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How do Grocery Stores Manage Inventory? 4 Core Ways to be Successful

Are you still tracking your inventory manually? If so, you’re not alone. Nearly half of all small businesses either track inventory manually or don’t track it at all.

However, if you want your shelves stocked, your aisles organized, and your customers always able to find the items they need, you won’t be able to manage your inventory this way any longer.

Managing inventory in a grocery store is complex and challenging. You have thousands of SKUs, hundreds of varieties of perishable items, and a dozen seasons and holidays to manage specific inventory for.

A grocery store’s success relies heavily on maintaining accurate inventory levels and minimizing waste while still meeting customer demands and maximizing profits. The right inventory management process can do all this and more for your store. 

This post walks you through four core tips to better manage inventory for your grocery store.

Grocery Store Success 101: How do Grocery Stores Manage Inventory?

Does inventory management feel like you’re juggling multiple balls while walking on a tightrope? 

The balls are the various aspects of inventory management, including the multitude of products and variations you need in stock, shrinkage, vendor relationships, and seasonal fluctuations.

Related Read: Top 5 POS Systems for Small Grocery Stores

The tightrope is the delicate balance required to maintain optimal inventory levels, avoiding having too much stock or too little, and ensuring your store is profitable.

The success of your grocery store depends on optimal inventory management and efficient processes that don’t take up all of your time. With smooth inventory management, you can stock your shelves with the products your customers need.

1. Implement an Automated Inventory Management Solution

The best grocery store point of sale (POS) systems have automated inventory management features that help streamline tracking and monitoring your inventory. The aim is to reduce manual labor and improve accuracy.

The main benefit of automated inventory management is that your system automatically updates inventory counts as items are sold. You’ll have an accurate view of inventory in real-time.

No more running to the back to check what’s in stock.

You can set minimum product thresholds that trigger an alert when you need to order more of that product — no more running out of your most popular items.

Some POS systems automatically generate purchase orders. Simply set the reorder threshold for a product and let the system do the work for you.

A POS system with automated inventory management features can also generate reports on sales trends, slow-moving items, and stock discrepancies.Markt POS guide to grocery POS hardware

2. Analyze Your Data Regularly

Analyzing data might feel daunting or complicated, but some POS systems have easy-to-use and customizable reports. With a high-level view of data, you can keep an eye on the pulse of your store.

With a granular view, you can use data to make better business decisions.

Reports help identify emerging trends. Are customer preferences changing? Which products are popular at the moment? Real-time data enables you to align with customer demand.

Related Read: Customer Loyalty Analytics: 5 Trends To Watch Out For & What To Do Next

Sales data reveals patterns related to seasonal fluctuations. For example, you might notice increased sales of barbecue-related items during the summer or higher demand for baking ingredients during the holiday season.

If you anticipate fluctuations, you can adjust inventory levels.

Other Ways to Use Data

  • Detecting potential issues: It’s easier to notice discrepancies in stock counts, unusually high shrinkage rates, and slow-moving items when you have the data. Promptly addressing these issues helps minimize inventory waste.
  • Pricing and promotion optimization: Sales data can show you which products sell better at specific price points or which promotions drive the most sales. For example, a BOGO (buy one get one) promotion may drive sales for particular products instead of a standard discount.
  • Customer segmentation: You can segment customers based on their demographics, preferences, and purchasing habits. You can tailor your product offerings and marketing campaigns accordingly.

3. Make Data-Driven Buying Decisions

Using data to inform purchasing decisions is essential for successful grocery store owners. When you take your product buying cues from inventory data, you’re doing all you can to minimize waste and maximize profit.

Which products sell well? Which products are taking up shelf space? You might expect a specific product to be popular, but have you considered your local demographic?

You don’t need to guess when you have data.

Using point of sale data also informs ordering frequency and quantities, allowing you to maintain accurate stock levels and avoid overstocking. You’ll lower carrying costs and make room for products that sell.

Finding a balance is easier if you have data to support your decisions.

For example, if you notice that a specific cereal brand consistently underperforms compared to competitors, you can choose to discontinue the brand or negotiate better pricing with the supplier. 

Conversely, if a new product is gaining popularity, you can increase the order volume to capitalize on the trend. You might be able to negotiate bulk discounts or more favorable payment terms with your suppliers.

4. Implement Strong Category Management

Category management is the process of grouping products into logical categories to optimize inventory management and sales. By grouping products, you can be more efficient with time and resources.

It’s helpful to place related products near each other. You’ll manage shrinkage better because similar products have similar shelf lives. With effective category management, you can regularly rotate products, especially perishable items.

You’ll also get a handle on supplier relationships. Category management can help you evaluate supplier performance and identify any issues contributing to shrinkage, such as late deliveries, damaged goods, or inaccurate invoices.

Which sections of your store need regular maintenance? For example, maintaining your deli or bakery sections will take more time and labor than canned goods.

Not all products are equal regarding inventory management, and categorizing them can help direct your priorities and time spent.

Finally, category management creates a better customer experience and makes your employees’ lives easier.

  • Faster transactions: When everything is categorized correctly, cashiers can quickly locate items on the POS screen using custom hotkeys.
  • Reduced errors: Well-organized POS screens make it easier for cashiers to find the right product under the right category, minimizing the chances of selecting the wrong item.
  • Simplified training: A properly categorized POS screen simplifies training new employees. It is easier for new cashiers to learn and remember where products are when items are logically grouped.

How do Grocery Stores Manage Inventory? With The Right Systems

Efficient grocery stores know that inventory management is an essential factor in the health of their business, and great grocery stores rely on tools and POS systems that can help get the job done.

At Markt POS, we’ve helped countless grocery stores optimize their inventory management and find success through automation, data reports, centralized and integrated systems, and a support team that’s always on deck, ready to help.

Improving your inventory management and implementing a system like Markt POS can help you get better visibility over your stock levels, which can help you make better buying decisions for your store.

It enables you to avoid shrinkage and even negotiate lower purchasing costs on some of your more popular products.

Inventory management is step one on the path to grocery success, and if you’re ready to start growing your store and achieving your goals, get in touch with us today!

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