04 Apr Tips on Stock Control for retail business
Maintaining the correct amount of stock within your store is vital to good business management. Without a good inventory management system, stock control can be a very time consuming and difficult process – and at worst you can waste money by having too much stock on the shelves! However, there are ways to mitigate losses and streamline your stock control.
The best solution is to automate your stock replenishment process and a good POS solution will do this form you. Before starting to automate your inventory replenishment, it’s best to take a continuous improvement approach. The goal is to reduce inventory levels while still being able to fill most of the orders that come through the door. Balance is the key!
What is stock control?
Every retail store carries stock, these are the products on the shelves which keeps the store open! Stock control is the balance between the benefits and costs of holding stock.
Top 3 stock control factors:
- Too much stock can mean loss of money! When holding stock, money is tied up in the purchase of the actual stock, storage and insurance. There’s little point keeping boxes of stock which just sit on the shelf
- Too little stock can also mean a loss of money! If you don’t have enough stock in store, you can lose sales and thus income
- Wrong stock: Knowing what products you need to stock at what time is vital! For example you can lose money by having boxes of jumpers in the middle of summer.
As you can see, stock control is the cornerstone of your business. Get it right and you will increase sales, have better customer service and grow the business!
Tips on reordering stock
Know your business.
How well do you really know your business? Run regular reports on the history of your past orders and sales to see patterns. Jumpers sell well in winter, but how many jumpers sold, which styles and colours sold best and how many were left after winter? Never guess these figures, always run reports with your POS software.
Minimum and maximum inventory levels
The best way to track what stock is needed is to set minimum and maximum inventory levels. This way a replenishment or reorder note is raised when the inventory quantity falls below minimum safety stock level, whist the maximum governs the amount of a particular product to order at one time. Every product will have different minimum and maximum levels, as they will all sell at different rates.
For example, let’s say your store sells jumpers. You know from the store history and reporting that the optimum amount of stock to keep in the store is 100. So when the jumper inventory falls below 100, your minimum reordering level will flag that more jumpers are needed.
Trends and Seasons
All retail stores will be affected by trends and seasons. Some trends will come and go, such as a kitchen gadget or a brand of toy. However there are seasonal trends which are predictable year on year, jumpers are in demand in winter, t-shirts in summer for example.
When managing stock you must factor in seasonality or trends. Set up intelligent suggested reordering processes using your POS software and retail sales history. With the correct history of sales, this will be able to help you manage the rise and fall of stock trends throughout the year. For example, during winter more jumpers will be sold, but how many jumpers do you still need to keep in stock over summer?
Using the right supplier for your business can save you money. The supplier might hold stock for you, lowering your holding costs, or deliver products directly to customers. This is perfect if you’re also running an eCommerce channel, such as a website or eBay store. Team this with software which will keep track of stock levels across your physical store, website and eBay store.
You may also be able to negotiate 30 day payment terms with your customers, with 45 day payment terms with the supplier – this reducing cash flow tied up in your stock! As always, run regular reports on your suppliers to keep them in check.
Using your business reports; minimum and maximum levels with trends and seasons data your POS software should be able to help you find average sales for each product and/or time period. Use this to forecast a replenishment schedule based on average sales per week, month or season.
Average usage method is helpful in factoring a predictable inventory increase during a certain time. So if a retailer consistently sells more t-shirts in summer compared to other months, the replenishment order every summer will factor that expected spike in sales. If you sell more bottled drinks on Fridays, then stock will need to be replenished by Thursday. Every retail store is different, but the data trends for your store teamed with the best stock management system will help you grow.
Stocking the right products at the right time is essential. Get this wrong and your business can suffer from loss of income, cash flow and low levels of customer service. Our POS solution Connect can help you track stock, maintain correct levels and track supplier performance. Information and data is key to growing and successful business and we know that having the right software on hand will make this easy and accessible for everyone!
To learn more about how Intelligent Retail can help your retail business, contact our team today.