Last updated : February 16, 2026 4:33 pm
The report says that even though categories are growing well, 28–40% of organised retail stores remain unprofitable, revealing deeper structural challenges in store-level profitability across formats.
Nine out of ten organised retail stores experience revenue leakage at the shelf, and a significant share continue to operate below profitability, according to a new knowledge report by Vector Consulting Group. Titled The Ticking Shelf: The Overlooked Economics of Store Performance, the report was unveiled at the Retailers Leadership Summit 2026 hosted by the Retailers Association of India (RAI) and is based on a survey of CXOs and heads of 100 organised retail chains with annual revenues exceeding ₹500 crore.
The report highlights that despite strong category growth, many organised retailers continue to carry a persistent tail of unprofitable stores, typically 28–40% of their network, across formats and categories, pointing to deeper structural issues in store-level economics.
The study shows that while shelf velocity is central to retail profitability, only 9% of retailers use shelf throughput to guide daily buying, replenishment, and display decisions.
Ageing inventory continues to occupy a significant share of shelf space across categories. Around 48% of on-shelf inventory in Mobile & Consumer Electronics remains beyond its optimal selling window, while Apparel & Footwear reports 24%, Home & Furniture 40%, and Jewellery and Personal Wear 43%. This erodes shelf productivity and shortens the full-price selling window for new launches.
“Retailers protect margins tightly, so they often tolerate long lead times and pursue opportunistic bulk buying,” said P. Senthilkumar, Senior Partner of Vector Consulting Group. “At the same time, they continuously expand their SKU portfolios. Together, these practices increase inventory. When correction finally becomes unavoidable, the sheer volume of stock involved makes the potential loss feel unacceptably high. Actions such as markdowns, transfers, or pullbacks are perceived as margin erosion or additional cost, which discourages timely intervention.”
The report notes that rules and processes to safeguard inventory freshness are either absent or weak, making the management of ageing stock reactive and exception-driven rather than routine.
“Retail profitability and company-level profitability have always been a focus area for all retailers,” said Kumar Rajagopalan, CEO of the Retailers Association of India. “This report helps develop better methods to ascertain the various levers that improve profitability, including improving shelf productivity and asset efficiency.”
To address this, the study recommends managing shelf space as a perishable asset through rule-based subordination of retail operations to shelf throughput. This includes disciplined limits on product portfolios, performance-led space allocation, supply chains optimised for speed, early rule-based exits for slow movers, and faster, gap-driven deployment of proven winners.