It’s been a tough few months for retailers selling on high streets or in-store, with Marks & Spencer the latest in a long line of high-profile businesses announcing cuts to their staffing levels.
At a time when the bottom line is being hit harder than ever before, it’s increasingly important to invest in effective stock management and auditing; let us explain exactly why…
Freeing up working capital
There’s the old adage that ‘cash is king’ and for any business going through a difficult or unpredictable trading period, this is certainly true.
For many retailers a large proportion of working capital is often tied up in stock.
Understanding whether or not you have the right levels of stock is therefore key to freeing up this tied capital; if items or certain lines are staying in the warehouse for prolonged periods, you’ll need to know. Alternatively, if there’s been a surge in demand for other products (sales of yoga equipment were up by 316% during the lockdown!) it’s essential you understand these buying trends and quickly react in order to maximise the sales opportunity and not leave yourself out of stock.
Effective stocktaking will provide you with the information you need to ensure you’re carrying the correct levels of stock for existing trading conditions, enabling you to maximise the levels of cash flow you’re able to have within the business.
Minimising stock loss
Although there have been significantly lower levels of shoplifting reported in recent months due to decreased footfall, the ongoing Coronavirus pandemic has led to a number of potential pitfalls when it comes to stock loss:
- Staffing Issues:
Although we’re all human and mistakes will sometimes happen, having well-trained staff that fully understand your established processes will lead to less errors in stock. If you therefore consider that we’ve gone through a period in which more than 9 million people have been furloughed, staffing numbers are often lower and work has been disrupted and altered in many different ways, it’s inevitable that stock loss by way of human error or procedural change will be on the rise. If not identified early, even the smallest of errors can quickly build to be bigger, fundamental problems.
Effective stocktaking can nip these issues in the bud before they have time to grow.
- Returns and refunds:
Returns and refunds often lead to stock level errors. With so many retailers turning to ecommerce in order to augment sales and with 22% of goods being bought online returned (compared to 8% in physical stores), is your business facing a potentially mounting problem as online sales grow?
Stocktaking can give you the information you need to ensure that stock levels don’t become bloated by returns.
The past quarter in 2020 has seen some of the most radical swings in demand for certain items usually only reserved for the run-up to Christmas. Sales in areas such as health and fitness have been buoyant, while more niche products including dried trifle have soared by more than 350%!
At the heart of effective stocktaking is actionable data and information – it’s there to help you understand what stock is flying out the door and which is lying stagnant at the back of the storeroom. If something is selling, it’ll give you facts and figures to support decisions on the volume of the next shipment and ensure it’s not full of items destined to be written-off through lack of sales.
Stocktaking can often be seen as just facts and figures on a spreadsheet. In essence, particularly when you partner with the right provider, it can be so much more than that; as we’ve explained, it can help to free up working capital, ensure you’re able to maximise sales through understanding demand, as well as reduce stock loss through the disruption caused by the pandemic. Now really is the time to invest.
Abacus Valuers has worked with retailers for more than 30 years. If you could use some help through some of the biggest changes the retail sector has ever seen, give our team a call on 01637 874609.