Five Purchasing Mistakes Costing Retailers Margin and How to Fix Them

Merchandise Management System - Purchasing

Margins are tighter than ever. Consumer expectations continue to rise, supply chains remain unpredictable, and omnichannel commerce continues to evolve. Yet despite these challenges, one area consistently separates high-performing retailers from those struggling to maintain profitability: purchasing accuracy.

Purchasing is the foundation of retail margin. When retailers purchase the right products, in the right quantities, at the right time and cost, everything downstream becomes more efficient, inventory flows smoothly, stores have the right stock, customers get what they want, and markdowns shrink. When purchasing goes wrong, however, the entire operation feels the impact.

What are the five most common purchasing mistakes costing retailers margin and what are the actionable strategies for fixing them? The focus is on practical improvement, supported by smarter forecasting, unified systems, and stronger purchasing discipline.

1. Relying on Gut Feel Instead of Data-Driven Purchasing

Many retailers still depend heavily on instinct when making purchasing decisions. While buyer experience is valuable, relying on gut feel rather than data is one of the biggest sources of margin leakage.

Why this happens

• Buyers lack access to real-time, trustworthy data

• Reporting is fragmented across spreadsheets, emails, and legacy systems

• Historical data is incomplete or outdated

• Purchasing cycles are rushed, leaving no time for deeper analysis

The margin impact

• Overstocking on slow sellers

• Underbuying high-demand SKUs

• Excess markdowns

• Increased inventory carrying costs

• Lost full-price sales

How to fix it

Retailers must move toward data-driven purchasing supported by:

• Accurate demand forecasting

• Real-time inventory visibility

• Category performance analytics

• Store-level purchasing insights

• Seasonality and promotional trend analysis

When buyers have access to a single source of truth, they make sharper decisions, reduce risk, and protect margin. Data transforms purchasing from subjective to strategic.

2. Forecasting in Silos Instead of Across an Omnichannel View

Retail consumers do not follow tidy, predictable buying journeys. A customer will browse online, check stock in-store, purchase via mobile, and return via a different channel. Yet many retailers still forecast their channels separately.

Why this happens

• Systems for e-commerce, store POS, and OMS are not integrated

• Historical data is channel-specific

• Performance is measured by silo rather than total business impact

• Buyers focus on store allocation while digital demand grows

The margin impact

• Online sells out while stores sit overstocked

• Excess stock transfers inflate operational cost

• Lost sales from inconsistent availability

• Margin dilution due to unnecessary discounting

How to fix it

Retailers must shift from channel-led forecasting to omnichannel demand forecasting. This means integrating all demand signals into one unified forecast, including:

• Online orders

• Store sales

• Click & Collect patterns

• Ship-from-store behaviour

• Marketplace activity

• Social commerce demand

This creates a more accurate picture of true consumer intent. When purchasing aligns to omnichannel demand, stock flows more efficiently, markdowns reduce, and margin improves across the trading lifecycle.

3. Using Outdated or Inaccurate Supplier Lead Times

Even the best purchasing decisions fail if products do not arrive on time. Many retailers underestimate lead-time variability or rely on supplier estimates that do not reflect real performance. This is one of the most common operational blind spots.

Why this happens

• Lead times are set once and never reviewed

• Suppliers provide optimistic timelines

• Retailers lack automated monitoring of actual receipt data

• Changes in logistics or production are not communicated

The margin impact

• Shortages during peak trading

• Over-ordering to compensate for uncertainty

• Higher safety stock levels

• Last-minute air freight or expedited shipping

• Poor availability leading to lost sales

How to fix it

Retailers need to make lead-time accuracy a core part of purchasing strategy. This includes:

• Tracking actual lead-time performance at SKU and supplier level

• Updating lead times automatically based on receipt history

• Adding buffers only where proven necessary

• Building supplier scorecards into purchasing decisions

Accurate lead times enable more precise ordering, reduce excess stock, and ensure products arrive exactly when needed.

4. Weak Master Data and Poor Product Setup

Retailers often underestimate the importance of clean, consistent master data. Incorrect product data, missing attributes, inconsistent pack sizes, and mismatched supplier information can disrupt purchasing before it even begins.

Why this happens

• Product data is maintained across multiple systems

• Vendors send incomplete or inaccurate item information

• Manual spreadsheet uploads introduce errors

• No centralised master data management process

The margin impact

• Incorrect orders and quantities

• Receiving errors in the warehouse

• Store replenishment issues

• Misaligned pricing and cost data

• Slow time-to-market for new products

Poor master data creates hidden operational costs that quietly eat away at margin.

How to fix it

Retailers must standardise and centralise master data through:

• A single master data management (MDM) solution

• Automated validation checks

• Standardised item setup workflows

• Vendor compliance policies

• Integration across POS, WMS, OMS, and purchasing systems

Clean, unified data is the backbone of accurate purchasing and margin protection.

5. Treating Purchasing as a Static Event Instead of a Lifecycle Process

Many retailers treat purchasing as a one-time activity, place an order and hope for the best. But modern retail demands continuous adjustment. Demand changes daily, especially during promotions, peak seasons, and market disruptions.

Why this happens

• Buyers overwhelmed with spreadsheets and manual tasks

• No real-time visibility of in-season performance

• Replenishment processes are not automated

• Organisations lack exception-based workflows

The margin impact

• Late reaction to stockouts

• Excess stock at season end

• Slow-moving inventory tying up working capital

• Markdowns required to clear overbuys

• Missed opportunities to capture high demand

How to fix it

Purchasing must shift to a dynamic lifecycle approach, supported by:

• Automated replenishment

• Exception-based alerts for stock anomalies

• Continuous forecasting updates

• “Buy again” triggers based on real-time sales

• In-season adjustments driven by demand behaviour

This agile model allows retailers to react instantly to market changes, protecting both sales and profitability.

Building a Profitable Purchasing Strategy

Margin protection begins with smarter purchasing. Retailers who invest in data-driven forecasting, strong master data foundations, omnichannel alignment, automated replenishment, and accurate supplier management outperform those who continue to rely on outdated processes.

A modern purchasing approach delivers:

• Higher full-price sell-through

• Better stock availability

• Lower inventory holding costs

• Fewer markdowns

• Smoother supply-chain operations

• Improved customer satisfaction

Most importantly, it ensures everything invested in inventory works harder.