Accurate inventory counts are the foundation for solid liquor store operations. Out-of-stocks from shrinkage or theft can drastically cut into sales. Meanwhile, overstocking ties up cash and leads to expired or damaged goods.
But how can you approach tracking inventory accurately? For some liquor stores, the answer is in the form of an inventory counter: a staff member tasked with periodically checking and tallying products on shelves and in backstock. But are manual counts the best way to manage inventory for your store?
This post tackles the question of inventory management practices in liquor stores. What is an inventory counter? What are the best practices for liquor store inventory management? Find the answers to these questions and more.
What Is an Inventory Counter? The Basics of Manual Inventory
Keeping tight control of inventory is critical for all retail stores, but for liquor stores, you have more than profitability and shrinkage to worry about. Inventory management is essential to maintaining regulatory compliance in your store. So, how can you best manage your inventory processes?
Manual inventory management may seem basic on the surface, but doing it consistently and accurately takes skill and diligence. Inventory management means tracking every bottle and case that comes in and goes out of your store. Done manually, this involves a physical count of on-hand stock matched against historical sales data and replacement needs.
Related Read: How To Do Alcohol Inventory: 14 Tips, Tools, and Tactics for Inventory Management
For a smaller shop, you may be able to tally inventory yourself (though manual inventory processes will likely become unsustainably time-consuming over time). Multi-store chains or large-format liquor stores often need dedicated inventory teams performing cycling counts by section over designated time frames.
All inventory management can be challenging, but alcohol inventory comes with unique challenges:
- Seasonal items, ever-changing consumer trends, and specialty releases mean constantly fluctuating stocks.
- Frequent deliveries are needed to keep your stock fresh while security steps protect against theft.
- Fragile inventory can result in shrinkage when improperly handled by clumsy customers or staff.
- Compliance labeling laws and bottle size regulations further complicate recording.
Having dependable inventory protocols prevents profit shortfalls and other issues in your liquor store. In this post, we’ll outline best practices for establishing effective manual inventory systems tailored to liquor retail.
1. Establish Clear Counting Procedures
Establishing clear counting procedures is one of the most basic (and critical) practices of any inventory management process. Create clear standardized methods for counting all products to maintain consistency across staff.
Related Read: Top Options for Liquor Inventory Apps
Define how you will tally your products; for example, if spirits will be tallied by bottle while wine is counted by case. Develop count sheets listing every product in shelf order to simplify ticking off items. Establish assigned counting stations — Employee A takes spirits and coolers, and Employee B handles wine and beer.
You should also set regimented counting schedules based on sales velocity. You may choose to count monthly for slow staples, weekly for faster movers, and daily for extremely high-volume items. Setting strict, regimented procedures helps to maintain accuracy in your counting processes.
2. Categorize Your Inventory
Another best practice you should consider when implementing manual inventory processes in your store is categorizing your inventory. When you group like products, you can simplify and streamline your counting process.
Store vodkas, gins, and rums in one sector and put your whiskies and bourbons in another area. Establish visible category signs or shelf tags clearly noting what products belong in each section. Consistently label all storage areas clearly to eliminate confusion in identifying boxes and cases.
Related Read: What Is a Good Inventory Turnover Ratio for Small Retailers?
One of the most effective methods of categorization is using ABC analysis. This method requires you to assign A, B, and C rankings to your products, and then count the products in order of their rank.
Under this method, your most critical items get counted most frequently by section. For example:
- A products might be weekly counts.
- B products may be mid-tier products that need biweekly counts.
- C products are low performers that only need monthly counts.
This tailored approach focuses labor on maximizing return.
3. Utilize Tools and Technology
Manual counts and spot checks should always play a role in your inventory processes, but if you plan to conduct all your inventory processes through manual counts, you will struggle to remain efficient and accurate. As a result, you should supplement your manual efforts with advanced tools and technology where possible.
The most straightforward technology you can implement is digital count sheets that allow easy note-taking and data uploads, rather than pen-and-paper inventory counts. However, this process is still a heavy manual lift. As your store grows, you will need to implement more advanced technology.
A point of sale (POS) system with powerful inventory management tools is a “must” for modern liquor stores. Implement a solution that integrates with barcode scanners for speedy intake counts. Additionally, consider a POS tool that allows for case break inventory management, giving you the flexibility to record inventory by the case or the bottle.
Robust POS systems like Bottle POS conduct automatic, real-time inventory counts across your store and storage facilities. This keeps real-time visibility into true stock levels always available to prevent out-of-stocks while minimizing traditional counting labor spends.
4. Train Your Staff
Your staff are critical to your store’s success — especially regarding inventory management processes. Require extensive new hire training on the proper inventory counting techniques you set in step one.
Review policies and best practices regularly with employees to maintain rigorous standards. You should also perform supervised spot checks while counts happen to provide live feedback ensuring compliance.
Additionally, implement routine, unannounced “test” counts on specific sections to keep staff attentive and honest. It’s vital to impress upon all staff the importance of strong inventory management processes.
5. Document and Analyze Count Data
Your inventory counts don’t mean anything if you don’t document them and utilize that data. As a result, the fifth best practice we’ll discuss is appropriate record-keeping and data analysis.
Related Read: Your Point of Sale Data Is a Goldmine. Here's How To Make the Most of It
Carefully record all inventory counts consistently, noting exactly what was physically observed and any visible causes for shrinkage, like broken bottles. Set a regular monthly reconciliation process to compile and assess count statistics. These counts will help you identify your top-sellers and slow-moving products, as well as help you pin down sources of shrinkage.
Analyze opportunities to fine-tune purchasing and supply planning based on your inventory turnover. Watch for fast-selling items, and order additional backstock of these products, especially ahead of major holidays or events like Super Bowl weekend, where you may sell out.
You can also optimize performance across your store by calculating key performance indicators (KPIs) like turnover rate weekly to chart progress over time.
PRO TIP: Invest in a robust point of sale system with built-in auto-ranking capabilities. These solutions can rank products from A to D and provide color coding based on their sales performance, helping you manage your top-sellers and slow-movers more easily.
6. Conduct Regular Audits
Finally, regardless of the technology, tools, or tricks you implement to streamline regular, routine inventory, you need to do full, wall-to-wall inventory reconciliation at least once a quarter. During this process, you’ll reconcile physical counts with recorded inventory levels to identify and correct discrepancies, ensuring accurate financial reporting.
In addition to this quarterly check, you should implement quick spot-checks of random areas or sections weekly, choosing different zones each time. These checks will encourage better inventory management over time and deter employee theft.
However, one tip is to treat audits as learning experiences rather than punishments for staff. Verify employees follow procedures and provide additional training where needed. Hold staff accountable for willfully fraudulent counts, but being too harsh on honest mistakes can hurt morale and cause challenges moving forward.
Finally, immediately implement insights from audits. You can use your audits as an opportunity to optimize and improve your inventory counting processes over time.
Your POS System: Your Automated Inventory Counter
Following these best practices can help your inventory counter better manage your manual inventory counts. However, you'll struggle to scale your store if you rely purely or primarily on manual inventory counts.
If you want to manage inventory efficiently and grow your business, you need a point of sale system with real-time inventory tracking. Bottle POS offers an all-in-one point of sale solution with inventory management features tailored to liquor stores. You can benefit from robust reporting, barcode scanner integrations, and liquor-store-specific features like case break inventory.
Schedule a demo of Bottle POS today to see how our solution can help your inventory counter manage inventory more effectively in your store.
