Consumerism is at its peak. Long gone are those days when customers waited for days or weeks for their desired products to be back in stock. Now, there is always a second brand offering the same thing, which sometimes may be the better option. Therefore, retailers must keep themselves updated on the “stock situation” in their company, as doing so will keep the company running efficiently.
A haphazard inventory management system will only lead to reduced profits and more loss of customers. The good news is that with time, managing inventory becomes a smooth process for retailers. They can promise the best of services to people and fulfill them. If you have been using spreadsheets or automated software, there has been no better time than now to streamline business operations concerning the stock.
What is inventory management?
Inventory management is the process of managing and overseeing the quantity and quality of goods within your company. In retail stores, the process starts with procuring goods from the manufacturer and ends with selling to the interested customer. A smooth process here ensures reduced maintenance and miscellaneous costs and a better understanding of sale patterns and customer behaviors.
Grocery stores, boutiques, supermarkets, and other retail stores need to be on their toes when managing their stock. If the items on the shelves and warehouses are high, the operating, storage, and maintenance costs will be higher, and vice versa. An optimal inventory management system keeps these costs and other logistic issues in check.
Detailed information on the following can also be understood when managing inventory:
- Quantities of the products and their variants
- Locations of product storage
- Reorder quantity of each product
- Number of products to store
- Discontinuation time of underperforming stock
- Seasonal effect on the sale of different goods
5 challenges retailers face while managing inventory
A few challenges that retailers face while juggling products and their related sales and demands are:
1. Less time to adapt to changes
In this fast-paced world, trends keep changing daily, impacting demand and supply. Most retailers are caught off-guard. As a result, they’ll witness long queues and run out of items quicker. The unavailability of the desired products can lead to higher unpleasant shopping experiences. Retailers never wish to make their customers go back empty-handed.
2. Complex inventory management due to omnichannel retail
Due to customers’ preferences, more retailers are trying to combine physical and online stores to achieve the best customer experience. However, this comes with its own set of troubles for retailers. As more delivery channels have to be merged, monitoring inventory in real-time can be complex.
3. Confusing digital solutions
Technology can definitely help manage inventory, but choosing the right tools and services takes time and effort. Too many cooks can spoil the experiences retailers hope to provide and achieve. Digital transformation is a must in today’s time and age and must be embraced only after retailers have done their homework.
4. Inefficiency in the warehouse
Warehouse management is a must for brick-and-mortar retail stores. A warehouse that isn’t efficient enough will affect the accuracy of operations and the entire retail process. Issues like lost orders, delivery delays, shipment issues, and so on will arise. Furthermore, errors in the stock count, costs, and quantity of products will occur frequently and be heavy on your pocket.
5. Overselling due to miscommunication
What can be worse than not selling your entire product inventory? It is committing to overselling more products than you actually have. This ultimately leads to the unfulfillment of customer demands. Such chaotic circumstances not only affect business operations but also spoil the reputation of the retail store.
Five reasons why retailers should invest in inventory management
Each retailer must implement better inventory management practices to keep their business up and running. Over time, inventory management improves efficiency, saves expenditures, and keeps customer expectations in check. Here’s why retailers must practice inventory management:
1. Reduces out-of-stock products and quantities
Customers are bound to get disheartened when they see their desired items are out of stock. This may make them look for alternatives from other brands, eventually affecting your revenue. Inventory management will help retailers to store products in the correct quantity at their stores. Nothing too much or too little.
In today’s time, more boutiques are opening up as more people realize their interests and pursue them full-time. During the pandemic, businesses optimized their eCommerce to keep their shops alive. As the world returns to normalcy, entrepreneurs and shoppers look forward to creating and experiencing in-store commerce. If you are wondering how to open a boutique, managing inventory is one of the most critical factors you need to ace.
2. Minimized inventory costs
Being aware of the stock you have at hand will help you manage sales and demands. You can also figure out additional costs incurred in maintaining and storing merchandise. More expenditures in the form of shipping and logistics can be correctly calculated once you have a proper inventory management system in place.
You can forecast customer demand by incorporating an inventory management system into your company. Based on this, you can decide the number of items you want to keep on the shelves and as back stock. This formula will help you accurately project the inventory costs for the year. Thus, creating more space to save more money wherever possible.
3. Prevents inventory from going obsolete
While running a boutique, trends and styles are bound to fluctuate. What may be in demand today may not be tomorrow. Inventory management helps address concerns that arise when products become obsolete. When products evolve to a better version due to technology, the fear of product wastage and related costs is at an all-time high.
Inventory management takes care of unprecedented wastage and expenditures. Retailers will be able to forecast situations using this process for their stock. Upcoming trends can be predicted, and slow-moving items can be observed. Regular stock audits will bring attention to products that haven’t seen much sales, thereby saving you the hassle of placing more orders that may go unused.
4. Simplifies supply chain management
Retail stores can only operate to the best of their capabilities if their supply chain is organized. Inventory management is the key to simplifying supply chain management as it helps determine sales trends. You will also be able to order the amount of stock that is the ideal size for meeting demand.
Inventory management further helps keep you in the loop about the location of each product that enters your company’s premises and warehouses. The supply chain becomes better as you track manufacturing and delivery schedules. Shipping delays, low stock updates, and other logistical issues can be communicated clearly to your customers using an inventory management system.
5. Improves customer satisfaction
Your retail business thrives on the positive experiences of your customers. Therefore, keeping customers satisfied must be the primary goal of any business. Inventory management makes the goal achievable by keeping customers updated on the products they’ve set their eyes on. When they receive those products at the designated time despite increasing demand and limited quantity, it sure will lead to higher customer loyalty.
Inventory management is a huge help to your business if you wish to save costs. With better forecasting abilities, customer demand and inventory issues can be calculated accurately. Retailers need to upgrade themselves with smart technology in inventory management so that their stores can reach greater heights!
By B Naomi Grace