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August 3, 2021
Inventory Management Best Practices for Retailers
In a competitive market, knowledge is key to business success. Modern inventory tracking technology will give you the insights to ensure you fulfill the needs of your customers and ultimately drive sales. #retailaccounting
Inventory management is incredibly important in retail and yet studies reveal that 43% of small businesses either don’t track inventory at all, or do it manually. Proper inventory management can be the difference between a lost sale and a lifelong customer.
Here are some quick tips on how you can stay on top of stock control:
Understand the relationship between sales and inventory
Look at inventory and sales data together so you can see the relationship between the two.
For example, if you pull your sales results and see that dresses are 20% of your sales, and jumpsuits have only generated 4%, the instant reaction is to buy more dresses.
However, if you simultaneously look at your inventory results, you may see that while dresses generated 20% of sales, they represented 40% of your inventory, while jumpsuits generated 4% of sales but on 1% of your inventory.
By considering the relationship of sales to inventory, you might discover you are over-inventoried in one item, and missing opportunities to sell another.
Manage residual inventory to control costs and preserve profit
Residual inventory is what remains at the end of one selling season and is carried into the next season. A few examples include wool apparel that is on sale in the spring season or outdoor furniture sets that are marked down after the summer season. An effective way to manage this is to create season codes with style numbers when you enter items into your inventory management system. This can make analysing sales and inventory by season a significantly easier task.
Equip your business with the right inventory management tools
From choosing the right inventory management software to finding a POS solution that fits your business, it’s essential to implement tools. The right ones will integrate together to streamline and automate processes, making inventory management more accurate and efficient.
In a competitive market, knowledge is key to business success
To read more on inventory management tips, read the following article and talk to us about getting to grips with the metrics in your retail business.
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