February 28, 2024

How to Keep Track of Inventory for Grocery Stores?

Inventory is nothing short of a valuable asset for any company or business. For grocery stores, inventory management is perhaps one of the biggest challenges. So how do grocery stores manage inventory? Well, we have discussed the grocery store inventory management process in detail.

Most businesses and retailers are of the opinion that inventory only represents current stock. But it’s more than that and especially when we talk about grocery store inventory.

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What does managing grocery store inventory entail?

In general, inventory management is the process of ordering, stocking, and selling products. The management part helps grocery stores identify which and how many products to order. More importantly, inventory management enables businesses to avoid dead stock or stockout.

Grocery store inventory refers to items or products that you have in stock. This is the merchandise that your customers want and you must have to meet their demands. In any case, you should neither have too little nor too much in your back store nor warehouse.

Effective grocery inventory management is all about knowing:

  • Product locations
  • Quantities of each product type
  • Managing stock by location and sales channel
  • Which stock is selling well and which isn’t
  • Tracking profit margins by style, model, item, or product line

Then there are decision-making steps that affect grocery store inventory management such as:

  • The ideal amount of inventory to have in storage and backstock
  • How changing seasons will affect sales?
  • How many products to reorder?
  • When to discontinue a product?

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Why is managing grocery store inventory so important?

Grocery store inventory management helps you ensure sustainable profits while managing bulk stock. You can avoid inventory damage and meet customer demand without having excess supply or running out of stock.

Through inventory management, grocery stores can:

  • Reduce management costs
  • Ease supply chain management
  • Minimize out-of-stock issues
  • Prevent spoilage and avoid expired products 
  • Simplify your order fulfillment process
  • Stop inventory losses
  • Improves overall profit margins
  • Improve forecasting
  • Increase customers satisfaction

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How do grocery stores manage inventory?

Right now, most grocery stores are using inventory management software to manage their stock. The best inventory management software allows businesses to keep track of products in real-time. You can manage stock levels while monitoring what gets sold. The best part is that grocery stores can automate their reordering using omnichannel inventory management systems.

There are plenty of steps involved in grocery store inventory management

  1. Inventory is purchased 
  2. Data about each SKU is captured as they’re received
  3. The record of all the available products is updated
  4. After barcode scanning, Inventory is updated when an item is sold
  5. The inventory management system helps generate a replenishment list
  6. The software notifies if a product hits the preset reorder level
  7. Expired and damaged goods are deducted after manual counting
  8. New Inventory is bought
  9. The cycle continues to repeat itself

The below diagram will help you understand the process of inventory management for grocery stores. 

How do grocery stores manage inventory

Normally, a perpetual inventory system is an ideal choice for a grocery store. This type of system can handle a large inventory as it continuously records inventory changes. All you have to do is connect it to your point of sales (POS). However, for large and multichannel grocery stores, an omnichannel inventory management system is the right pick.

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How Different Types of Grocery Stores Manage Inventory

Not all grocery stores are the same because every business has its unique requirements. For example, the needs and dynamics of physical (brick-and-mortar) stores are different from online grocery stores.

Below is a breakdown of the grocery store inventory management process for physical and online stores. We have tried to explain the whole inventory management cycle step-by-step.

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For Physical Store

  1. A customer picks products and drops them in the cart
  2. The buyer goes to the checkout counter for payment
  3. The cashier scans the SKU (Store Keeping Units) of selected products.
  4. The POS generates the invoice once the transaction is completed 
  5. The inventory management software updates the stock levels

Scanning consents the inventory management software to remove/lower the quantities of these items from the store’s inventory level. CEO, managers and staff with access to the software can check the real-time inventory status. This helps inventory managers know when products are about to go out of stock.

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For Online Store

The online grocery store inventory management process is almost the same.

  1. A buyer browses and selects items on the website or store app
  2. The customer proceeds to the checkout page and clicks the Pay button
  3. The grocery store website or app is connected to an inventory management system
  4. The software generates the invoice and updates the inventory levels
  5. Both customer and store personnel will get notifications

Online stores can send such notifications via email or text messages. Brick-and-mortar stores can also establish their online presence through a quick commerce solution. This way they can receive orders and sell groceries online from customers near their store locations.

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What is the average frequency of manually checking inventory in grocery stores?

The frequency of manual inventory checking varies from business to business. Some rely heavily on their inventory management system and do not pay much attention to manual checking. Such grocery stores usually do manual counts annually (once) or biannually (twice a year). But this is not a good method if you are trying to stop store theft.

That’s because the manual checking process takes time and requires labor. You may have to utilize your own staff or hire a third-party for the manual checking. The process involves counting every single item that is present in your inventory from a cereal box to a cucumber. 

Physical checking of your inventory can take a toll on your staff, managers, and store. You may have to close your store for many hours if not a whole day. Then there is document preparation and reporting which may take days.

We recommend you do manual inventory checking or your grocery stores at night. This way your store can remain open for customers during peak hours. If it’s not possible, notify your customers beforehand to avoid any inconvenience. Furthermore, do manual checking quarterly instead of monthly or biannually.

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Why should grocery stores count inventory?

Managing and monitoring your stock through an inventory management system is easy. However, you cannot be sure whether your inventory levels match what the software is showing.  Manual counting will reduce the chances of theft and ensure that your stock numbers are accurate. You can identify damaged and lost products through manual counting to keep a check on your inventory. 

Important Things to Remember

We hope you are now aware of the grocery store inventory management process. We have tried to explain all the essential points in detail for your convenience. There are a few important things to remember when it comes to grocery store inventory management
  • The best way to manage grocery store inventory is with inventory management software.
  • An inventory management system prevents understocking and stockout as well as overstocking and dead stock.
  • Grocery stores can streamline their operations and manage inventory on multiple channels using the software.
  • Manual inventory checking is still necessary to avoid store theft and prevent losses. Physical checking can strengthen your inventory management but only software can provide real-time inventory data.

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Monitor and Track Inventory with XStak

XStak is an all-in-one, omnichannel retail operating system for next-generation retailers. Our inventory management system allows grocery stores to keep track of their stock on multiple channels and locations. You can get real-time inventory insights and see which products are performing better or moving slowly.

XStak helps grocery stores strengthen their inventory management process by providing data-driven forecasts. You can track when an item entered inventory, can track it using the SKU, and will know the moment it left the store.

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