Variety is the spice of life and essential for bringing new customers to your store.
But, for liquor store owners tasked with balancing old favorites with new industry trends, avoiding stockouts, and everything else that goes into running a liquor store, managing that perfect collection of products can be complex and expensive.
Liquor store owners have a tough job when it comes to inventory tracking and management. There are thousands of products to track, hundreds of orders to place, and dozens of places the system can fail along the way.
In this article, we’ll cover everything you need to know about liquor store inventory:
- Top liquor store inventory challenges
- Benefits of effective inventory management
- How modern inventory systems can simplify inventory processes and cut costs
With effective inventory management, you can ensure your customers’ favorites are always in stock, make better business decisions, and cut costs.
Let’s get started.
Managing Liquor Store Inventory: Top Challenges
Inventory management refers to the tools and processes used to keep track of your products, from ordering and storing them to putting them on the shelf, and finally, selling them to the customer.
The goal of effective inventory management is to optimize stock levels and maximize profits. As a retail business, your inventory is your business. However, striking the perfect balance between ordering what you need and meeting customer demand isn’t always easy.
Related Read: ANSWERED: What Affects Your Liquor Store Profit Margin?
Here are some of the top hurdles liquor stores face when handling inventory.
1. It’s Time-Consuming and Error-Prone
Several factors make managing liquor store inventory particularly difficult. At the top of the list? The time it takes.
Liquor store owners and operators across the country spend many hours every week counting and sorting inventory, adding it to their system, and watching out for things like dead stock.
Regular inventory audits are necessary to spot sources of shrinkage and other inconsistencies. Unfortunately, many staff have to count inventory by hand or using spreadsheets, which is extremely tedious and error-prone.
It’s estimated that most retailers have an inventory accuracy of only 63%. That means many stores spend too much on stock they don’t need or are unsure of what needs to go on sale. Either way, it’s bad for your bottom line.
2. Multiple Systems Cause Confusion
Technology has come a long way, especially in retail management. However, many stores still rely on multiple systems for vendor management, inventory, and payments.
Disconnected systems make tracking inventory more complex and leads to errors like double ordering.
Last, without a unified system to manage inventory, store owners can’t take advantage of real-time data to understand bestsellers, sales trends, inventory churn, and other key performance metrics (KPIs).
3. Product Variety Adds Complexity
Liquor stores have the additional challenge of keeping track of all the different ways products are packaged. You have individual bottles, four-packs, six-packs, cases, cartons, boxes, and flats.
Additionally, demand for certain products is highly seasonal, making it vital to know what products are popular at certain times of the year so you can plan accordingly.
Without the right system, you have to spend a lot of time manually entering these various products into inventory.
4. A Lack of Visibility Makes You Reactive
Perhaps the biggest challenge in liquor store inventory management is the inability to track stock in real time. Without a comprehensive and accurate view of what you have on hand, you run the risk of running out of popular items or excessively stocking items.
In short, you become reactive to what’s happening instead of proactively getting ahead of trends and problems.
Customers will eventually become frustrated if they come to your store and can’t find what they want because you’re understocked. As the owner, you’ll also become frustrated if you have a hundred bottles of vodka, but you only sell ten a week.
This problem compounds if you have multiple locations or if you sell online. If customers can’t find what they need, they’ll go elsewhere and you’ll lose business.
Benefits of Effective Liquor Store Inventory
A perfect inventory system doesn’t exist. Sometimes, an unexpected surge in demand or a new trend will take you by surprise. Also, investing in a new inventory or POS system may seem more trouble than it’s worth.
However, the benefits of improving your inventory management processes far outweigh any short-term discomfort.
Improving Inventory Management - Key Benefits
- Improves customer satisfaction: Inventory management tools help avoid stockouts and understand which products are most popular. Use this information to tailor your product list to your customers’ needs.
- Reduces overhead costs: Optimized inventory levels reduce overspending on inventory — purchasing it, storing it, etc. — and increase revenue.
- Improves discount strategy: Understanding inventory levels and churn rates lets you plan better promotions to sell slow-moving products.
- Improves demand forecasting: Combining sales and inventory data lets you pinpoint seasonal trends, which can help you adjust your inventory levels throughout the year.
- Avoids stockouts: A real-time view of inventory enables you to reorder at the right time, avoiding stockouts and keeping costs down.
- Improves efficiency: With streamlined receiving processes, vendor management, and item tracking, you’ll spend less time on inventory counts and setup and more time on customers.
