Retail Inventory Management Trends for Small Business Retailers
Why These Retail Inventory Management Trends are Extremely Important for Small Retailers to use for Better Inventory Management Quickly.
For various reasons, streamlined inventory management is a must for retailers; whether small or large. For small retailers, keeping up to date on the latest inventory management trends can make a big difference in retailers managing inventory better. With the retail industry growing like never before, largely due to the massive growth in eCommerce sales channels, managing inventory for small retailers is both critical and challenging.
Here are a few reasons why small business trends for retailers to manage inventory better are so crucial:
- Customer Migration: Retail customers are notoriously impatient. If they can’t buy what they want in your store, they will move to the next one. The longer your store stays under stocked, the more customers you may lose for the long haul.
This is something that will seriously erode your brand value. Better inventory management keeps customers happy and more importantly keeps them coming back to your store.
- Managing Demand Fluctuations: While manufacturers roughly produce the same amount of goods over the year, demand keeps changing with the arrival and departure of seasons, festivals, financial year endings, and so on.
Again, if your store has the correct mix of products during all seasons, customers will keep coming back and pass along your positive reputation to their friends, relations, and associates.
However, you must remember that although customer spending can be reasonably estimated, there is no precise way to forecast the same. Having sound inventory management practices in place helps you make hay even when customers decide to suddenly start purchasing.
- Taking Advantage of Price Revisions: It is a common practice to retain goods in the inventory and not put them for sale in order to profit from possible price changes. You can also do the same for increasing demand as also to provide discounts.
- Minimize Wastage: Despite all your efforts, howsoever directed they are, some amount of goods will expire while on the shelves. But you can minimize such wastage through excellent inventory management practices. Every item that is not wasted, not only saves you its cost, but also brings you sales revenue.
- Optimize Space Allocation: The space in your warehouse is limited and it is your responsibility to allocate it wisely to have the correct product mix available. With hundreds of products and multiple manufacturers making each of them, achieving the accurate product mix can be a tough task.
This is where good inventory management comes into play. Although precise prediction of customer demand is a next to impossible task, you can forecast customer demand with reasonable accuracy using optimized inventory management.
If you are not wasting space on items that are not being sold, you are using the space for a product that sells and brings you revenue. Effectively, this means you are not being doubly burdened by a product that lies idle, costing you money for maintaining it while also allotting the same space for a popular product whose availability brings you repeat customers and upgrades your brand.
Small Business Trends for Retailers to Manage Inventory Better
The purpose of inventory management is to ensure that the correct products are available for sale in the correct quantity and at the correct time. Here are some tips for small retailers to manage inventory better:
- Closely Monitor Inventory Levels: Always keep your eyes open and have at least a rough idea in your mind for the type and quantity of products you have in the storeroom. Even if you use inventory management software, actually go out and do a physical count to check if the correct numbers are entered in the system.
By remaining alert and updated, you know exactly what is going on in the warehouse. Most importantly, your physical presence and the fact that you are taking a stock of things will keep your storeroom employees on their toes.
- Classify the Product Stock: Zero in on the items that are lying idle for over 6 months – they represent wasted space and opportunity. Dispose them by offering discounts or other such creative methods.
For best results, use the ABC method of classification. A type goods have the maximum profit margin but are slow moving and their sales are unpredictable. At the other end are the C type goods that offer least profit margins but are sold in large quantities. Items under the B head lie somewhere in between.
Store type A goods at the best locations in the storeroom and make every effort to optimize their stock to benefit from their sale immediately following a demand by customer. You don’t have to sweat much for type C goods because they are fast moving. Efforts for type B goods lie somewhere in between these extremes.
- Streamline the Estimation Process: Have as accurate forecasts as possible by analyzing the history of sales of items. If the high season for a particular item is approaching, order it beforehand so that customers are always happy of having found what they came for.
You can establish a procedure for advance notifications that warns you of the impending high season for particular products.
- Employ the First In first Out (FIFO) Technique: In order to minimize waste on account of spoilage and expiry of items, utilize the FIFO method – the products that first entered the warehouse must be first put up for sale.
- Utilize Inventory Management System: Retail pos software and inventory management software are a great way to execute all the steps mentioned thus far. These tools allow you to keep stock of your inventory levels, classify the items into the ABC types, better forecast demand, and use the FIFO technique.
This is because they make available tons of information and data analysis available at your fingertips. You can employ the data evaluation to check all aspects of inventory management and make decisions accordingly. Sometimes, you may need to integrate the retail and the inventory management systems.
- Outsource: Also called drop shipping, it places the onus of holding inventory on the producer or the wholesaler even though a customer has ordered the item from your store. Drop shipping is popular with start-up retailers who operate online stores.
- Keep Warehouse / Storeroom Equipment in Working Condition: There is no point in getting everything right with the planning of inventory management if your warehouse equipment is not available to execute such planning!
As is the case with physically taking stock of inventory levels, your presence on the warehouse floor sends the message that you are a hands-on guy. Your employees will never get complacent.
- Maintain Excellent Vendor Relations: Identify your best vendors and place bulk orders with them. This will get you discounts and keep them happy on account of the better business opportunities that you provide. You can then leverage such good relations for excellent supply chain management.
Such rapport will prove invaluable for implementing the conclusions of your precise forecasting before the high season. And, accurate estimation is at the very heart of exemplary inventory management.
Inventory management practices can make the difference between a booming retail store and a gloomy one. The products available in all retail stores are roughly the same. What differentiates retailers is the service offered, of which inventory management is an integral element.