Chamber Chat - End of Year Inventory

Dec 09

By Meg Moss

 

With the holidays upon us, increased sales are helping put many retailers in the black. While this is great news, there is one major task left to do. Count your inventory.

 

This is the time of year that all retail businesses – big and small – need to complete their inventory for year-end tax requirements and financial statements. It’s not the most fun task, but is certainly essential.

 

In addition to those tax requirements, there are several other reasons that it is good to do that year-end product count. Entrepreneur did an article called “What You Need to Know About Managing Retail Inventory”, and it outlined a few of those “other reasons”. First, theft control. Physical counts of products are a great way to make sure that sales match order information, and that there are no differences due to employee or customer theft. According to FitSmallBusiness,   shoplifting accounts for around 37% of retail loss in the United States. There are several ways to reduce your vulnerability. Store organization is one of them. Keep an open floor layout so that most items are visible, and utilize mirrors as needed. Also keep most often, or most easily stolen items close to the register, and have your checkout counter near the front of the store. Additionally, educate your employees on what to look for, such as bulky clothing and switched tags.

 

Secondly, Entrepreneur says that another good reason for end of year inventory is for better customer service. Having a good picture of what inventory you have on hand helps make sure you can meet your customer’s needs, and stock up on things that are low in inventory.

 

Evaluate your sales. Another good reason for inventory counts. It’s a great opportunity to look back at the year and evaluate what products are selling and which might be worth dropping from your inventory all together. While this should be evaluated throughout the year, this time of year gives you a full twelve month history.

 

The North Carolina Retail Merchants Association provides tips on the task of physical inventory counts. First, schedule accordingly. It is a time-consuming process, but shutting everything down will affect your revenue. So first, clean up by getting everything in order. That way there’s no wasted time locating misplaced or mislabeled boxes. Organize products on shelves leading up to the count will make everything run more smoothly.

 

The NC Retailers Association also suggestions creating a map of the store or warehouse and divide the work between employees. Plan and assign tasks and create checklists for each employee. “Staff-up” to make sure you have enough people to handle the counts during the time slot you’ve allowed. Also, schedule employees to work in teams of two to make sure of accuracy. Sadly, according to the National Retail Federation, employee theft is the number one cause of inventory shrinkage.

 

Year-end inventory counts can be overwhelming, but with the right preparation and methods, it doesn’t have to be as bad as it sounds. Happy counting!



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