Proper inventory management has long been a cornerstone to retail success. Many retailers who own brick-and-mortar stores tend to overlook the fact that mishandling the management of inventory can lead to a considerable amount of losses. Since the point-of-sale (POS) is the check out point at which transactions occur, proper inventory management software is imperative. It is a common misstep to focus on sales and neglect inventory monitoring and analysis. Failing to acknowledge the importance in inventory protocols can lead to a loss of sales all around. Retailers face more and more competition and have to strive harder to meet the demands of customers who want to be able to purchase whatever they want, when they want.
One of the most backbreaking jobs in retail management is keeping inventory, especially if you're someone who owns multiple stores. Having accurate software built into your POS system replaces archaic inventory management practices that are riddled with human errors.
Let’s take a look at why effective inventory management is essential to a retail business's success and how you can use your POS system to best optimize inventory management practices.
Happier Customers and Fewer Lost Sales
Implementing strong inventory management practices generally increases the likelihood that desired items will be in stock. Not only does this boost customer satisfaction, it also creates a level of trust with your store(s) and the customers. Establishing that kind of loyalty will increase profits over time. Inventory management will help eliminate sacrificing sales to your competition because a particular item that customers want is unavailable when they would like to purchase it.
Instead of basing your inventory off of human-generated excel sheets, your POS system can generate forecasts of which items are popular based on previous sales figures, set minimum reorder levels, as well as produce accurate, real-time reports that specify the quantities that items are selling at. This is particularly helpful for multi-store retailers who can determine if another store has an item stocked that is out at their location.
Lower Storage Costs
Storing excess inventory that is not needed on store shelves or in the back can create a considerable financial outlay. The less extra inventory you have on hand, the lower the costs. Your POS system is a great weapon to combat this. Purchasing unnecessary quantities of an item is virtually impossible when your POS system creates forecasts of your inventory, showing you what needs to be replenished and what does not. With this kind of data, you can save the cost of storing excess items.
In addition, you can review POS records and easily identify which items, despite the fact that they may be selling, are moving slower than other products on your shelves. You can create targeted sales for those items or readjust your ordering strategy. Either way, you will have a smaller volume of surplus inventory and reduce storage costs.
No Unnecessary Overhead
In addition to the storage of items, the cost to maintain inventory includes: insurance, damage, inventory taxes, opportunity expenditures, and obsolescence. The longer that inventory sits in warehouses, storage units, or retail floor, the higher the inventory overhead. The money spent on excess inventory is money that would have been earmarked for business-building initiatives such as marketing or loyalty programs.
When you utilize data from your POS system, you will be more on-target when it comes to managing the appropriate quantities of merchandise to order. That way you are not stuck with excess inventory or overhead expenditures that you would be incurring otherwise.
Proper inventory management is key to a retailer’s success. Until you understand how to make your POS system work for you to achieve that success, your business will be riddled with the same common inventory errors and your profits will reflect.