whole truth. Your system says you have the product. The shelf says you don\u2019t. And the customer? They already may be on their way to a competitor.<\/p>\n

That gap between balance on hand, what your system claims is in stock, and on-shelf availability (OSA), what\u2019s actually there for the shopper, is more than a numbers and operations headache. It\u2019s a revenue drain and a competitive threat.<\/p>\n

Across the industry, inventory accuracy is shockingly low. Gartner\u2019s Hype Cycle for Revenue and Sales Technology says store-level accuracy can be as low as 60%. More than half of retailers, according to an IHL Group survey, admit their data isn\u2019t even 80% correct. That means phantom inventory \u2014 stock the system thinks exists but doesn\u2019t \u2014 is almost guaranteed in every store.<\/p>\n

Shoppers notice, and take action. Nearly 30% will switch stores if they can\u2019t find what they want, according to a study from Numerator. More than 70% will switch brands, according to Adobe. These lost sales fuel loyalty erosion, resulting in further missed opportunities. Add it up and the inventory distortion problem for retailers worldwide amounted to $1.7 trillion in 2024, according to IHL Group. The damage is slow but relentless. Every time a customer is disappointed, they\u2019re a little less likely to come back.<\/p>\n

The Problem you Can\u2019t Count your Way Out of<\/strong><\/h3>\n

The balance on hand and on-shelf availability disconnect has been around forever, but the forces making it worse are multiplying. Phantom inventory is the biggest culprit, caused by theft, shrinkage, inefficient promotion management, and misplaced items. Retail Insight analysis suggests it can drive as much as 80% of out-of-stocks.<\/p>\n

But the converse is also a major problem. When balance on hand shows zero, even if stock exists, this triggers unnecessary reorders, driving excess stock, waste and holding costs \u2014 especially for perishables. Misplaced inventory adds to the issue: items may be in the backroom, overstock areas or displays, but not on the intended shelf. Associates waste time searching, shelves stay empty and customers leave frustrated. Relying on balance on hand alone distorts forecasting, fuels over-ordering and undermines on-shelf availability. A positive balance on hand doesn\u2019t guarantee products are where shoppers expect them.<\/p>\n

Modern supply chains make accuracy harder to control. Products move from factory to distribution center to backroom to shelf with multiple handoffs that can distort data. Omnichannel retail compounds risk, as the same inventory must serve stores, online orders, pickup and ship-from-store. Human error adds more gaps, such as manual counts, delayed updates and overstretched associates. Traditional fixes like quarterly counts or spot checks are too slow and partial. Inventory changes constantly; without shelf visibility, you\u2019re running on lag. And in retail, lag is lethal.<\/p>\n

The Way Forward <\/strong><\/h3>\n

Improving high on-shelf availability levels is a constant challenge for retailers. With a 90% OSA rate across 30,000 SKUs, that translates to roughly 3,000 out-of-shelf events every day. Which of these can be replenished immediately? Which are out-of-stock? And which ones have high demand and high margin and should be addressed first? The product is available in the system, but cannot be found in the back of the house? The only way to close the gap between on-hand inventory and on-shelf availability is to see reality as it happens. That means embracing shelf visibility through AI and object recognition.<\/p>\n

Computer vision and machine learning, which are fields of AI, can continuously scan shelves, detect gaps, misplaced items and compliance issues without needing manual checks. Together, these capabilities create a single, connected system that not only flags issues, it prevents them and ensures products are available where and when customers expect them.<\/p>\n

Imagining the scenario with 3,000 out-of-stock events every day, the challenge goes beyond identifying such issues to receiving prioritized alerts, in order to address those that will really influence revenue and customer experience, all before the customer ever notices\u2026<\/p>\n