One of the biggest concerns of any aspiring retailer is stock control. Not enough stock results in unhappy customers and missed opportunities. Too much stock takes up too much capital and can result in lower margins if you mark down unsold products. At RMS, we’ve been helping retailers put the right stock keeping systems in place for over 14 years.
There are three main areas that any retailer needs to address when dealing with stock: getting the right software in place, establishing the right processes to keep on top of your stock and learning how to optimise your stock so you can make more money and have happier customers.
Picking the right stock-keeping software
Picking the right stock keeping software is essential for your success. In the past people may have used basic spreadsheets or non-cloud based software but we would always recommend a cloud-based solution for both security (always backed up, lacks the risk of relying on a single server or PC) and accessibility (can be accessed through any device again mitigating any risk associated with relying on a single piece of hardware).
There are some key questions a modern retailer should ask before deciding on a stock-keeping solution:
- If I want to sell online too, will my stock keeping solution integrate with my e-commerce solution?
- Does my stock-keeping solution work on mobile devices and tablets?
- Does my stock-keeping solution integrate with my accountancy software?
There are many options on the market but picking the right one to fit your business will help you greatly in the long run.
Putting Your Processes In Place
Stock management can be aided and enhanced with technology but still relies on people and processes. Having a process in place that covers the stock management process from when you create orders and send them to the supplier, when you perform stock checks and when you replenish shelves is essential – particularly if you have to train and rely on staff.
We would always recommend an integrated EPOS/Inventory management application to begin with. Integrating and automating the link between your e-commerce software and your Inventory software will save hours of manual processing. Additionally, integrating your accounting software with your inventory management will save on manual processing and give you greater oversight.
However, as impressive as these automations are, your business will require manual stock-taking. You may require less manual stock taking, thanks to technology, but checking that your stock levels in your software and your stock levels in reality match is essential. Theft – from both customers and staff – is an unfortunate reality for retailers. Making sure every unit is accounted for will help you tighten up your processes and spot any worrying discrepancies.
In terms of taking the stock count, you can perform a full stock check (out of hours, so as not to disrupt trade) or a cycle count – where different parts of your stock are counted on a more regular basis. Counting stock items that are more important to your business (higher turnover or margin) more regularly is worth considering as is counting in-season items more regularly.
Optimising Your Stock
The discrepancies between the stock level in your software and your stock level, in reality, is called shrinkage. Some shrinkage is caused by theft and fraud so making sure your store has CCTV and your higher value items have electronic tags might be required.
Other shrinkage can be purely accidental (drinks are spilled, cans are bashed and items are knocked over). If accidental shrinkage is a recurring problem for your business then your store layout may need to be improved upon. Are aisles wide enough? Are less durable items stacked too high on the shelf?
As many retailers move away from plastic packaging we are seeing an increase in measured goods (goods sold by the metre, litre or kilo) while bars and restaurants have to deal with containerisation (selling pints of beer from the barrel, for example). Having EPOS software in place, such as our OpSuite Retail Management Solution, that deals with measuring.
Any intelligent retailer is going to attempt to optimise their stock based on what items are performing well and are higher margin. An important metric to consider is Gross Margin Return on Investment (GMROI). If your shop has a Gross Margin of £100,000 on an inventory cost of £60,000 then your GMROI is 1.66. That is to say that you make £1.66 for every pound you spend on inventory.
Knowing what to order next can be difficult for retailers – particularly in trend based industries like food or fashion. Your suppliers will definitely be telling you what they think will be the “next big thing” but they have their own incentives. Keeping on top of your industry’s news is important but, whenever you can, ask your customer what they’d like to see in your shop. It might just be your next best seller.
Having the correct stock-keeping processes and software in place is life-or-death important for the aspiring retailer. Ensuring accuracy when ordering can increase your profits while identifying any discrepancies between what stock you actually have and what stock you think you have can help you understand any deeper problems with your business.
At RMS, we provide retailers with either single or multiple stores, multiple warehouses and vehicles OpSuite, a gold standard in enterprise-level inventory management. Whatever your retail need, we have a solution so feel free to get in touch.