5 Ways Technology Helps Optimize Liquor Store Inventory
When you run into business challenges, the instinct is to throw more at them, whether that’s hiring more staff or spending more time solving them.
When it comes to liquor store inventory, that isn’t always the best solution.
As the saying goes, “work smarter, not harder.” Many liquor store point of sale (POS) systems come with built-in inventory management tools that significantly streamline inventory processes and provide crucial business insights so you can do just that.
Here are five ways liquor stores around the country are finding success using inventory management technology.
1. Track Stock Levels More Accurately in Less Time
Managing stock effectively leads to having enough stock so your customers find what they need without over or understocking items.
Liquor store POS systems track inventory in real time, giving you a better handle on what’s happening in the store so you can proactively address customer needs and sudden shifts in demand.
Systems with case-break inventory management also make receiving easier by automatically breaking down cases by bottle, six-pack, or can. This also gives you a more granular view of inventory levels.
Case Breaking Examples
- If you get a case full of 12 wine bottles, scanning the case will create 12 separate wine bottles in inventory. That way, when you sell one or two bottle, you don’t have to reconcile the remaining inventory at the end of the day.
- If you get a case of six packs, you can denote how many cans are in the case, but also whether you’re selling a given bar code as an individual can or a six-pack. When that item is sold, the remaining inventory will be updated accordingly.
2. Make Better Business Decisions Using Data
Using combined sales and inventory data, your POS system can give you an invaluable and unbiased overview of store and product performance.
You can get insights into:
- Bestselling products and product categories
- Peak hours and seasons
- Inventory churn rates
- Shrinkage sources
- Profit margins
- Supplier performance
Tracking these data points helps you make better business decisions.
Are certain items not moving as fast as you’d expect? Consider adjusting the price or running a sale. Or maybe you find a certain distillery or brewery is overperforming in sales. You could contact your supplier to stock more varieties from them.
Data also shows you what’s selling better in certain seasons or around particular events, allowing you to improve your demand forecasting.
3. Increase Customer Satisfaction Using Auto-Ranking
It can be hard to understand your customers’ preferences. Using social media or asking them directly is one way, but it paints an incomplete picture.
Some systems, like Bottle POS, also include auto-ranking. This feature automatically grades your products on a scale from A to D, giving you a detailed understanding of bestsellers within different sections of the store at a glance.
Knowing which products are flying off shelves and which are gathering dust is key to helping you make better purchase and reordering decisions. When you stock more of what customers love, you’re more likely to get return business and increase profits.
4. Avoid Stockouts and Cut Costs With Strategic Reordering
Knowing when to reorder is just as important as knowing what to order.
Using an inventory system that updates in real time makes it much easier to know when to reorder. The best systems make this even easier by letting you set low-stock alerts that tell you the minute certain items dip below a predetermined stock level.
What that threshold should be depends on the lead time of your suppliers. But by tracking the information, you can quickly dial in automatic alerts that let you order the exact amount you need, right when you need it.
5. Use Automated Processes To Maximize Efficiency
You don’t have to maximize your effort to make your store more efficient. Although automation is a big talking point in retail, many small businesses think it’s not a technology that applies to them — but you might be surprised.
The best automation tools help give staff more time to focus on customers and liquor store marketing by eliminating manual data entry and taking care of tedious tasks.
Here are a few common examples of automated inventory features from Bottle POS:
- Auto-generating purchase orders: Store vendor information and automatically create purchase orders for products your store needs as soon as inventory gets too low.
- Reorder calculations: Bottle POS can recommend how many items to reorder to maintain a 30-day supply based on average sales history.
- Auto invoicing received shipments: When inventory arrives at the store, the invoice is automatically imported so you just have to review and finalize it.
- Auto ranking: As mentioned earlier, you can quickly identify which brands are driving your sales vs. which are overstocked or dead stock. Bottle POS auto ranking grades all of your items on an A-B-C-D scale and color codes them based on sales patterns.
The best part of many of these features is that they work even when you’re not physically in the store. This allows you to track and manage inventory at multiple locations or from any device.
Boost Sales and Cut Costs With a Best-In-Class Liquor Inventory System
Whether you’re starting a liquor store for the first time or looking to upgrade your current tools, investing in a system that truly works is essential. Transitioning to a new system can be an investment of time and money, but trust us, it pays off in spades.
Implementing the right technology takes everything great about your liquor store and gives you the tools to make it better. Efficient inventory management will help future-proof your store with ways to save time and cut costs while improving the overall customer experience.
Want to see how a best-in-class liquor store inventory solution can transform your liquor store? Schedule a customized demo today to learn more.
