Lost demand
Lost demand is sales that did not happen because a product was unavailable, hard to find or priced out, so they never appear in a sales report.
- Is
- Sales that never happened because a product was unavailable, hard to find or priced out.
- Estimate
- Normal rate of sale over the gap, less what similar lines picked up.
- Watch for
- A soft category blamed on the range when availability is the cause.
Updated
Meaning / 01
What it means for retail and category teams
Sales data only records what sold, so lost demand has to be estimated: by comparing what a line sold while available with periods when it was not, by looking at what similar stores sold, or by watching what shoppers bought instead. Part of it is recovered when shoppers switch to another line the retailer stocks; the rest leaves the store.
Stakes / 02
Why it matters
Because it never shows up in a report, lost demand is easy to ignore, and it is often a large part of why a category is soft. Estimating how much there was, and where it went, tells a team whether to fix availability, range, price or layout, and stops forecasts learning from demand the retailer failed to serve.
Example / 03
Illustrative example
The business and figures are illustrative. None of it is customer data.
| Switched to similar lines | $900 |
|---|---|
| Left the store | $1,500 |
| Result | Half the category's $3,000 fall |
$1,500 walked out, which is half of the month's shortfall.
Read the example as text
A category's monthly sales fall 6%, from $50,000 to $47,000. Availability data shows three top lines were each out of stock for about a week. At their normal rate they would have sold $2,400 in those weeks. Similar lines picked up $900 of it, so $1,500 left the store: half of the $3,000 shortfall. The team fixes availability on those three lines before it changes the range.
Related / 04
Related concepts
Next step
Work through an availability decision
Bring a product that keeps running short or sitting too long. We can examine the stock, demand and options together.
