Inventory Management: A Practical Retail Guide
Inventory management: a practical retail guide
Too much stock ties up cash and storage space. Too little means missed sales and disappointed customers. Inventory management covers receiving, storage, selling, counting and replenishment so the shop can hold a useful quantity of each product.
1. Use ABC analysis to focus attention
Group products according to their contribution to the business. High-value or important items deserve closer review; slower or lower-value items may need a different ordering policy. The familiar 80/20 pattern is a planning idea, rather than a rule every shop must follow. Use actual sales and margins to choose the groups.
2. Give each variant a clear SKU
A stock keeping unit identifies the item being counted and sold. Separate sizes, colours and pack quantities where necessary. Use the same identifiers in purchasing, checkout and online listings. Duplicate or inconsistent codes make reports and transfers harder to trust.
3. Rotate stock using FIFO
First in, first out means using older received stock before newer stock. Arrange storage and picking procedures to make that practical. For products with expiry dates, review expiry requirements as well; the earliest received batch may not always be the earliest to expire. Record damaged or expired goods through a controlled adjustment process.
4. Review inventory turnover
Inventory turnover compares cost of goods sold over a period with average inventory value over the same period. Use consistent cost values and dates. Review categories separately: a fast-moving food item and an expensive seasonal product need different interpretations. A high turnover can also hide frequent stockouts, so review availability alongside it.
5. Set safety stock and reorder points
A reorder point should allow for expected sales while waiting for delivery, plus an appropriate buffer. Review supplier lead times, demand changes and storage limits. The buffer should respond to uncertainty rather than simply increasing every order.
Connect online and physical stock
When a shop sells through several channels, establish which stock is available to each channel, when an order reserves it and how cancellations release it. Check synchronisation timing and the handling of returns, transfers and goods in transit. A shared system still needs clear allocation rules and accurate staff entries.
Keep records accurate with stock counts
A full count checks all products at once. Cycle counting checks selected products or areas regularly. Choose a schedule suited to the shop's risks and workload. Investigate discrepancies before changing the recorded quantity, and retain a reason and approver for adjustments.
Use software to support the routine
A connected POS can help link sales and returns with stock, reports and transfers. Ask the provider to demonstrate the selected plan's low-stock alerts, purchasing and counting functions. Posify uses a software subscription. Confirm the implementation, hardware and support costs separately.
Posify requires connectivity and does not provide offline checkout. Test the primary connection and a 4G/5G backup, then check interrupted transactions after reconnecting.
Frequently asked questions
Where should I begin?
Clean the product catalogue and count opening stock. Then introduce a regular review of important items.
How often should I count?
Set the frequency according to value, movement and discrepancy risk. A cycle-count routine can identify problems between full counts.
Will synchronisation prevent every oversell?
No. Test reservations, update timing, returns and interruptions, and keep physical stock records accurate.
Continue with five stockout controls and multi-store management.
