Few, if any, small businesses have been immune to ongoing economic pressures. In fact, according to a report from Commonwealth Bank, 87 per cent of SMEs encountered a cashflow crunch in the past year. With consumers being more frugal in their discretionary spending, one of the most vulnerable sectors is retail.
The approaching peak season will inevitably provide opportunities, but small retailers cannot simply sit back and expect shoppers to surge through their doors and online checkouts. Instead, they need to plan proactively, not just on customer acquisition and retention, but on their bottom line – using that as their financial foundation.
For retailers – typically stock-heavy businesses – one of the most impactful ways to do so is through real-time inventory management. But what is it? And what are the benefits for your business?
Inventory becomes insight
Real-time inventory management is the process of continuously monitoring and updating stock levels as transactions occur. From pen and paper to spreadsheets, the optimised process today occurs on inventory management software or a POS (point of sale) platform. When inventory records are updated as soon as a product is added, sold or moved – for example from a warehouse to shopfront – you can make informed decisions about purchasing, sales, and inventory control.
It’s about more than understanding what stock you have, and where it is, though. Effective inventory management enables you to improve your efficiency, profitability, and customer satisfaction. Real-time inventory software provides a clear and current view of inventory across multiple locations, which is crucial for managing supply chains, warehousing, and retail operations.
This up-to-date inventory data helps you predict demand more accurately, allowing you to adjust your inventory levels to meet customer needs without overstocking or understocking. Understanding exactly how much stock you have on hand helps maintain optimal inventory levels, reduce holding costs, and minimise waste due to overstocking.
Consider seasonal retailers. You don’t want to sit on excess winter stock and have not enough of your summer range. Through inventory management, you can make insights-driven decisions about how to shift your winter stock – through, for example, end-of-season discounts – and how much of your summer stock to order. It’s not just about what stock you hold, but where to store it too. For example, if certain items typically sell far more in store than online, have them in your bricks-and-mortar location rather than an online distribution facility.
Inventory management also enables you to streamline processes such as order fulfilment, restocking, and supply chain management, reducing manual errors and operational inefficiencies in the process. In some instances, if your inventory management allows you to establish confident, transparent long-term forecasts, it might even enable you to negotiate more favourable terms with suppliers.
It’s not just about your bottom line; accurate stock levels ensure that products are available when and where customers need them, improving service and customer satisfaction. In today’s omnichannel retail environment, where businesses – and their shoppers – are active online and in-store, it’s essential to have complete visibility over your inventory. According to Lightspeed’s Retail Insights and Shopper Sentiment Report, 42 per cent of Australians highly value being able to check accurate in-store stock availability online.
Today, when cashflow is uncertain, every dollar counts. Your inventory as a retailer is one of your most valuable assets, not just through sales of it, but through effective management of it. With peak season approaching and economic pressures persisting, establishing greater control and visibility over your inventory could be exactly what you need to improve cashflow, operational efficiency and customer satisfaction in the short-, medium- and long-term.
