Cycle Counts

With only a distant memory of the holiday shopping season in our minds and spring business just on the horizon, it’s a good time to start focusing on inventory control and accuracy. With the hustle and bustle of the holidays, retailers sometimes lose focus on what’s really important, their inventory. It should be second nature for you to take an annual inventory of your store. The best time to do this is soon after the holiday. Think about it, your store is most likely at a low inventory point, so counting is normally easier, and you have a little extra in the payroll budget due to that month of increased sales. It only makes since. Often though, this annual inventory is the only time some retailers verify their on hand accuracy, however, cycle counts can be of great benefit to any store environment, any time of year.

If you are unfamiliar with cycle counts, just think of them as a mini-inventory focused on a small section of your store. In my experience, conducting a count on high value, or high theft merchandise at least quarterly (monthly is better), can actually help boost sales. For example, let’s say that you sell several styles of pocket knives. Your sales are good in this category, but your shrink is always high. You know you lose knives daily due to theft, so your on hand counts are always a little off. If you are replenished based on those counts, then you may not be getting the product you need, which will then hurt your ability to sell that product. Not only is the theft creating a loss, but now you are losing sales because your customers can’t purchase a knife you don’t have. If you waited an entire year to conduct an inventory, you would lose those sales for the entire year. This can easily be corrected through consistent and well planned cycle counts.

Once you have the areas of the store selected that would benefit from a cycle count, plan to do them on a day that is historically a low sales day, like early on a Monday morning. This gives you a chance to get it done with minimal interference from customers, and it won’t mess with your counts if a customer purchases an item you are counting. Take a small section, once a month. Don’t try and count an entire department. Keep it simple and focus on a small area that is normally high shrink. Print out what you should have on the books, and compare it to what you physically have. Simply make any adjustment to your inventory as needed. It’s really that simple and it’s a great way to stay in stock for your customers.

As in the example above, as a manager, or store owner, you know what areas of the store have the most shrink. In order to combat theft and remain in a good stock position throughout the year, you have to have accurate on hand counts. If you implement any inventory adjustments, always ensure that they are conducted by a manager, or one of your most trusted employees. Having an inaccurate count can cause a loss on paper, and/or keep you out of stock even longer. Additionally, this can also help you to identify areas of employee theft as well. If you have items that are shipped to your store that are stored in areas only accessible to employees, you shouldn’t have any losses. For instance, if you have high end sunglasses that are kept locked in a case and you find you are missing hundreds of dollars’ worth of those glasses, chances are you may have an internal theft issue. If you would wait until the end of the year to find that during your annual inventory, you may never be able to uncover the source of the loss.