Retail Inventory Management Software: Your Key to Massive Savings

Discover 5 proven ways to slash costs and boost profits with retail stock management software.

Retailers, are you tired of overstocked shelves and lost profits? Juggling inventory can be a real headache, draining your time and money. The good news is effective solutions exist.

Retail inventory management software — either POS-based or a standalone platform — offers a lifeline for struggling retailers. The right inventory system can help automate ordering, improve cycle counting techniques, identify waste, and prevent stockouts and overstock.

Almost all retailers can benefit from using stock management software. However, few use inventory software to its full potential.

Are you getting the most from your retail inventory software? This guide provides the five easiest ways inventory software can save your business time and money. Plus, we cover the advantages of POS-based inventory software over standalone platforms (and show you how a POS system maximizes the impact).

What Is Retail Inventory Management?

Inventory management in retail is the process of overseeing and controlling the flow of products in your business. An effective system helps you monitor the items you sell more accurately. You monitor items from vendors to the warehouse, until they are sold.

Effective retail inventory management helps your business:

• Reduce costs – Minimize storage costs and markdowns.
• Improve profitability – Help you optimize pricing and promotion strategies.
• Free up cash – Overinvesting in slow-moving inventory.
• Streamline processes – Better organization = less time reconciling discrepancies.
• Happier customers – Avoid stockouts and shortages and ensure accurate pricing and availability.

When done right, retail inventory management ensures you have the right products, in the right place, at the right time.

Does Your Business Need Stock Management Software?

Commonly, retail store inventory software becomes more important as your business grows.

Picture this, an independent boutique might be able to manually count items and their sizes and record this data in a simple spreadsheet. However, once that business scales and adds a location or a hundred more SKUs, retail inventory software becomes a mission-critical tool.

This is because inaccurate inventory data becomes more and more costly as the business grows. Therefore, you might consider investing in or upgrading your inventory software if:

1. Your Product Count Is Growing – Managing hundreds of SKUs manually is nearly impossible. If your product catalogue is growing rapidly, inventory software will help you keep track.

2. Your Inventory Processes Are Time-Consuming – Manual counts, data entry, and order processing can easily turn into an around-the-clock job. Inventory software can automate many of these tasks.

3. You Have Inaccurate Inventory Data – If you often find discrepancies between physical inventory and your data, inventory software can help you get back on track.

4. You Frequently Run Out or Overstock – Consistently running out of popular items or having a glut of inventory drains your profitability. Inventory software can help you make smarter inventory decisions.

The good news is that stock management software doesn’t have to break the bank. In fact, many POS software providers offer advanced retail inventory management software, as a part of their POS platforms.

FTx POS retail point of sale software includes basic to advanced inventory management as a part of our platform.

How Retail Inventory Management Software Simplifies Tasks and Saves Money

A good retail inventory system offers a compelling ROI. The right tool can help you get faster — automate tasks that used to take days to complete — and cut your costs and improve profitability to drive real revenue.

Here are five inventory management tasks that can get much better with the right software platform:

1. Cycle Counts

Manual cycle counts are time-consuming, labor-intensive, and prone to human error. First, you must manually analyze your stock with ABC analysis. Then, an employee must count and manually enter the count data (on a daily or weekly basis).

Not only does cycle counting help improve inventory accuracy (the average business’s inventory is just 65% accurate). This also helps you ensure your shelves are stocked.

How Inventory Software Helps

Retail inventory management software automates cycle count processes, assigning specific items for counting based on various factors like value, turnover rate, or historical accuracy. In other words, the system will set frequency and generate count sheets automatically, using data-driven modeling.

Cashiers can then print counting sheets and perform assigned counts during their shift. Then, during counts, cashiers can use a mobile inventory scanner to scan items and input data directly into the system, eliminating manual data entry errors.

