Stock Control Procedures in Retail: Tips and Best Practices

Stock control in retail involves ordering and storing the right amount of inventory, so you neither run out of stock nor overstock. It is about finding a balance to optimize inventory storage costs while always fulfilling customer demand.

Managing your retail business inventory properly helps you avoid losing out on sales opportunities, reduce waste, and increase your cash flow.

In this post, we will discuss the tried-and-tested stock control procedures in retail that can help boost your profit margins. But before that, let’s also discuss the key reasons to leverage them.

Why Should You Invest in Stock Control As a Retail Business?

Here are the key benefits of investing in stock control as a retail business:

1. Prevents Stockouts and Lost Sales

Using stock control procedures ensures you always have a minimum stock level to meet customer demand. It helps you fulfill customer orders, even when demand fluctuates.

2. Reduces Overstocking and Wastage

With stock control, you only order as much as you need to meet your sales demand. This prevents overstocking products that just end up consuming your storage space.

According to a report, companies held $142K worth of stock in 2022, over and above what they needed. Overcoming this can reduce wastage and increase your cash flow. You can use this cash to grow your retail business.

3. Improves Customer Satisfaction

There’s nothing more annoying than visiting a website and finding your favorite products out of stock. If your products often go out of stock, it can annoy your customers and stop them from revisiting.

Proper stock control ensures you meet customer demand successfully and boost satisfaction.

4. Reduces Thefts

When you have a clear picture of how much stock you have, the chances of theft are minimal. Even if it occurs, you can easily track such issues because you have complete visibility over your inventory levels across locations.

Over 57% of global retailers have inventory data accuracy of less than 80%.

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However, you can improve inventory accuracy and gain real-time visibility of your stock levels with the right stock control procedures.

5. Boosts Profit Margins

Stock control ensures you never have excess stocks, reducing wastage and storage costs. This results in maximizing your profit margins.

If you’re looking for a powerful stock management solution to track your inventory levels in real time, automate restocking, and reduce waste, consider Waveon. Our no-code ERP builder helps you automate various aspects of stock control (see image below), boost efficiency, and reduce costs.

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Whether you run a small shop or a large retail chain, Waveon gives you the tools to stay organized, prevent stock shortages, and maximize profits.

5 Most Important Stock Control Procedures for Retail Businesses

Now that you understand the importance of effective stock control, let’s discuss some methods you can use.

1. Economic Order Quantity (EOQ) Method

EOQ helps you identify the perfect amount of stock to order each time, so you minimize costs while keeping shelves stocked. It aims to balance the cost of ordering frequently and the cost of storing excess inventory to find just the right quantity to order.

This stock control method is great for retailers with limited storage space and low budgets.

2. First in First Out (FIFO) Method

The idea is to sell your oldest stock first, ensuring your products don’t expire, go out of fashion, or become outdated.

Though it is useful for all retail businesses, this method is especially perfect for retailers that sell perishable goods or products with a short expiration date. It helps keep your stock fresh and reduce wastage.

To implement this technique, you can use batch tracking or some sort of RFID system to keep track of each piece of inventory and its expiry date.

3. ABC Analysis Method

If your retail business sells numerous products, the ABC method can help you prioritize the most important products over low-value ones.

It involves categorizing products based on their value and sales volume, into the following three categories:

1. High-value, low-quantity

2. Moderate-value, moderate-quantity

3. Low-value, high-quantity

The goal is to focus on the most important stock in your inventory to make the most out of your storage space and inventory budget.

4. XYZ Analysis Method

This stock control procedure for retail businesses is similar to the ABC analysis method. However, here you categorize products based on demand patterns:

1. High-demand, consistent

2. Moderate-demand, seasonal

3. Low-demand, unpredictable

You can also use a mix of ABC and XYZ analysis procedures for smart stock control and inventory management. For example, you can prioritize high-value best-selling products (AX) and not worry too much about low-selling, unpredictable products (CZ).

5. Safety Stock and Reorder Points Method

Safety stock is the extra inventory you keep as a cushion to meet unexpected demand or supply chain delays. Reorder points are the stock levels at which you place a new order to avoid running out of inventory.

This stock control procedure involves keeping extra stock and setting reorder points so you never run out of essential products. You can automate reordering based on predefined rules using an ERP solution like Waveon to improve the efficiency of this method.

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Two Key Stock Control Systems Best Suited for Retail Businesses

The focus of stock control methods is typically narrower, while a stock control system is broader in scope. It involves tracking stock across stages, including supply chain, ordering, and warehousing.

Here are the two key stock control systems you can use for your retail business:

1. Perpetual Inventory System

This system involves updating stock levels in real time using technology like POS systems and barcode scanners. As soon as a product is sold, the system will get updated. It gives you real-time visibility of your company’s inventory, enabling efficient management.

2. Periodic Inventory System

This involves counting inventory at set intervals (weekly, monthly, or yearly) instead of tracking it in real time.

It leaves scope for mistakes as you don’t have real-time visibility of your inventory. Though it could work for a small business with a single store, it is not the best stock control procedure for retail chains.

Manage Your Stock Efficiently Using Inventory Management Software

There you have it — some of the best stock control methods for retail businesses. Choose one or more of these to streamline your inventory management process.

Using no-code inventory management tools like Waveon can simplify and automate the process as it:

• Requires no technical expertise

• Offers customization flexibility and options

• Is easy to modify with pre-built templates and drag-and-drop modules

• Is cost-effective

Try Waveon for free to get started