By Stephanie Braun
Smart retailers know that inventory is a double-edged sword. On one side, it’s the lifeblood of your business–after all, what would you sell if you didn’t have stock? On the other side, inventory is costly to keep on hand and takes space away from fresh items that could potentially sell faster. When it comes to inventory, the name of the game is balance. Fine tuning that balance comes with both experience and some necessary tools.
From the day you open a pet store, it could take months–or even years–to get your inventory strategy right. Perhaps you overestimate the number of large dogs in the area, or underestimate how many consumers are looking for innovative cat toys. Based on data and research, you may calculate demand for products correctly, but seasonal variables throw off your game plan. You can strategize and analyze the market as much as possible, but without a point of sale that helps you manage buying inventory, you will hinder your profitability in the long run.
“A progressive point of sale can do a lot of good things for your inventory strategy,” said JP Chauvet, chief revenue officer of Lightspeed POS. “It can help you track your goods efficiently, set up information properly from the start, help you determine total costs, monitor your sell-through, and more.”
Using a point of sale, you can run a report that quickly shows products that have hit their reorder point. A reorder point is a level that you preset which suggests it is time to order more product. Unless you have an extremely small shop, it is not always easy to see what is running low until it is too late. You cannot sell what you do not have, so being able to quickly see all the items you are running out of is crucial. Similarly, a proper point of sale can show you sell-through by brand and/or item.
Many retailers might explain how they “just know” which brands do better than others or what their most popular items are by virtue of spending time in the store. With an automated system, however, they can quickly tell you which items typically sit on the shelf for two weeks or more, or which ones have the highest sell-through.
More than just telling you what is selling, a point of sale will also help you quickly calculate your margins for various items so you can better understand which products are the most profitable–and who wouldn’t want to stock up on fast-selling, profitable merchandise?
You know that it is important to quickly sell off aging stock, so identifying slow-movers early on is key. A sell-through report will also help you manage your discounting and prompt some serious re-merchandising to get rid of the slow-movers. You can also run a weeks of supply report to see exactly how slowly a product is performing. Of course, a shrewd retailer can sense what is selling and what is not. But without the hard facts generated by a report, it is almost impossible to make optimal decisions based on a “hunch” and an outdated operating system.
By this point, you have probably realized that automation is essential for understanding what is going on in your store and is crucial for making decisions. A point of sale can help you control even more, such as minimizing shrinkage, and allows you to manage inventory from several locations in a single system. To find out more, download this free guide for retail best practices for maximizing profits, or check out https://www.lightspeedhq.com/resources/white-papers/managing-your-inventory/.