How data latency erodes margins
Paul Boyle, CEO of Retail Insight, a leading provider of store operations software explains why real-time data is a key ingredient in maintaining profitability.
Grocery margins are razor-thin. Protecting them depends on fast, precise, and flawless execution – across allocation, assortment, pricing, and markdown. But there’s a hidden drag on performance that most grocers overlook: data latency.
Latency is the delay between an event happening in-store and the moment a system recognises it and prompts action. When insights arrive too late, grocers miss critical opportunities; markdowns are poorly timed, phantom inventory goes unchecked, shelves sit empty, and supply chains are out of sync. These aren’t just operational hiccups, but daily compounding losses that slowly erode profitability.
In a sector that has to constantly keep pace with demand and respond to its many unpredictabilities, delayed data means delayed decisions. And those delays are costing billions.
The incremental cost of latency
Every minute without real-time visibility chips away at margin. This is the latency tax – paid in missed sales, inefficiencies, and preventable waste.
The consequences show up in multiple areas. Markdown windows are missed when price reductions happen too late for stock to sell through effectively. Phantom inventory builds up when theft, mis-scans, or replenishment errors cause systems to show stock that isn’t available to customers. Shelf gaps go undetected for hours, sometimes days, resulting in lost sales and a poor customer experience. Meanwhile, supply chain forecasts become misaligned because the in-store data they rely on is outdated.
While these challenges might seem like separate operational issues, they all stem from the same underlying cause: slow, fragmented, and outdated data signals, which lead to problems such as poor markdown management and availability in store as a result of inaccurate forecasting in the supply chain. The consequences in store are lost sales and higher waste as well as a drag on labour hours, as we can see by looking at markdowns, which offer a clear example of how the latency tax damages profitability.
How delays destroy margin
In many supermarkets, markdowns are either triggered manually, for example, when a store colleague prints and applies a price reduction label, or rely on batch-processed data that fails to reflect the real-time situation.
This results in costly misjudgements. Mark products down too early, and the margin is sacrificed unnecessarily. Do it too late and items expire on the shelf and they’re written off entirely.
By contrast, real-time data enables dynamic markdowns – timely, intelligent pricing decisions informed by live information about sales velocity, stock levels, and expiration dates. This approach allows grocers to intervene at the optimal moment, reducing waste while recovering margin. Rather than being a last-ditch effort to shift unsold goods, markdowns become a strategic lever for protecting margin and brand reputation.
The hidden cost of shelf gaps
Out-of-stocks are one of the most visible and frustrating issues for grocery shoppers. But they’re often misunderstood. The problem usually isn’t that the product is missing from the store entirely. More often, it’s because the inventory systems haven’t registered and it’s missing from the shelf.
Without real-time visibility, products can sit in the backroom while shelves remain empty, and staff are unaware that anything needs to be replenished. Yet the system still reports the item as in stock. This disconnect creates phantom inventory — when a product is recorded as in stock, but is not available to customers.
This disconnect results in lost sales, damaged trust, and a weakened customer experience. But with real-time shelf-gap detection and replenishment alerts, retailers can spot and address availability issues the moment they occur. This enables staff to act quickly, putting products back in shoppers’ hands and converting what would have been a lost sale into recovered revenue. Shelf visibility isn’t just about experience, it’s a direct contributor to margin protection.
Latency upstream creates overstock downstream
The consequences of data latency aren’t confined to the store floor. When sales, waste and inventory data are delayed, the knock-on effects travel upstream. Forecasting becomes distorted, replenishment cycles fall out of sync with actual demand, and stock levels deviate from true demand.
This can lead to overstocked perishables that spoil and tie up working capital and understocked essentials that disappoint, driving shoppers elsewhere. Inefficient logistics compound the problem by inflating operational costs.
With real-time data captured at the shelf edge and connected across the supply chain, retailers can deliver accurate, timely signals to suppliers. This enables more responsive ordering, better stock alignment, reduced spoilage, and leaner, more agile operations.
Building a real-time retail engine
Eliminating the latency tax requires more than dashboards or software layers; it demands a fundamental shift to a real-time retail operating model, one that captures, processes, and acts on live data across every level of the organisation.
Retailers should focus on three strategic value drivers: availability, waste reduction, and operational efficiency. Improving on-shelf availability through real-time gap detection can boost sales by up to 3–5%, ensuring that products are available when customers are ready to buy. Reducing waste is another significant opportunity; by using dynamic, data-driven markdown strategies, powered by machine learning and timely expiration alerts, retailers can recover margin while cutting food waste by as much as 10%. These same capabilities can also support stock exit strategies, providing live sell-through recommendations that help clear seasonal or discontinued lines before value is lost.
Operational efficiency is the final pillar. Enhancing inventory accuracy through live stock data reduces phantom inventory and supports more reliable replenishment. Real-time alerts help direct store teams to the right priorities, improving both engagement and execution. And streamlining ESG and sustainability reporting reduces effort and improves compliance, helping retailers meet their environmental commitments while reducing the burden on head office and store teams alike.
Proof that speed pays
Retailers that have embraced real-time systems are already seeing measurable results. Sales recovery of up to 6% is achievable through better shelf availability and smarter markdowns. Food waste can be reduced by as much as 10%, while labour productivity, compliance, and stock visibility also see significant gains.
Crucially, these benefits don’t come from technology alone. They come from choosing the right partners, those that offer scalable solutions, deep retail expertise, and seamless integration that minimises disruption. The best platforms are cloud-native, shelf-edge connected, and format-agnostic—designed to reduce latency without adding operational drag.
Latency is a strategic vulnerability
Data latency is no longer an IT issue. It’s a strategic one that affects margin, waste, sales, productivity, and customer satisfaction. For grocers, continuing to operate on lagging insights means exposing the business to daily, compounding losses.
Latency-free retail isn’t a future vision—it’s fast becoming the industry baseline. And those who invest in real-time, agile data infrastructure today are laying the foundations for future category leadership.
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To find out how Retail Insight can help your retail operation, visit them online here.
