Study: Supplier/retailer data flow problems causing lost sales

Catalog titles often not in stock

By Marcy Magiera -- Video Business, 3/21/2008

MARCH 21 | The Digital Entertainment Group and consultants Capgemini and Teradata finished the initial phase of an industry-first supply chain study analyzing merchandising execution at what’s known as the “the last 100 feet” of retail, from the stockroom to the store floor. What they found was significant room for improvement in data synchronization between suppliers and retailers.

“It all has to do with data accuracy,” said Bill Segil, vice chair of DEG’s operation committee and senior VP of worldwide operations at Walt Disney Studios Home Entertainment. The studios “have quite lofty metrics we’re supposed to perform to,” and most studios are striving for 99% stock availability at stores, Segil said, explaining the impetus for the study.

Out-of-stock situations primarily involve catalog titles, which individual stores may stock only a few units deep. Sales opportunities are lost when consumers cannot find the DVDs they are looking for on the shelf, often because inaccurate information flowing between the retailer and supplier causes reorders to be delayed. Though titles that sell few units are the most affected, the out-of-stock situations collectively result in a large loss of potential revenue for both studios and retailers.

“Sales are being missed. The numbers are huge in an industry that’s not growing as fast as it once was,” said Segil.

DEG hopes to next identify best practices “that would improve any trading practice,” said Segil. It would then fall to individual studios and retailers to determine how to implement the recommendations.

Studio participants in the study included Disney, 20th Century Fox Home Entertainment, Image Entertainment, Lionsgate, Paramount Home Entertainment, Sony Pictures Home Entertainment, Universal Studios Home Entertainment and Warner Home Video. Retailers from the mass, electronics and specialty channels also participated.