Benefits:

• Time savings: Reduces labor hours spent on physical inventory counts.
• Improved accuracy: Minimizes counting errors through automation.
• Data-driven insights: Identifies inventory discrepancies and trends for corrective action.

2. Order Automation

Manual order placement, inaccurate demand forecasting, and stockouts or overstocks lead to increased costs and lost sales. Tracking down lost invoices and payment status also wastes valuable time.

How Inventory Software Helps

Inventory management software uses historical sales data and predictive analytics to determine optimal order quantities and reorder points. Once the reorder point is met, the system automatically generates a purchase order. Automated replenishment and purchase order generation saves time and reduces manual errors.

Benefits:

• Time savings: Automates order creation and reduces manual data entry.
• Cost savings: Prevents stockouts and overstocks, reducing carrying costs and lost sales.
• Improved profitability: Optimizes inventory levels to maximize ROI.

3. Preventing Stockouts / Overstock

Stockouts lead to lost sales and customer dissatisfaction, while overstocks tie up capital and increase carrying costs. The key is ordering the optimal amount of inventory, and this often requires knowing key metrics like your inventory turnover ratio.

In smaller operations, many store owners rely on gut feeling to “calculate” their inventory needs, which often turns into overstock or understocking issues.

How Inventory Software Helps

Inventory management software provides real-time visibility into stock levels, allowing retailers to identify slow-moving and fast-moving items. Demand forecasting helps anticipate sales trends, enabling proactive inventory adjustments.

Benefits:

• Increased sales: Reduces lost sales due to stockouts.
• Cost savings: Prevents overstocking and associated carrying costs.
• Improved customer satisfaction: Ensures products are available when customers want them.

4. Product Data Management

Inconsistent product data between online and in-store channels or multiple stores, leads to customer confusion, lost sales, and returns.

How Inventory Software Helps

Centralized product information management systems ensure consistent data across all sales channels. These systems manage data like product descriptions, images, pricing, and inventory levels. However, you don’t need to invest in a PIM system. Instead, advanced retail inventory management software, like FTx POS, includes robust PIM features to help you manage and maintain 1000s of SKUs.

Benefits:

• Improved customer experience: Provides accurate product information to customers.
• Increased sales: Reduces returns due to incorrect product information.
• Enhanced efficiency: Streamlines product updates across multiple channels.

5. Optimized Fulfillment

Inefficient shipping processes, including manual order picking, packaging, and labeling, increase costs and delivery times. This can also disrupt in-store customer pick-up programs or delay store transfers for multi-location businesses.

How Inventory Software Helps

Retail stock management software integrates with shipping carriers to automate order processing, generate shipping labels, and optimize shipping routes. Features like ship-to-store, warehouse transfers, and direct-to-customer order fulfillment can be managed efficiently.

For the warehouse, this type of system is invaluable. Packing slips are created automatically, and orders automatically enter a tracking queue.

Benefits:

• Time savings: Automates shipping processes and reduces manual labor.
• Cost savings: Optimizes shipping rates and reduces transportation expenses.
• Improved customer satisfaction: Faster order fulfillment and accurate shipping information.

For businesses, the average ROI based on our client estimates would be 10% to 30% in the first year of implementation. Therefore, a business bringing in $1 million in revenue could improve net profit by an estimated $100,000 to $300,000.

POS Inventory Software vs. Third-Party Solutions: Which Is Right for You?

Today, there are really two main types of retail inventory systems: POS-based software or a standalone third-party tool. Here are some of the key differences between these types of inventory platforms:

• POS – A POS-based inventory system is software that’s built-in to your point-of-sale software. It automatically tracks inventory based on sales recorded in the POS. Using a point-of-sale with inventory facilitates real-time data and improves inventory accuracy.
• Standalone – A third-party inventory solution is software that’s designed to manage inventory; however, it operates independently of your POS system. Commonly, a developer will integrate the software into your POS, or the business will manually sync these systems on a regular basis.

