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Retail Inventory Reports That Will Change Your Business

Posted by Emily Fanning on May 9, 2018
Emily Fanning

Reporting on inventory is unquestionably the most important thing you can do for your retail business; after all, it’s your single biggest asset (and liability): often 70%-80% of your overhead. Understanding what your customers respond to, being able to spot trends quickly, keeping your inventory fresh, and finding ways to improve inventory turn are all critical to your bottom line. In most cases, customers don’t want to see merchandise that exceeds 120 days, so it’s key to use your retail POS software to run these 3 retail inventory reports regularly and act fast!

Sell-Through
Today, freshness is the name of the game, and this KPI can be run many different ways in order to determine how well your merchandise is performing - by brand, by category, by class and more! This metric will help you know when to restock quickly, when to put something on sale, or when to renegotiate with a vendor. Sell-through can also be used by your marketing team to determine which items they should promote, or by your merchandiser to highlight items that might need a little extra push.

These metrics can be accessed easily by a POS system like Springboard Retail POS, but you can manually calculate your sell-through by: Units sold / Units received x 100

Analytics_SellThrough

Key questions to ask:

  • What’s trending? Should we re-order now?
  • Which brand or categories merit an increase in initial buy based on a high sell-through?
  • How can we feature a category with low sell-through to give it a boost?

Inventory Turn
This KPI measures how quickly your stock is turning over and thus how well your cash is flowing. Ideally, the higher the number the better, as it indicates that your inventory is moving quickly. This metric can help you evaluate your purchasing decisions so you can match customer demand with inventory on hand.

Calculate inventory turn: Cost of Goods Sold / Average On-hand Inventory Value

Analytics_InventoryTurn

Key questions to ask:

  • Am I stocking too much? Or too little?
  • Should I transfer stock to a store that has a higher turnover rate for a particular item? 
  • Am I stocking products that customers don't want? Should I negotiate an RTV (return to vendor) for poor performers?
  • Am I seeing higher turnover since a marketing campaign was launched?

GMROI

Gross Margin Return on Investment demonstrates whether you are able to make a profit on your inventory over a 12-month rolling cycle. GMROI is an inventory profitability ratio that tells you what you made for every dollar you spent on inventory. Or, in other words, your ability to turn inventory into cash above and beyond the cost of the inventory. When this calculation is complete you have a clear, truthful picture of the health of your business through a simple digit. For example:

1 Means you are barely keeping lights on
2 Means you are able to pay for your inventory
2+ Means you can start to pay yourself

GRMOI can be calculated by;
GMROI = Gross Margin $ / Average Inventory Cost
Gross Margin = Total Sales - Cost of Goods Sold
Average Inventory = (Beginning Inventory $ + Ending Inventory $) / 2

Analytics_GMROIdata

Key questions to ask:

  • Am I buying merchandise that is making money for me?
  • What vendors or categories are not returning profit?
  • Which categories should I be investing in more heavily?

Effective inventory management can be a game changer! Want to learn how?
Crack open our FREE Retail Inventory Report today!

Inventory Report LP Graphics 2

Download Now!

Topics: Inventory Management, Retail Analytics

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