twelfth · Glossary · Stock and supply
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.
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.
Why it matters
Because it never shows up in a report, lost demand is easy to ignore and is often the biggest explanation for a soft category. 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.
Illustrative example
The business and figures are illustrative, not customer data
A category's sales fall 6% in a month. Availability data shows three top lines were each out of stock for about a week. Comparing those weeks with normal ones suggests roughly half the shortfall came from the gaps, with some shoppers buying a similar line instead and the rest not buying at all. The fix begins with availability before changing the range.