In an era when reducing costs and embracing omnichannel shopping has never been more critical for retailers, more and more store operators are turning their attention to retail inventory management.
An effective retail management system allows a store to manage stock levels instore and online, while reducing out of stocks, and improving the customer experience.
But what exactly is involved? Here are five ways to improve your retail inventory management.
A centralised record of stock
Effective inventory management starts and ends with an accurate real-time record of exactly what products are on hand and where they are located.
Key to this is a centralised record of stock that is accessible to staff.
These days most mobile Point of Sale software systems have inventory management built-in, recording each sale and return against inventory on hand and notifying retailers when an item is running low.
This software is the foundation of best practice inventory management, but as every retailer knows, recorded stock levels can actually differ to what’s on the floor or available due to a range of factors including error and loss.
Regular stock counting
In order to ensure your record of stock is accurate, retailers should be undertaking regular stock counts. And that means stock counting at far more frequent intervals than just the end of financial year stocktake.
That’s where tools like RFID come in, allowing retailers to accurately count stock within minutes, at the time of their choosing.
RFID also empowers retailers to comprehensively track products through the supply chain, mitigating the potential for error and loss.
Used in conjunction with a centralised record of stock, tools like RFID also enable retailers to focus on deviations, identifying where there might be potential issues such as theft that impact anticipated levels of stock compared to what’s actually available.
Create a purchasing process
Out of stock events remain one of the biggest bugbears of shoppers, with recent data indicating it costs the Australian retail sector $14 billion in lost opportunity.
Retail managers should set a specific time to review their stock levels and create a purchasing process for the items required.
This process might draw on automatic mPOS triggers that alert you when stock is running low or other tools such as on-shelf availability sensors that further indicate when items need to be replenished.
Between the record of stock, regular stocktakes and automatic notifications, mitigating out of stocks becomes a much easier process.
Meanwhile, retailers should also implement a process for receiving stock. This involves checking off the inventory ordered against what is supplied or items that are damaged.
Using mPOS data versus regular stock counts, retailers have the opportunity to better understand where their retail loss is occurring, and once this is identified there’s a greater chance of plugging the leaks.
Current data indicates loss (including shoplifting, employee theft, supplier fraud and error) costs the sector almost 1 per cent of revenue or around $3.37 billion annually.
Some, including the National Retail Association, actually note that figure is far higher, with their estimates indicating in total it costs the sector around $9 billion annually.
Either way, this preventable loss is no small issue, affecting retail’s bottom line at a time when revenue has never been more important.
Once a retailer knows where their loss is occurring they can begin to adopt strategies that directly target what is occurring, including loss prevention strategies such as cabinets and displays with smart keys, electronic article surveillance, staff education, CCTV and more.
Returns are a particularly challenging aspect of inventory management, which is where processes and procedure become imperative.
The procedure around returns should involve both staff checklists and data entry.
Staff should check if the item is damaged and faulty, while also flagging any signs of fraudulent returns. If an item is faulty, it should be re-routed to the supplier.
If it’s eligible for re-sale, the product should be re-entered into the centralised record of stock and returned to the correct location in-store where it can be re-sold.
The final word
An efficient and effective inventory management system is one of the best ways to maintain control of in-store operations, while minimising costs and maximising profits.
In the process, inventory management reveals a wealth of insight into a retail outlet, including high-demand stock, areas of potential loss, flaws in your systems and process, plus more.
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