The Sales You’re Losing to an Inventory Record

Inventory audits may be one of retail’s most overlooked revenue opportunities.

Every large retailer has invested in software that predicts demand, triggers replenishment, and manages shelf space with precision. Almost none of that software questions whether the inventory number it’s reading is actually correct. A recent study in the Journal of Business Logistics suggests that blind spot is expensive, and that fixing it is one of the more overlooked levers a retailer has for growing sales.

The researchers, working with a major UK grocery chain, examined roughly 24,000 products across 11 stores to understand why inventory records drift from what’s physically on the shelf, a problem known in the industry as inventory record inaccuracy. They then ran a field experiment to measure what happens to sales when a store corrects those records through a full audit. The results reframe a task most retailers treat as a nuisance into something closer to a growth strategy.

Start with why the records go wrong in the first place. The study found that products carrying more inventory and products replenished more often were significantly more prone to inaccuracy. That makes intuitive sense: every case broken down, every unit moved from backroom to shelf, is a chance for a human to miscount or mis-scan. Perishable goods were the worst offenders of all, because they come with an extra layer of mandatory handling, including rotation, expiration checks, and markdowns. Each of those steps is another opportunity for the system’s record to part ways with reality.

The one finding that cuts against intuition involves promotions. A reasonable manager would guess that a promoted item, with its spike in demand and faster shelf turnover, would be more error-prone, not less. The data said the opposite. Items on promotion showed much lower inventory inaccuracy than items sold at regular price. The likely explanation has nothing to do with the promotion itself and everything to do with what a promotion triggers organizationally: tighter price-tag checks, more frequent stock verification, and closer oversight of displays. In other words, the item didn’t become easier to track. It became more visible, and visibility is what discipline attaches itself to. The lesson generalizes past grocery aisles: operational accuracy tends to follow wherever attention is already concentrated, and to quietly erode wherever it isn’t.

That insight sets up the study’s more consequential finding. The researchers compared two closely matched stores, auditing one and leaving the other as a control, then tracked sales for two months before and after. The audited store saw an 11 percent increase in store-wide sales following the inventory audit, a number that held up under several rounds of statistical scrutiny and, notably, grew stronger in the second month rather than fading away.

What makes that number worth a manager’s attention is where the gain came from. It wasn’t spread evenly across the store. It was concentrated almost entirely in items where the system had been overstating inventory, meaning the shelf was effectively empty while the software still believed stock was available. Those items never got reordered, because nothing in the system told anyone to reorder them. The audit didn’t just tidy the books. It surfaced a category of hidden stockouts that the retailer’s own technology was actively concealing. Correct the inventory record, and the replenishment engine finally does its job. Items where the system had understated inventory, or where the count simply confirmed accuracy, produced no sales lift at all. Perishable products, consistent with their higher baseline error rate, saw close to three times the sales benefit of non-perishables once corrected.

The practical takeaway isn’t that every SKU deserves a more frequent inventory count. It’s that audits, like any other investment, have a return that varies enormously depending on where you point them. A retailer auditing uniformly across the store is spending the same effort on items that will show no benefit from correction as it spends on items hiding real, recoverable sales. The smarter approach is to weight audit frequency toward the products most likely to develop inaccuracies and most likely to be losing sales because of them: high-turnover perishables, frequently replenished items, and anything the store has reason to suspect is running a phantom stock number.

More broadly, the study is a reminder that better algorithms cannot compensate for bad inputs. Retailers have spent heavily on the analytics layer of inventory management while treating the accuracy of the underlying data as someone else’s problem. The evidence here suggests that reversing that priority, even modestly, pays for itself. Sometimes the fastest way to sell more isn’t a sophisticated marketing plan or high performing supply chain. It’s knowing what’s actually on the shelf.

This article is based on: Rekik, Y., Oliva, R., Syntetos, A. A., & Glock, C. H. (2026). Inventory Record Inaccuracy in Grocery Retailing: Impact of Promotions and Product Perishability, and Targeted Effect of Audits. Journal of Business Logistics, 47, e70079.