How Do Grocery Stores Track Inventory? 15 Trends, Tips, & Tools

Inventory management might be the most important part of running your grocery store. 

Managing stock levels, anticipating customer demand, and minimizing shrinkage require an effective system — without one, you’re leaving money on the table.

Let’s say you run a small organic food store. You’re often busy serving customers, yet your outdated point of sale (POS) system and manual inventory tracking methods are causing financial headaches and operational challenges. Sound familiar? You can turn the tide with modern systems — but change is scary, right?

In this blog, we’ll give you an overview of the current best practices for managing inventory, a glimpse into the most impactful future trends, and practical tips and tools you can use to manage your inventory.

Let’s get started.

7 Grocery Trends To Keep Track Of

A lot is happening in the world of grocery. Changing customer preferences, economic uncertainty, and emerging technologies all have an impact on what grocery stores stock (and how to present it).

While small grocers can’t be expected to account for every single emerging trend, knowing the major ones can help you improve your grocery sales forecasting and decision-making. 

Here are some of the biggest grocery store trends to be aware of:

1. Customers continue to be cost-sensitive in the face of rising prices and are more willing to swap down to cheaper or private-label brands.
2. Electronic labels and other in-store tech are offering stores chances to be more flexible and dynamic with their pricing strategies.
3. Online shopping remains a popular sales channel with grocery, and even small grocers are expected to have in-store pickup and other online options.
4. Customers are focusing on health and wellness, providing opportunities for grocers to take advantage with healthy snack bundles and other custom product packages.
5. AI is evolving fast and is increasingly integrated into grocery inventory management systems to improve forecasting, fine tune reorders, and make your day-to-day more efficient.
6. Younger customers are showing increased interest in “functional foods” — foods that provide helpful benefits in addition to nutritional value. Many foods are naturally functional, and using signage to promote these products is a great strategy to capture younger shoppers’ attention.
7. As prices rise, small grocers need to do more to differentiate themselves from bigger, more budget-friendly brands to stay competitive.

So, what does all of this mean for small grocers? Basically, independent grocery stores need to be more strategic about their inventory planning and management to stand out. 

Long story short: An effective and data-driven inventory management process is a must if you want to proactively address customer needs, capitalize on trends, and rise above the competition.

How Do Grocery Stores Track Inventory? An Overview

Inventory management refers to how you track goods and products. This includes monitoring perishable and nonperishable food, produce, canned and packaged goods, and various general merchandise for grocery stores. 

As a grocery store owner, you have four primary objectives when it comes to inventory management:

• Stock shelves properly.
• Reduce spoilage and waste.
• Identify fast and slow-moving items.
• Avoid out-of-stocks.

Sounds simple, right? But, like anything, inventory management relies on airtight management and everyone pulling in the same direction. Good grocery inventory management helps with buying decisions, manages costs, and keeps customers happy.

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

How Effective Inventory Management Helps You Capitalize on Opportunities

At first glance, inventory management processes seem pretty tied up in improving day-to-day operations. While this is true, effective (or poor) inventory management also has a major impact on your ability to respond to changing customer demand.

Grocers that rely on manual processes are generally stuck in a reactive loop, restocking shelves and trying not to get blindsided by shifts in demand. 

Streamlined inventory processes free up more time for strategic planning and give you an unbiased look at your operations, helping you spot the products, price points, and deals that matter to your customers.

Let’s look at a basic example to show you what we mean.

A grocery store in a popular shopping area finds that sales are steady but underwhelming. 

Using their POS system, they see that while sales of staples like milk and eggs stay steady, their selection of fresh pastas and homemade sauces consistently overperforms.

Using their reporting tools, they find that the trend extends to multiple suppliers and that they’re earning a healthy profit margin despite carrying only a small selection. So, they contact their local partners and see what other products they carry. They also look to see what kinds of items people buy together with these top sellers to refine their promotions and store layout.

They also set more aggressive reorder alerts to ensure they don’t run out of these in-demand products.

Not only does modern inventory management help them keep those items in stock, but they might find that these items are differentiating them from other grocery stores — this gives them a profitable opportunity to advertise in those areas and expand their selection.

Grocery POS Systems: The Foundation of Better Inventory Management

It’s difficult to improve your inventory management processes if you don’t have a holistic way to view and control the end-to-end process. Until recently, this kind of visibility was reserved for big chains and corporate stores — but not anymore.

Industry-specific point of sale systems give small and independent grocery stores the inventory management tools they need to break free from spreadsheets, stay competitive, and refine their selection, including:

• Real-time inventory tracking to get an accurate view of inventory levels, expiration dates, and other vital information
• Low stock alerts and streamlined vendor management to optimize inventory levels and speed up reorders
• Reports and analytics to track inventory turnover, bestsellers, shrinkage sources, seasonal trends, and more
• Streamlined receiving tools to update inventory against an invoice and make edits on the fly
• Unlimited and custom SKUs to track a variety of products, including unique product bundles and items you make in house
• Inventory counting tools for more accurate cycle counts and inventory audits
• Connected online and in-store inventory to lay the foundation for online sales and to keep stock levels accurate for multichannel sales

These features help grocery stores save hours and spot important sales trends that would otherwise go unnoticed. A modern inventory management system is also essential for connecting to grocery e-commerce platforms.

Bonus Inventory Management Tips To Make Your Store More Competitive

A grocery store POS system is a powerful inventory management tool — but like all tools, it’s only useful if you know how to use it. 

Here are a few additional tips to improve your inventory management processes:

• Leverage data for demand forecasting: Use historical sales data together with factors like time of day, season, events, and weather to spot recurring trends to improve your inventory planning.
• Track expiration dates: Ensure you input approximate expiration dates for your perishable inventory to prevent spoilage and implement discounts.
• Use discounts strategically: Know when to run sales and discounts and use your POS system to monitor which promotional strategies were most effective.
• Use the FIFO method: Use the first in, first out (FIFO) method to keep your older products front and center.
• Refine your reorder points: Leverage data like supplier lead times and average weekly sales to optimize your reorder points and amounts for high-demand items.
• Use data to improve your layout: Use the insights from your inventory management software to make meaningful updates to your store layouts so customers can find popular items faster.
• Spot trends to improve search engine optimization (SEO): Use bestselling products and categories to improve your grocery store SEO, helping you appear higher in search engines. 

With a comprehensive view of your store inventory at your fingertips, you can make better decisions and keep your customers happy. 

ANSWERED: How Do Grocery Stores Track Inventory?

Inventory management is integral to your grocery store’s operations. While large chains use enterprise systems to collect and analyze massive amounts of data, independent grocers have a harder time finding the right solutions.

However, with more affordable, intuitive, and scalable point of sale platforms available, you can now get far greater visibility into your stock levels, purchasing patterns, and sales — without breaking the bank. But what should you look for in a POS system?

• Must-have features like inventory tracking, purchase ordering, customer management, and reporting
• Integration with your existing hardware, such as deli and weight scales and barcode scanners
• Tiered but simple pricing
• 24/7 customer support
• Omnichannel capabilities

IT Retail is proud to work with many independent grocers. Our system is designed to offer everything above, and to give grocery store owners like you the features you need to succeed. 

Schedule a demo today with our grocery experts and see for yourself!