5 Ways to Control Inventory Through Merchandising
Merchandising is the art of promoting retail merchandise for sales. There are a variety of techniques that can help retailers move merchandise through the supply chain to the customer, but you’ve got to keep a steady flow of merchandise coming in the door as you move it out the door. That requires a thoughtful and well-planned strategy for maintaining your inventory.
Here are five different inventory control methods any retailer can use to move merchandise.
- ABC Analysis – ABC analysis involves analyzing your inventory to determine which products move the fastest. Those products that move the fastest should be placed closest to shipping and receiving. The idea is to make them more accessible so they can be loaded, trucked, and processed into your stores quickly so they can then be sold to customers.
- Inventory Turnover Ratio – When you calculate how quickly your inventory is turned over in a given time period, you can then position your merchandise to move according to that timeline.
- Automatic Inventory System – Automatic Inventory System depends on automatic replenishment procedures. Your retail chain management team monitors your stock levels to ensure that you have a steady quantity and/or value of each item you merchandise. This ensures you never run out of product.
- Inventory Budget Method – The Inventory Budget Method designates an annual budget for your inventory. Throughout the year, your inventory is adjusted and buying habits governed to keep up with your budget. Budgets, of course, can be raised or lowered, but this is typically done on an annual basis.
- Demand-Based Merchandising – The demand-based merchandising model is more dynamic in nature. Retailers keep a constant eye on merchandise trends and order product according to the demand. This can be tricky because some retail sectors, such as fashion, can be difficult to predict. Trends can change quickly as can demand.
The key to keeping your products shelved so that you can keep selling them is to have a merchandising strategy. Which strategy suits your retail environment depends on a number of factors including the sector you occupy, geography, customer preferences and buying habits, your financial position, and more.