How Grocery Store Inventory Leads to Increased Profits: 4 Things to Know
As a grocery store owner, you know the importance of balancing inventory levels to maximize profits and minimize waste. You also know that task is easier said than done.
Trying to maintain the right stock levels can feel a bit like trying your hand at clairvoyance. How can you truly know how many units you’ll need and when you’ll need them?
The struggle is real.
Overstocked shelves lead to dead stock and waste, while understocked shelves can result in lost sales and frustrated customers.
But what if you could streamline your inventory processes and strike that perfect balance? Imagine reducing waste, improving stock accuracy, and boosting profits all at the same time.
We’re here to help you turn your market’s inventory management from zero to hero. We’ll dive deeper into what it means to have efficient grocery store inventory management, and help you better understand what you can do to optimize your stock for revenue success.
Tapping Into the Power of Grocery Store Inventory
Effectively managing your grocery store inventory can lead to increased profit. However, every coin has two sides. Inefficient inventory management will not only prevent you from seeing these benefits, but can actually hinder your business.
Miscounted inventory due to manual counts and management lead to products running out of stock, and no clear view of what you need to order more of. Manual inventory management also takes significantly more time than using modern POS software. Not back-filling sold products also means you’ll have more empty shelves than you want, leading to a poor customer experience.
Poor grocery store inventory processes can also result in deadstock, poor space management and storage practices, and other woes — becoming detrimental to your entire business. Grocery store profit comes from product in and product out, which means your revenue is determined by the products you purchase, and how well you sell them.
Grocery stores can increase profits by effectively managing their inventory and utilizing key product sales data to drive data-backed buying decisions. It can also help identify what products aren’t selling well, so you can create marketing campaigns or promotions to change that.
By implementing efficient inventory management strategies, grocery stores can improve their bottom line by reducing waste and spoilage, optimizing product mix, improving stock availability, increasing sales through cross-selling and upselling, managing promotions and discounts and optimizing pricing.
1. Optimize Product Mix
Analyzing sales data can help you identify which products are most popular, and adjust your product mix accordingly. Doing so can help to increase sales and profitability by bringing in items that you know your customers want.
Keeping track of sales data over time can help with identifying product popularity by showing you trends in product sales.
Some products may be more popular during specific seasons, which can help you save cost by ordering less during off-seasons, and ramping up when you know people want it. Seasonal products are also a great way to diversify your grocery store inventory, and keep it exciting all year round.
Using data to make informed decisions about which products to stock and how much to order reduces the risk of overstocking items or being left with shrinkage.
If you’re consistently running out of stock on certain items, you can look to buy larger quantities at cheaper prices. The cheaper it is to order your products, the more money you’re making per unit sold. This ultimately leads to increased sales, improved customer satisfaction and increased profitability.
2. Improve Stock Availability
Accurately maintaining and monitoring your market’s inventory levels can help you forecast demand, and ensure that you have the right products in stock, at the right time. Simply having the correct inventory levels can make a huge impact on your customer experience, and ultimately, your revenue.
Monitoring stock levels and stock rotation help to reduce waste and spoilage. Make sure to follow the first-in first-out rule, meaning your older products are at the front of your shelves so they aren’t left in the back to go bad. Regularly rotating your stock can help make sure products are sold rather than thrown away.
High product availability can help to create a loyal customer base by letting your customers know their shopping needs can be fulfilled. Markt POS has state of the art barcode scanners to help you better track inventory levels, and accurately identify any issues with stock availability.
Improving stock availability is really quite simple. If you have more, you can sell more, and if you know you’re going to sell a lot of that product, then fill up!
3. Run Effective Promotions & Discounts
By tracking inventory and sales data, stores can identify slow-moving products, and use promotions and discounts to clear them out if need be. Take advantage of smaller products that work in combination with larger products. Mix and match promotions that bundle products like wine and pasta, or meat and barbecue sauce, can help move smaller inventory quicker.
On the flip side, people are usually more willing to buy items with a long shelf life — even if they don’t need them immediately — in bulk, which means sales work great for them. Canned items are a perfect example of products people are willing to buy many of, and that you can clear out pretty fast.
A grocery point of sale solution like Markt POS makes a buy-one-get-one (BOGO) promotion easy by recognizing what items are part of the promotion and discounting them automatically, rather than your cashier having to manually discount products.
A reliable POS system that boasts grocery inventory management, stock reports, and an easy-to-use interface make running any sort of discount or promotion an absolute breeze.
4. Optimize Pricing
Stores can optimize pricing and maximize profit by doing a regular analysis on product demand and cost.
If products aren’t selling, consider reducing the price closer to the at-cost value and testing from there. The last thing you want is to sit on top of stock that you may eventually throw away — so the best thing you can do in this scenario is sell your product at a minimum in order to break even. From there, you can start to test increasing the price to see what point sales drop off the most.
For popular products, consider increasing the price to see if customers are willing to purchase at a higher cost. Especially for products you consistently run out of stock on, this can help you manage the demand and increase your profit at the same time.
Another option for popular products is to order more, and work with the supplier to negotiate a cheaper cost per unit. This can help you optimize the price you purchase the product at, so you can turn a larger profit for every unit sold.
It’s important to remember price optimization works on both ends of your store — how much you sell the products for, and how much it costs you to bring the products into your store.
Maximizing Profits: The Importance of Effective Grocery Store Inventory
By implementing these effective inventory management strategies, your store can increase sales, reduce waste, and ultimately increase profits.
Understanding your customers is the root of success.
Knowing your audience and pricing products and promotions accordingly can lead to a loyal customer base. Maintaining accurate inventory records can be challenging, but with the help of technology, you can make your grocery store inventory management efficient, and ultimately work for you.
Inventory management software can automate many tasks, such as tracking stock levels, forecasting demand, and reordering products — leaving you more time to focus on other aspects of your grocery store.
Markt POS can do everything you need and more: efficient inventory management, real-time sales data, loyalty programs, and automatic stock updates. We can help you optimize your inventory management so you can increase your profits ASAP.
Use our build and price tool today to explore our features and see how we can help you make your small market’s inventory a breeze!
