You can think of your inventory as a substitute for your hard-earned money. You invest in products and only if you actually sell them do you get your money back and make a profit. That’s why effective inventory management is crucial to your success: it’s more or less the survival of your business.
Thinking about inventory management can be a bit overwhelming. Don’t worry, it’s not impossible. Use the inventory reporting capabilities of your POS system, along with the following four techniques, to maximize your inventory ROI.
Get rid of dormant stock.
Evaluate slow moving inventory.
Double down on what sells well.
Synchronize your inventory by tracking sales in-store and online.
Inventory Management: 4 Ways to Increase Your ROI
1. Get rid of dormant stock
Dead stock is stock that doesn’t move (i.e., stock that doesn’t sell). If you don’t use inventory management software, you run the risk of keeping dead stock sitting in the back of the store or on the shelf, forgotten and japan whatsapp number neglected by your customers. And as the name suggests, dead stock kills your store’s profits.
Dead stock doesn’t just take up space; it also ties up resources, leaving you with less to invest in replenishment or marketing efforts. For most retailers, unsold inventory after six months is likely to cause inventory turnover to plummet. So take action and eliminate dead stock. Here’s how.
Run a promotion or flash sale and discount dead stock to generate quick sales.
Ask your distributor if they would be willing to take back dormant inventory, in exchange for new inventory or a price reduction on your next supply order.
As a last resort: If your promotions or negotiations with the distributor don't work, you can donate the dormant stock to charity, in order to benefit from a tax deduction.
Often the first step in stocking your shelves with stock that sells well is to get rid of unsold stock.
2. Evaluate slow-moving inventory
Unlike dormant inventory, which doesn't sell at all, slow-moving inventory continues to sell, but at a slower rate than you want. If you don't take action, slow-moving inventory risks becoming dead inventory.
Like dead stock, slow-moving inventory ties up your resources and negatively impacts your store’s profitability and cash flow. But how do you determine if a specific item is slow-moving?
Use your POS system's inventory reports to isolate each individual product and calculate its turnover .
Learn more — Dead (or dormant) stock: how to best avoid it in your store?
Set sales goals
You can set sales targets in your POS system , so you can easily identify which products are meeting your sales targets, which products aren’t selling at all, and which are selling better than you expected. This has a dual benefit. First, you can uncover slow-selling products before they become a bigger problem. Second, it allows you to reorder products that are performing better than you thought, so you can keep up with demand.
Give slow-moving stock more visibility in store
You can refresh the visual presentation of your store's merchandise and place your slow-moving inventory near some of your fast-moving items that can be associated with them. By placing them next to products that you know are popular with customers, you make them more visible and thus increase the chances of selling them.
Example ?
Let’s say you have a pair of chinos that aren’t selling well this season. You can put them next to your Oxford shirt, which is selling really well. Why? Because chances are someone looking for a shirt is also looking for a pair of pants to complete the outfit. This strategy is called product bundling .