The era of big data is transforming nearly every industry. For retailers, advanced data analytics provides them with deeper insight into their customers and their operations. This allows businesses to improve the efficiency and productivity of their processes, which boosts revenue and profit.
The one area where retailers have the most to gain through the use of data analytics is inventory management. By integrating inventory management with POS functions, stores are able to keep enough stock on hand to meet customer demand without incurring unnecessary overhead charges due to overstocks or returns.
As with any technology, the key to realizing the benefits of a POS system with inventory management capabilities is matching the POS features to the unique needs of your business. With the ideal combination of POS and inventory-management capabilities, a retailer ensures it is operating at peak efficiency, which gives it a leg up on the competition.
Here are five ways retailers can grow their business by implementing inventory management via their POS system.
Take Advantage of “Perpetual” Inventory Management
For years, retailers and other businesses relied on “periodic” inventory management, which meant they would make a physical count of inventory levels at the start and end of an accounting period. In this system, total cost of inventory (goods) equals the beginning inventory plus purchases, and the total cost of goods sold is the total cost of inventory minus ending inventory.
A much more effective approach is “perpetual” inventory management, which relies on a POS inventory system to automatically adjust inventory counts after every transaction. The inventory ledgers created by the POS system include a wealth of information beyond the cost of goods sold, purchases, and inventory on hand.
For example, retailers can see when, where, and at what price each item sold, as well as information about the purchaser that can be collected and stored in a customer relationship management system.
Keep Customers Happy by Reducing Out-of-Stock Items
Software Advice notes that 39 percent of retail customers have left a store empty-handed because the item they wanted to purchase was out of stock. On one out of every three trips to the store, a shopper finds a product they want is unavailable, which costs retailers as much as $22 billion in lost sales worldwide, according to the Grocery Manufacturers Association.
Real-time inventory tracking ensures that retailers are alerted when an item’s stock level starts to run low, giving the store plenty of time to reorder before it runs out. Stores benefit by having higher in-stock percentages, faster turnover, fewer stock-outs, and less shrinkage (items lost due to theft, damage, accounting errors, and other causes). Customers benefit by concluding their shopping trip with their desired products in hand.
Go Omnichannel by Combining Online and On-Premises Inventory Tracking
One of the point of sale and inventory management software features that has become even more important in light of the precautions retailers must take in response to the COVID-19 pandemic is omnichannel POS. Online ordering for retail makes it easy for customers to order products via the store’s mobile app or website and then either pick up the order curbside at the store or have it delivered.
Integrated inventory management with POS helps retailers keep stock levels at the optimum levels while also improving the accuracy of customer orders by preventing orders for out-of-stock items. The systems also let retailers offer custom product combinations and variations, often as part of promotions or special offers. Use of barcodes to process sales and track inventory saves time while also making stock counts more accurate and timely.
Improve Inventory Efficiency by Tracking Customer Purchasing Trends
Traditional inventory tracking tells retailers the what and when, but not the who or why. Modern POS systems are able to link specific purchases to the people doing the buying. Collecting and analyzing these purchase patterns gives retailers a more detailed view into what motivates their customers and how to persuade them to purchase more. As a result, stores can tailor promotions to their regular clientele, which keeps customers returning.
The faster a retailer is able to adjust to changing market trends and customer preferences, the less likely it will be stuck with outdated, unsold inventory. By keeping close tabs on which products are attracting the most attention, stores are able to anticipate tomorrow’s hot sellers and avoid inventory that simply collects dust.
More Efficient Inventory Management with POS Means More Involved Employees
When a store implements inventory management with POS, it empowers employees by giving them a lead role in ensuring inventory levels are optimized, accurate, and up-to-date. The goal is to have the storeroom shelves as well organized as the shelves on the shop floor. Several aspects must be accounted for in the efficient management of retail inventory:
- Labels must be clear to prevent misplacing items.
- Deliveries should be scheduled, and shipment manifests matched to the products received before the inventory is updated.
- Attach loss-prevention tags to products. The tags can be deactivated by store clerks once the items have been purchased. This helps balance the cost of losing the item with the added burden on employees of the extra product handling.
- Collect and analyze data on the store’s suppliers to help anticipate price changes, delivery problems, and product shortages.
The old saying that “information is power” applies only if it is the right information at the right time and place. Efficient inventory management becomes more important as retailers pivot their operations in response to COVID-19 shutdowns. Businesses that are able to capitalize on the potential of data analytics to streamline their operations and gain insight into their customers will be in the best position to thrive in the new normal, regardless of what form that new normal takes.
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