Inventory management is essential in retail, but it’s often an area where businesses lose money. Optimising stock storage and maintenance doesn’t just cut down costs—it could also increase your overall turnover. To make sure your inventory management process is cost-effective and efficient from start to finish, here are three things to keep in mind.
Reduce storage spending
Storage can be one of a business’s biggest expenditures. The last quarter of 2017 saw a huge rise in retail warehouse investment, according to data from Savills—a 14.4% rise on the 10-year average.
The uptake in warehouse storage has happened for many reasons. Chief among them is the rise of e-commerce, which necessitates warehouse storage due to the lack of a traditional retail space. Then there’s next- and same-day delivery, which has led to (mostly online) retailers renting regional warehouse space around the country in order to speed things up.
No matter how much storage space you currently have, there’s always a way to use it more efficiently. Even though you might be renting at a fixed rate, the cost of storage will actually vary from item to item, in practice. The longer you store an item without selling it, the more it will rack up storage costs.
To get around this, keep track of what you are storing and for how long. If there are items that simply aren’t selling, consider taking them out of storage in order to cut your losses. Anything that remains in storage is costing you money, not making it, so even giving these products away for free, or including them in a special promotion, will make big savings.
Keep spoiled stock to a minimum
No retailer wants stock spoilage, but few take stringent enough measures to eradicate it as much as possible. If you sell any perishable products, being aware of this is particularly important. Keeping these products on the shelves or in the warehouse until they expire not only wastes time and money: it’s poor inventory management.
Reducing spoiled stock involves, first, storing everything correctly. If you’re storing food, wine or even beer, precise conditions will be required to keep everything in its best condition. Even if your products are not perishable, you still need to ensure that they will not be lost or damaged in any way. Here at Retail Asset Solutions, we can help you identify these conditions and work with you on crafting the ideal inventory management setup for your business.
Buy in new stock wisely
Most businesses, when they’ve been operating for a while, settle into a groove of ordering new stock in a specific pattern. This is fine in theory; it only becomes a problem when you end up ordering additional stock that you don’t need.
Seasons change. Fashion changes. Whatever the reason, there will be times that your stock ordering practice has to change too. Buying in too much of anything can clog shelves, rack up storage costs, and eventually lead to further stock spoilage. None of these outcomes are desirable, so it’s important to avoid over-ordering at all costs.
Pay close attention to what you do and do not sell during certain times of year, and adjust your ordering practice as appropriate. Holding too much inventory may have disastrous consequences on a number of levels, but not ordering in enough stock can be just as bad for business. Buying stock wisely is about striking the perfect balance. By carefully observing trends and fluctuating popularity, you will be able to order exactly the stock you need.
For more information about inventory management or to work with us on managing your stock, get in touch today.