How More Regular Stocktaking Can Benefit Your Retail Business
14th Mar 2018
Stocktaking is, at the very least, an annual task for most retail businesses. However, more regular stocktaking can have serious advantages for your business, and although this can be a time consuming process it will undoubtedly be worth it for a number of reasons. This is why, as part of our stocktaking services at OCS, we offer a perpetual inventory service in which we count stock levels on a regular basis. These figures are then compared against the stock file to ensure there is an accurate picture of your stockholding. Here are six ways that this regular stocktaking can benefit your business.
1. Stocktaking uncovers stock shrinkage
Stocktaking can help you identify common shrinkage issues that can affect a retail business, such as damaged or missing items. It will allow you to (quite literally) take stock of what you need to do to rectify these issues.
If you uncover that your stock is being damaged by, say, a leak in the stockroom, you can immediately sort this out, or if it appears that stock is missing but has simply been misplaced, this can be rectified.
As part of the stocktaking services we offer at OCS, we will help investigate the causes of such stock loss. This will help you get to the bottom of stock shrinkage as quickly as possible so you can begin rectifying any issues.
2. Stocktaking enhances your ordering process
Stocktaking can often reveal unwelcome inventory surprises. It may be on record that a whole pallet of jeans are in stock, but a physical count could reveal that the the majority were actually damaged in transit. Now you know this, you can compensate for these shortages in your next order.
Having the wrong amount of stock can be detrimental to your business. If you don’t have enough inventory to fill orders, your unfulfilled orders will drive customers away. They may then develop relationships with other retailers, meaning you could lose their custom forever. Having control over your inventory through regular stocktaking ensures you’re able to provide a better customer service. This will help you retain buyers and, in turn, maximise sales.
3. Manual stocktaking gauges the efficiency of your stocktaking software
A manual stocktake gives you the chance to see how efficient your stocktaking management system is. This physical count alongside the results from your system may reveal discrepancies between the two that could be a result of inaccurate stocktaking software. You may then need to think about upgrading it. Many retailers have taken this step, with RFID (radio-frequency identification) systems proving to be increasingly used ahead of traditional barcode systems. Now, a staggering 96% of retailers are working on ways to integrate RFID software into their stores.
RFID stocktaking works similarly to barcoding, in that each product will have a unique label that can be read by a scanner. However, RFID technology is seen as a lot more efficient than traditional barcode systems. As we have noted about RFID stocktaking, it can create a “reduction in shrinkage” in comparison to barcode tracking due to “increased stock file accuracy of 65% to 95%”.
Unlike barcode scanners, RFID scanners can read multiple items at a time and provide real time updates of where products are at any given moment. This can help to eradicate some of the shrinkage issues that occur with barcoded products.
4. Stocktaking ascertains product performance
It is imperative that you keep tabs on which products are flying off the shelves and which aren’t quite doing so well. If you have a particular product that is sat on your shelves in large quantities, it’s safe to assume that it’s not the most popular product you sell. Stocktaking will bring this to your attention so you can reduce its price to move the stock on. Otherwise you’ll just end up wasting money by continuing to order it in. Conversely, you might discover a product that is selling very well if there is a scarcity of it in your inventory, enabling you to order more of this product to keep up with sales. This may even encourage you to think about increasing the marketing of similar products.
Doing this will also put your finances under the microscope, providing you with the perfect chance to analyse your sales and profits by seeing exactly which products are selling and which aren’t. This can help you determine how you should price different items, and in turn enable you to maximise your profits.
5. Stocktaking reveals your suppliers’ efficiency
Stocktaking is also important in that it helps you to ascertain if your suppliers are doing their job properly. If a stock count reveals that you are missing stock or that it is damaged, it could be that the fault lies with the suppliers. You will then be able hold them to account and ensure that they don’t make the same mistake again, or think about changing the suppliers you use.
6. Stocktaking helps you work out your tax liabilities
Finally, stocktaking helps you to work out your profits and tax liabilities at the end of a tax year. This will allow you to enter an accurate closing figure in your accounts—a legal requirement for tax purposes. Failure to input an accurate figure can lead to investigations into your company and possibly a hefty penalty. This represents a potentially disastrous state of affairs that can easily be avoided.
By doing regular stock takes, your stock levels will be up to date all the time, This means an annual stocktake and any other necessary periodic stocktakes will be faster and more efficient since they will just be confirmations of data rather than time consuming data entry tasks.
Though it may not be something you do regularly at the moment, frequent stocktaking can vastly increase the fortunes of your retail business in a number of ways. For more information about our stocktaking services, get in touch today.