Grocery Store Inventory Management System: 5 Features [+ 5 Tips]

Imagine empty shelves gathering dust as tumbleweeds drift down vacant aisles. Sounds like a scene from The Walking Dead, doesn’t it?

But you might have had this nightmare! As a grocery store owner, managing inventory effectively is no walk in the park. There are a lot of moving parts. If you’re relying on manual counts, you’re setting yourself up to fail.

Instead, consider investing in a grocery store inventory management system.

This article highlights why you should, the features to look out for, and how to make the most out of your systems.

Why You Need a Grocery Store Inventory Management System

The main function of great inventory management is ensuring that you have just enough stock on hand to meet customer demand, but not too much that products go to waste. Getting this right affects everything from customer satisfaction to grocery store profits.

To help get this right, a grocery store inventory management system should give you real-time visibility into what products you have on hand, so you don’t run out of key items. Even occasional stockouts can add up to lost revenue over time.

Related Read: How Do Grocery Stores Track Inventory? Plus 2024 Trends

Poor inventory management also leads to waste. Without tracking expiration dates on perishable goods, you may end up throwing away spoiled or expired products. Excess stock that goes bad before selling it is pure profit loss.

Last, inaccurate inventory counts make it difficult to identify fast versus slow-moving items. You could remove slow-moving products and make shelf space for faster-selling goods. But without the right data, you can’t make good decisions.

One solution is to implement a grocery store point of sale (POS) system with inventory management capabilities baked in. But which features should you look for and how can they help your grocery store thrive? Let’s find out.

#1: Real-Time Inventory Tracking

Angry customers, an overflowing stock room, and perishable goods going to waste — what do they all have in common? Poor inventory tracking. Without real-time insights, you’ll have to rely on periodic manual audits.

Related Read: Inventory Reconciliation 101: How To Reconcile Inventory in 5 Steps

Real-time tracking is essential for preventing unexpected stockouts between inventory checks. How many times has a product sold out before you even realize it’s running low?

With real-time tracking, you can set alerts for the moment a product hits its reorder point. You can immediately place an order with your supplier to prevent stockouts. Real-time data also lets you accurately answer customer inquiries about product availability.

Last, live tracking provides the visibility you need to optimize inventory. You can spot fast-moving products that need restocking or relocating to prominent locations. Likewise, you can spot slow-sellers that may need extra promotion or clearance.

#2: Data Analytics & Reporting

Grocery-specific inventory management systems incorporate robust reporting and analytics capabilities, helping to turn data into actionable insights. Key features include:

• Sales reporting: Use historical data to see what’s hot and what’s not. You can analyze sales by day, week, month, and year to get a complete picture and make purchasing decisions.
• Turnover reports: How fast is your inventory moving? Turnover rates also help purchasing decisions. Fast turnover indicates rising demand for certain products. Slow turnover rates suggest you might have excess inventory that you need to reduce.
• Inventory levels and value: Get a snapshot of your inventory across all products and locations (if you have more than one store). Identify high-value products that are more susceptible to shrinkage or theft and need protection.
• Reorder analysis: Determine the optimal reorder points based on sales data, seasonality, lead times, and other factors.
• Forecast reports: Use historical data to predict future demand. For example, have you got enough stock for the annual holiday rush? 

Your POS system should have custom reports for inventory as well as employee performance, customer behavior, and profit and loss reports. Granular reporting aims to reduce waste and ensure you have enough stock on hand.

Related Read: POS Reports 101: 5 Essential Reports to Manage Your Grocery Store

#3: Vendor Management

Think about inventory management as a team effort. It’s not just you and your employees, but your suppliers too. Without good vendor relationships, you risk late deliveries and high costs. 

Vendor management integrated into your POS system lets you store key data on suppliers, including:

• Contact information: Store point of contact, phone numbers, email, and physical addresses.
• Items supplied: Link suppliers to the products they provide for easy reordering.
• Pricing: Maintain pricing agreements and catalogs from vendors.
• Order history: Track all previous orders for reporting and analysis.
• Performance data: Record delivery times, fill rates, and quality issues.

Related Read: 5 Tips To Overcome Common Grocery Store Supply Chain Challenges

Think of the actionable data you can collect! You can reference supplier catalogs for reordering and get visibility into spending and volume. You can monitor and rate suppliers on delivery, accuracy, responsiveness, and consistency. Reward top vendors with more business and reevaluate suppliers who perform poorly.

#4: Perishable Goods Management

Produce, meat, dairy, and frozen items present unique inventory challenges for grocery stores. If not handled properly, these products can spoil and have shorter shelf lives. This is where an inventory management system designed for grocery stores shines. You can:

• Track expiration dates by assigning expiration or sell-by dates to perishable inventory. Set up alerts for when items are nearing expiration.
• Use FIFO (First In, First Out) inventory rotation to ensure older stock gets picked and sold first before newly received items.
• Monitor the temperature of your fridges and freezers to prevent items from spoiling.
• Log and track spoiled or wasted items for reporting and analysis of shrinkage trends. You can use shrinkage reports to identify problem areas.

