Retail insights: how to avoid the ghost economy

Thought you'd outgrow your phasmophobia – or fear of ghosts – by the time you reached adulthood? Think again.

If you work in retail, chances are you're still quite spooked by the thought. That's because in this sector, the 'ghost economy' is what experts are calling the $1.75 trillion lost annually to out-of-stock, overstocked and returned products. 

The ghost economy could be avoided, at least in part – with responsible retail practices.

What is the ghost economy?

According to the IHL Group, the $1.75 trillion annually lost to the ghost economy accounts for 11.7 per cent of retailers' potential revenues. Each component plays a significant role:

• Overstock items, where the retailer makes/buys too much of something (3.2 per cent of total revenue),
• Out-of-stock issues, where poor inventory results in the loss of sale (4.1 per cent of total revenue),
• Returned items, where the retailer is unable to resell or forced to resell at a lower price (4.4 per cent of total revenue). 

Theft and improper sizes also fall under the out-of-stock category. 

The ghost economy doesn't just hurt your bottom line either. It can also affect the customer experience. When shoppers expect certain products to be available and they aren't, many consumers become frustrated and look for items elsewhere, including online. This, of course, is bad news in the face of Australia's Amazon invasion. 

Ghost-busting steps for Gold Coast retailers

You don't want your profits or brand to suffer. Instead, fight back against the ghost economy. Here are some tips: 

Staff appropriately

A staggering 71 per cent of customers will leave a store if they're unable to find an attendant when they need one, according to TimeTrade. If you're short staffed, you're likely missing out on sales from customers who might need a different size or colour item.

To this end, schedule ample staff and don't leave areas of the floor or changing rooms unattended. While cutting staff you might save in staff remuneration, you'll lose money in the long run. 

Check your stock thoroughly

Customers return products for several reasons, many of which are out of your control. One, however, isn't: defects.

Before putting stock on the shelves, check each item thoroughly to ensure it's in top shape. If it isn't, send it back and request a new one. There's no reason for the store owner to suffer because of a manufacturer issue.

Order based on data

If inventory is based on what you think will sell, you'll likely have problems with overstocked and out-of-stock goods. Instead, order from customer data you collect in-store and online. By understanding the items you sell the most of and which colours, sizes and styles are most popular, you can ensure you won't buy too much or too little of anything. 

Optimise your floor plan 

Your retail space affects the customer experience in many ways. If shoppers can't find what they're looking for easily or don't have access to floor assistants, it might be time to rethink your plan or even move into a bigger space. A clear, open area is also an essential aspect of theft prevention. 

Looking for the next spot for your retail store? Get in touch with the team at Ray White Commercial Gold Coast. We have several properties listed in the Gold Cost's most thriving shopping suburbs and are happy to help you find your ideal retail lease.