Retail inventory management involves maintaining appropriate stock levels to meet demand without over-purchasing. An inventory management plan guides purchasing, pricing, receiving, counting, and tracking inventory. Key aspects of retail inventory management include classifying items into A, B, and C categories based on value and cost; using techniques like economic order quantity, reorder points, and safety stock; accounting for inventory using FIFO or LIFO; analyzing inventory turnover and forecasting demand. Effective retail inventory management relies on people, processes, technology, understanding sales patterns, leveraging automation, and focusing on customers.

1. RETAIL INVENTORY MANAGEMENT
PRESENTED BY:
VISHWANATH SHIVASHIMPAR
01FM19MBA037

2. Retail inventory management is what keeps
your whole business in order.
How much of each item is in stock?
What and when do you need to reorder?
Are you ordering too much or too little
inventory?
What are your best and worst selling
items?
Should you stop selling something
completely?
Is your inventory storage sufficient?
Retail inventory management is stocking products that buyers want, using pricing and promotions
to sell profitably, and maintaining inventory at levels that meet demand without over-purchasing.
An overall inventory management plan guides how this all gets done, from intelligent purchasing
and pricing to procedures covering receiving, inventory counts, and location tracking.
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3. IMPORTANCE OF INVENTORY MANAGEMENT IN RETAIL
Simplifies Processes and
Facilitates Growth
Improves Customers
Satisfaction
Minimizes
Out-of-Stocks
Decreases Inventory
Costs
Improves Forecasting
Reduces Shrinkage
Improves Profit
Margins
Improves Multi-Channel and Omni
channel Performance and Order
Fulfillment

4. STEPS
1. Create a Centralized Record of All Products
2. Identify Stock Location
3. Do Regular and Accurate Stock Counts
4. Combine Sales Data With Inventory Data to
Simplify Reporting
5. Create a Purchasing Process
6. Establish a Process for Markdowns and
Promotions
7. Create a Stock Receiving Procedure
8. Create a Procedure for Returns
9. Determine a Dead Stock Procedure
10. Pick Your Inventory KPIs
HOW ?

5. INVENTORY MANAGEMENT METHODS FOR RETAILERS
Inventory Ordering Techniques for Retailers
•Economic Order Quantity (EOQ)
•Open to Buy (OTB)
•Safety Stock and Par Level
•Reorder Point
•Just in Time (JIT)
Inventory Accounting Techniques for Retailers
•First In, First Out (FIFO)
•Last In, First Out (LIFO)
Inventory Analysis and Forecasting Methods for Retailers
ABC: ABC analysis
FSN fast, slow and non-moving analysis,
Gross Margin Return on Investment (GMROI)
Gross margin return on investment = gross margin / average inventory cost
Inventory Turnover Rate
Retail Inventory Method
Retail Demand Forecasting

6. INVENTORY ORDERING TECHNIQUES FOR RETAILERS
Safety Stock and Par Level
Just in Time (JIT)
Economic order quantity (EOQ)
EOQ = √ (2 x D x Ca/Ch)
JIT is easiest to implement with high-cost, low-
volume goods like cars and appliances. The savings
on low-margin, high-volume products, when
compared to the risk of stock-outs, may not be enough
to merit the extra complexity.
Planned sales + projected end-of-period inventory on hand, in
transit and on order - planned beginning of period inventory
= OTB at retail cost
(Average daily unit sales x average lead
time in days) + safety stock in units
= reorder point in units
Par level = safety stock + the minimum inventory
required to meet customer demand
Open to Buy (OTB)
Reorder Point

7. ABC Analysis (ALWAYS BETTER CONTROL)
0 20 40 60 80 100
Text 1
Text 2
Text 3
Text 4
A C
B
ABC Analysis
ALWAYS BETTER CONTROL
Under this the inventory is classified into 3 categories viz. A B and C. These categories are based upon the inventory
value and cost significance .
•Items of High value and small in no. are termed as A.
•Items of moderate value and moderate in no. are termed as B.
•Items of small value and large in no. are in category C
DMART,
RELIANCE
MORE

8. FIRST-IN, FIRST-OUT (FIFO)
Best for:
Retailers who sell perishable products (food, drink, skincare, cosmetics, etc.)
Businesses that sell seasonal products, such as apparel, furniture and home goods
Inventory Accounting Techniques for Retailers
•First In, First Out (FIFO)
•Last In, First Out (LIFO)

9. Retail inventory management best practices are made up of
• People,
• Processes
• Technology
INVENTORY MANAGEMENT BEST PRACTICES FOR RETAILERS
1. Understand the relationship between sales and inventory
2. Manage residual inventory to control costs and preserve profit
3. Leverage automation
4. Focus on your customers first
5. Prioritize inventory for physical sales
6. Create a tech stack ecosystem
7. Make the most of surplus stock
8. Know how to manage inventory in multiple locations
9. Track moving inventory
10.Review and store inventory adjustments properly

10. THANK YOU