For many businesses, a cloud-based POS retail inventory system works best. First, POS-integrated systems eliminate the cost of third-party software. Plus, it simplifies network architecture and hardware costs and creates a system that’s totally in sync.

Key advantages of a POS-based inventory platform include:

1. Real-Time Accuracy

Every sale is automatically reflected in inventory levels, ensuring accurate stock counts. Some of the key benefits of improved data accuracy include:

• Reduced stockouts: Real-time data prevents out-of-stock situations. A missed or faulty sync between a third-party software and your POS, for example, can result in inventory delays or stockouts.
• Optimized inventory levels: Accurate data supports better inventory planning and reduces excess stock. A third-party tool can help you do this; but the implementation must be 100% correct. With POS, the data is reflected, without any special development or coding.

2. Streamlined Operations

POS-integrated inventory eliminates manual data entry and reconciliation between systems, saving time and reducing errors. Key benefits include:

• Centralized data: All sales and inventory information are in one place, simplifying reporting and analysis. In FTx POS’s retail back office Control Center, for example, you can pull from 100s of pre-configured and customizable inventory reports.
• Improved decision-making: Real-time data supports informed decisions about purchasing, pricing, and promotions. You can make inventory decisions up-to-the-minute, without having to verify data is accurate.

3. Enhanced Customer Experience

This is especially true if you sell through online and in-store channels. A real-time system syncs with your ecommerce site, allowing you to provide up-to-the-second availability data on your website. Accurate data also helps improve product lookups and ensure price consistency across multiple locations.

• Price consistency – Online, in-store, across all your locations – POS inventory software with a PIM database, allows you to instantly update and sync product data and price changes in seconds.
• On-time delivery – Ensure customers get their orders on time. First, by understanding your inventory levels (e.g. avoid overselling). Plus, with automation, the process (tracking, shipping, delivery) can all be automated.

4. Cost Savings

Better inventory processes help you reduce storage costs. However, you’ll also reduce your inventory and software subscription costs and improve labor efficiency.

• Software costs – Generally, advanced inventory management features for retailers include a small upcharge in monthly POS software cost. This is compared to a standalone platform, which might double or triple your software costs.
• One-platform for efficiency – Using POS software for inventory can help you reduce time resolving issues. You’ll have a single point of contact for your POS and inventory system, e.g. no having to go back-and-forth between providers to get a solution.

When Might a Third-Party Inventory Platform Be Better?

POS-integrated inventory management in retail is often the preferred choice. But there are some scenarios where a standalone solution might be better. The include:

• Massive product catalogues, over 10,000 SKUs. You might need specialized features to manage a huge number of products.
• Highly customized POS system. Your business might be operating a custom-built POS system, and therefore, would need a third-party tool.
• Some industries may also require a specific solution, e.g., distribution or manufacturing. In these platforms, a solution built for the complex supply chain would be beneficial.

However, if your business runs one retail store or 100, and sells direct to consumer in-store and/or online, a stock management platform built into the POS is likely the best retail inventory solution for your business.

FTx POS: The Best Retail Inventory Management Software for High-Volume Stores

The inventory management features built into FTx POS were designed to power a growing retail chain (50+ stores). Therefore, our platform is designed to help retailers of all sizes leverage retail stock management software.

Our platform is completely integrated into FTx POS, and therefore, you can manage your retail store’s POS and inventory platform from a single log-in. Plus, our solution includes valuable features for tobacco shops, convenience stores, groceries, and other businesses that sell lot fast-moving consumer goods:

• Replenishment automation / vendor management
• Cycle count report generation and count sheet automation
• PMI pricebook management for 1000s of SKUs
• Warehouse integration (for picking, packing and shipping automation)
• Data reporting and inventory analytics (100 of reports)
• POS training courses to learn advanced inventory features

Bottom line, retailers need a POS that can do it all. With FTx POS, you get a system that can power your entire business, from the back office to the point-of-sale.