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SYS-CON MEDIA Authors: Elizabeth White, Liz McMillan, Carmen Gonzalez, Srinivasan Sundara Rajan, Blue Box Blog

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UK Retailers' Christmas Gamble Fails as Stock-Outs Could Cost 1.87bn pounds Sterling in Lost Opportunities This Christmas

- New Research from CEBR Supported by NetSuite Reveals That Poor Demand Planning and Aging IT Systems are Driving Out-of-Stock Situations for Retailers in Vital Christmas Period

Key findings:

-- Retailers stand to lose 1.7 billion pounds Sterling to competitors this Christmas due to lack of product availability

-- 147 million pounds Sterling may be lost to retailers altogether, as consumers are unable to purchase out-of-stock products

-- Half of the top causes of stock-outs are entirely within the retailers' control: inaccurate demand planning, wrong retail channels mix and a lack of holistic view of the business

-- 50 percent of retailers surveyed cite aging IT systems as their biggest challenge for order fulfillment this Christmas, while only 7 percent automate their entire order fulfillment process

-- 72 percent of retailers surveyed plan to increase their spending on IT next year – yet only a third are including ERP or demand planning in these investments

LONDON, Dec. 12, 2012 /PRNewswire/ -- A research report sponsored by NetSuite Inc. (NYSE: N), the industry's leading provider of cloud-based financials / ERP software suites, today revealed that 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 shop elsewhere for their Christmas gifts. The research is based on economic models provided by the Centre for Economics and Business Research (CEBR) and primary research with UK retail businesses, and a nationally representative study of 2,000 UK consumers conducted by Vanson Bourne. The findings are available for free download as part of NetSuite's latest retail report The Christmas Gamble at www.thechristmasgamble.co.uk.

The research found that the average retailer is losing 10 percent of its Christmas revenue to out-of-stock situations:

  • 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 that they plan to go to a competing website or retailer to get the Christmas gift 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.

A truly multi-channel Christmas, but online product availability hampers retailers' revenues

UK consumers are now looking for a true, 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. Mobile shopping will also play a key role in driving sales this festive season; almost 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 that 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 for NetSuite said: "Delivering an omnichannel retail experience is a key challenge for retailers as consumer shopping habits continue to shift, both in-store and online. Stock-outs in particular cost more than lost revenue or competitive advantage; they can tarnish a brand, especially over the highly emotionally charged festive season. 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".

The causes of stock-outs

Half of retailers surveyed stated that their biggest order fulfillment 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 that they lacked a holistic view of the business.

Looking ahead to 2013, 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. 

Andy Lloyd continued: "Our research shows that many of the reasons behind out-of-stock products comes down to factors which are within retailers' control, with inaccurate demand planning affecting more than half of retailers alone. While investments in eCommerce and social capabilities are vital to ensuring that retailers can keep up with an increasing volume of online, mobile and social commerce, retailers are taking huge risks by not investing in their ERP and demand planning systems, which are currently far lower down on their list of priorities despite being a key component of delivering on customer expectations.

To remain competitive, retailers must invest in their software systems and processes to ensure that they can deliver on customer expectations, have full business information transparency, greater customer insight and better demand planning capabilities. Being able to tightly align sales forecasts with inventory replenishment plans can eliminate stock-outs, improve customer satisfaction, whilst ultimately ensuring a retailer can remain competitive during such an important shopping period".

Colin Edwards, economist at CEBR, added: "The Christmas period represents the most lucrative revenue opportunity of the year for retailers, comprising one fifth of annual revenues on average. By investing in the right solutions, CIOs and IT managers can enable their businesses to successfully compete with other retailers and capitalise on the potential revenues offered by Christmas".

NetSuite's SuiteCommerce platform is a new commerce-aware platform that provides a central system to manage all transactions and associated interactions with consumers and other businesses over multiple touchpoints (website, tablet, smart phone, social media site, in-store, etc.). SuiteCommerce delivers Commerce as a Service, which is a presentation independent, globally accessible capability supporting transactional channels, and providing sophisticated demand-planning and supply chain management capabilities. For more information, please click here

About the research

The research is based on economic models provided by the Centre for Economics and Business Research (CEBR) and primary research with 100 IT decision makers at UK retail businesses, as well a nationally representative study of 2,000 UK consumers conducted by Vanson Bourne. The findings are available for free download as part of NetSuite's latest retail report The Christmas Gamble at www.thechristmasgamble.co.uk.

About Vanson Bourne:

Vanson Bourne is a specialist research-led consultancy carrying out user research within a technology context. Vanson Bourne's clients range from start-ups to well-known companies that need expert guidance, delivering robust and credible research-based analysis.

About NetSuite

Today, more than 12,000 companies and subsidiaries depend on NetSuite to run complex, mission-critical business processes globally in the cloud. Since its inception in 1998, NetSuite has established itself as the leading provider of enterprise-class cloud ERP suites for divisions of large enterprises and mid-sized organizations seeking to upgrade their antiquated client/server ERP systems. NetSuite excels at streamlining business operations, as demonstrated by a recent Gartner study naming NetSuite as the fastest growing top 10 financial management systems vendor in the world. NetSuite has continued its success in delivering the best cloud ERP/financial suites to businesses around the world, enabling them to lower IT costs significantly while increasing productivity, as the global adoption of the cloud is accelerating.

Follow NetSuite's Cloud blog, NetSuite's Facebook page and @NetSuiteEMEA Twitter handle for real-time updates.

For more information about NetSuite, please visit www.netsuite.co.uk.

NOTE: NetSuite and the NetSuite logo are service marks of NetSuite Inc.

Cautionary Note Regarding Forward-Looking Statements:

This press release contains forward-looking statements relating to expectations, plans, and prospects including expectations relating to the future growth of the retail and mobile commerce markets. These forward-looking statements are based upon the current expectations and beliefs of NetSuite's management as of the date of this release, and are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements including, without limitation, the risk of continued adverse and unpredictable macro-economic conditions. All forward-looking statements in this press release are based on information available to the Company as of the date hereof, and NetSuite disclaims any obligation to update these forward-looking statements.

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