As any astronomer knows, time and space respect certain laws, and that those laws cannot be broken. Retailers and grocers are also well-acquainted with those same laws. But they feel the penalties of breaking them not so much theoretically as practically—along their bottom line. Perhaps nowhere is this more evident than in inventory management.
Not even the most ingenious retail inventory management strategies can alter these fundamental laws. Your storerooms, aisles, and shelves can accommodate only so much merchandise, and you can only update prices as quickly as you’re able to process new pricing information.
But you can always be smarter about how you negotiate the hard constraints imposed by time and space. If you’re looking to maximize your operational efficiency and minimize the cost of doing business, train up your staff on these grocery inventory management best practices.
Zero out your zero movers.
Every opportunity to face your shelves is an opportunity to more strategically allocate one of your store's most precious resources: space. While your staff may have a strong sense of what's flying off those shelves as opposed to what's just hanging around, you need them to make inventory management decisions based on hard data.
Zero mover reports are the surest way to identify which products simply aren't selling. Backed by analytics, category managers and store directors can make smarter decisions about what to stock, in what quantities, and how to display that inventory to your customers. You don't necessarily need to know customers aren't putting lemon cake mix in their shopping carts. But you could be meeting the greater demand for chocolate cake mix, if you had the insights to right-size your supply.
A zero mover report also opens up quick turn options. Marking down the right items—or even relocating them to areas of your store where they're more likely to grab customer attention—can free up valuable shelf real estate.
The key is to train your staff to adhere to retail inventory management best practices. That means routinely consulting and leveraging the information in sales reports to increase your store's operational agility.
Invest in electronic shelf labels.
Traditional shelf labels are wasteful. They take time to print, cut, and hang. They require consumables such as paper and toner. And, even if you're mass importing the latest vendor-supplied data to generate your labels, you haven't fully automated the process, meaning you haven't optimized the labor savings that come with digitally transforming your pricing updates.
Unfortunately, the storewide adoption of electronic shelf labels, or ESLs, isn't in every grocer's budget. But what about specialty sections? ESLs make perfect sense for high-impact, margin-sensitive categories.
Prices for dairy, produce, meats, prepared foods and other perishables change frequently, as do items like beer, wine, and spirits. Imagine being able to update those prices at every customer touchpoint simultaneously, and with the click of a single button. No more retagging. No more having to remove old labels. No more discrepancies between the sign on the shelf and the readout at the register.
Besides eliminating the need for certain consumables and reducing your dependence on manual processes, ESLs can make your retail inventory management more cost-effective in other ways. You can price match in real-time to avoid being undercut by a competitor. You can get granular with your special offers, such as running a micro-sale on prepared sandwiches from 11 a.m. through 1 p.m. In short, you can pivot your pricing strategy based on actual demand.
Staff well-versed in integrated systems and enterprise solutions are vital to reaping the benefits of a more flexible pricing system. That said, the strategic deployment of these devices can help you instill a store culture based on making smarter, more data-driven decisions.
Weigh the benefits of scale management.
Because of the ways pricing changes cascade throughout your store and its systems, manual processes can be quite costly. This also applies to the random weight items you sell. Here, automating updates to your grocery inventory management platform can save you gross margin points.
Let’s say you need to change the price of hamburger meat. Traditionally, a team member would be charged with keying this change into every individual scale in your store. What are the possible points of failure in this process? The team member has to enter the correct PLU for the item being updated. They have to enter the correct price ($2.99/lb.) at a dozen different terminals. What if they miss one, fat-finger the entry, or get interrupted in the middle?
Scale management is all about instituting a single source of truth that protects your store’s data integrity. Using back office software, you can change pricing for random weight items in your central database and push those changes to the scales at your butcher counter, in your bulk foods department, and at your cash registers. You can then be confident that when your staff or customers weigh items on a scale, the right quantities will be recorded, and the printed label scanned at checkout will reflect the correct price per pound.
As your business scales, scale management has the potential to deliver even more significant savings. Consider the number of scales in operation across a 15-store chain. Multiply the total number of scales by the cost to sell just one random weight item. At only five scales per location, this chain could still be saving as much as six figures annually by training its staff to apply this retail inventory management best practice.
Control what comes through your back door.
Closing grocery inventory management gaps on your sales floor is only part of the equation. What happens in your back office merits just as much attention. Yet many managers have trouble holding vendors accountable because of legacy business practices surrounding receiving.
Let’s illustrate using the following, all-too-familiar scenario. A delivery of canned soups arrives at your loading dock. Your receiving clerk inspects the items the driver has dollied in and, together, they run the numbers. The 12 cases of chicken noodle and 10 of cream of mushroom you expected are there. But the billable totals don’t match. To make up the difference, the driver offers to throw in a half-dozen cases of cream of chicken.
Unfortunately, your clerk has no official documentation to which to refer and no way to confirm—as they suspect—that the supplier might be trying to shift the burden of their excess inventory to you. So they accept the delivery. Besides, the driver is a nice guy. It’s probably just an honest mistake.
Direct store delivery (DSD), sometimes called back door receiving, eliminates this problem. Rather than asking human operators to count and check items off a manifest, DSD relies on digital checks and balances to ensure proper order fulfillment. Product barcodes are scanned as soon as they are received, that information is fed into your store’s inventory management system, and all information is verified against the originating purchase order.
Closing the purchase order-invoice gap is critical to making retail inventory management more efficient and friendlier to your bottom line. Laying away products you can’t sell before they reach the end of their shelf life is bad business, and not only because doing so consumes valuable warehousing space. It also weakens your ability to exert full control over those links in the supply chain that most impact your store’s financial performance.
Implementing DSD processes and procedures reinforces to your staff the importance of buying inventory at the right price and in the right quantities. If you’re not receiving the right deals or allowances from the vendor on any product, no matter how premium, you can’t sell it at a profit.
You may not be able to bend the laws of time and space, but you can improve the accuracy of your inventory counts, maximize your store's space utilization, and streamline your inventory management workflows. Start by learning more about TRUNO’s integrated warehouse and store solutions developed specifically to meet the needs of grocery retailers like you.
Learn how TRUNO business intelligence helps manage inventory more efficiently and profitably.
