The Cost of Poor Inventory Management

The Cost of Poor Inventory Management to Your Retail Operations

Karen Savage

Head of Sales at Anyline

Jan 26, 2021

2020 was a year like no other in the retail sector. Thanks to the COVID-19 pandemic and associated economic downturn, massive changes took place in every corner of the retail industry. Many retailers saw significant losses, while others saw unprecedented gains.

Much of this had to do with the nature of each retailer, of course: we all understand why Walmart and Amazon had banner years, while smaller, high-touch shops struggled. But dig a little deeper, and there’s more to the story, such as poor inventory management and stock control.

Poor Quality of Inventory Data Leads to Revenue Losses

When your inventory data is off, you run the risk of losing out on revenue. At its simplest, this looks like losing out on customers who come in to purchase something you don’t actually have. It’s one thing if you know you’re out because you’re constrained by supply chain. It’s another thing entirely if you don’t know you’re out.

This can create massive frustration for your customers as well. Your website says you have something and the customer comes to you for it. But instead of leaving satisfied, the customer spends too long searching for something that isn’t in the store. This is a double threat: you lose out on revenue, plus you damage the customer relationship.

Inventory excess is the other side of this coin. When you have way more product than your inventory system says you do, you have capital tied up in inventory. If you’re dealing with seasonal or perishable inventory, you’re at an even higher risk of revenue losses.

 

Poor Inventory Management Leads to Falling Productivity

Your customers don’t like to wander around the store looking for nonexistent product. Neither does your staff. When the inventory system is a mess, your team wastes time.

This could look like a staffer checking the internal inventory and seeing an item listed as in stock when it’s really not. Then they run a wild goose chase around the floor. Every time that happens, you’re paying your staff to do nothing— actually, worse than nothing, because customers are getting frustrated in the process.

 

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