Related Read: How To Manage a Grocery Store Effectively: 9 Steps to Success

These capabilities can help you closely track expiration dates, organize inventory to minimize waste, maintain proper storage conditions, and analyze shrinkage. The results speak for themselves: fresher products, longer shelf life, reduced write-offs, and better customer satisfaction.

#5: Multi-Channel Integration

Customers want a seamless experience, whether they’re shopping online or browsing your store aisles. You need to ensure your online inventory matches what’s in your stockroom.

Without a unified view and control, it’s impossible to get an accurate picture of your true stock levels. How can you see what’s on hand when your e-commerce and physical store data lives in completely separate systems?

The best grocery store inventory management systems provide multi-channel integration. You get a single dashboard showing up-to-date inventory quantities across your physical and online stores.

When you sell a product in-store, your inventory should automatically update across all channels. When your inventory management software is built into your POS system? Even better! Now you have everything in one place.

5 Tips For Grocery Store Inventory Management

Now that you know which features to look for in an inventory management system, let’s look at some top tips to ensure you’re making the most out of them.

Tip #1: Conduct Regular Audits

While you get invaluable tracking and visibility with a grocery store inventory management system, it’s still important to conduct periodic physical audits. 

Get your staff to manually verify inventory quantities against what’s showing in the system. This catches errors or inventory gaps that might have resulted from miscounted deliveries, unrecorded waste, and theft. It also keeps employees informed and engaged with your actual inventory.

You don’t need to perform weekly or even monthly audits if you have a small grocery store, but set a cadence that suits you, and focus on high-value departments.

Tip #2: Train Staff Adequately

Technology is only as effective as the people using it. Your staff are on the front lines, receiving and counting inventory, and fielding questions from customers. Proper training ensures staff know how to use your inventory management software and the best practices they should follow.

Related Read: Why You Should Prioritize POS System Training in Your Grocery Store

Training topics include:

• Receiving and putting away procedures
• Hands-on experience with your inventory tracking tools
• Conducting manual inventory counts
• Protocols for identifying and processing out of stocks, shortages, and reorder notifications
• Generating and analyzing key reports

Training should be ongoing. Employees will get the most out of your tools when they can use them properly.

Tip #3: Negotiate With Suppliers

You don’t need to eat higher supply costs because you want to avoid rocking the boat. A good supplier relationship should be able to handle the negotiation of pricing and terms. 

For example, maybe you could offer to increase order volumes in exchange for a break on costs. Or request extended payment terms so you can sell through existing stock before paying for the next.

If an ask makes sense for both sides, there’s usually a deal to be made.

Tip #4: Reduce Shrinkage

We mentioned reducing shrinkage earlier, but it’s worth mentioning again. Get proactive! Start with visible security measures like cameras to deter thieves. Use FIFO inventory to reduce spoilage from expired perishables.

Lean on your inventory management system. Identify shrinkage trends and strengthen controls in areas where shrinkage is high. 

Pro Tip: You can also manage employees with your POS system. Set employee permissions for which features and reports they can access. Monitor employee transactions and activity.

Tip #5: Embrace Seasonality

Seasonal volume spikes boost your bottom line. They can also cause chaos if you don’t manage inventory effectively.

Related Read: Stocking Seasonal Products in Your Grocery Store: 6 Tips

Plan inventory operations around buying patterns anchored on major holidays and events. Stock up on turkeys before Thanksgiving. Load the coolers with extra soda and beer ahead of the Super Bowl. Cater the summer cookout displays to beachgoers and vacationers.

Negotiate with suppliers to get discounts on items that take off during different seasons. You don't want to run out of hot dogs on July 4th.

Grocery Store Inventory Management System: One Cog in the Wheel

Managing a grocery store’s inventory is hard. From perishable goods to online ordering and customer preferences, you need a system that helps manage your daily operations. With the right tools, you’ll reduce shrinkage, have fewer stockouts, and improve supplier relationships.

For the best of both worlds, you want inventory management that’s baked into your POS system. Your POS system ties inventory management with sales, reporting, and customer management. And IT Retail has the grocery store POS you need to thrive.

Our POS system features include:

• An Android inventory app that lets you quickly edit products, generate purchase orders, receive on the fly, and audit the inventory on hand.
• Integrations with online grocery platforms, deli and scanner scales, and self-checkout kiosks.
• Back office inventory management that calculates shrinkage, creates accurate purchase orders, evaluates sales reports, and is backed by 24/7 support.

…and more!

To see your next POS system in action, schedule a demo today!