Liquor Store Inventory Management Challenges
To manage liquor store inventory levels while maintaining your sanity is quite the balancing act. Maintaining proper liquor store inventory levels can make the difference for a business’ success or failure. Liquor store inventory management can be overwhelming, especially for new liquor store owners. While there are numerous benefits to owning a liquor store, managing liquor store inventory can be particularly onerous for the uninitiated.
Fortunately, solutions are available. With time, determination and skill development, liquor store business owners can become highly competent in assuring sufficient stock supplies to maintain cash flow.
Numerous of Products
To be successful, liquor stores must maintain large inventory levels. They must offer their customer base a variety of products. For liquor store owners, finding the balance between sufficient stock of hundreds, or even thousands, of products is likely to be one their greatest challenges to be competitive and successful.
Failure to maintain sufficient inventory levels means that the owner risks losing their customer base. To manage all those SKUs, the liquor store owner must understand how to use systems to properly manage their stock levels without overstocking or risking under-stocking. To manage liquor store inventory wisely undoubtedly affects the bottom line.
Challenges With Cash Flow
Maintaining sufficient stock, all on its own, is a challenge. Now add in the complexity of having sufficient working capital for inventory purchases and it is easy to see how challenging this complicated puzzle can become. Sufficient working capital is critical to assuring sufficient inventory but it also poses a significant financial commitment.
To purchase so many different products, liquor stores must lay out a great deal of capital. This may cause major liquidity issues for a small business particularly if the business owner is cash strapped.
Adding to this headache is the fact that liquor store owners must often buy in large volumes to get the best prices. For some, they must compete with the “big boxes” and that means buying many months worth of supplies which further ties up large cash outlays.
Solutions & Options
While most small businesses can get by on managing inventory on a spreadsheet, given the extent of liquor store inventories, most liquor store owners now need more sophisticated systems to manage liquor store inventory to remain competitive.
Enter the Point of Sale (POS) system. These comprehensive systems are electronic and tailored to the owner’s business needs. POS systems help business operate far more efficiently and can be used for management, theft control, promotions, and employee management.
POS Systems to Manage Liquor Store Inventory
POS systems were created to help businesses run their operations through a central hub, i.e. the “point”. These systems enable liquor store businesses, in real time, track and manage inventory, track profit margins, generate sales reports, and a variety of additional functions depending on the system that the business owner purchases to manage liquor store inventory.
Probably the best part of the POS system for managing liquor store inventory is the real time management. This provides liquor store business owners with inventory control with a couple of clicks on their computer.
When products are purchased by customers, the POS system updates the inventory levels to reflect each individual sale. This real time information creates greater operational efficiencies that allow the liquor store owner to save time managing their inventory, determine purchasing needs and assure accurate inventory counts.
The POS system will also track unsalable inventory, broken bottles, storage locations, and more. By fine-tuning merchandise tracking, the business owner is able to minimize waste and theft. It also shows the owner where they can make improvements.
POS systems will also track case counts which is important for managing liquor store inventory levels. This is due to the fact that nearly all liquor store merchandise is purchased by the case though products are sold individually. Consequently, POS systems are used to track both cases and individual items. This refined tracking facilitates reordering and inventory control.
Instant Stock Level Notifications
Another great feature for liquor store POS systems is that the business owner is notified by the system when stock levels are too low or too high. This under-stock and overstock notice is highly beneficial to manage liquor store inventory, working capital and loss prevention.
Once the POS system is set up, it can notify the business owner about inventory balances for the hundreds/thousands of products that are carried by the store. This automatic process provides the owner peace of mind that inventory is being tracked to fulfill customer expectations. It prevents overstocking as well which unnecessarily depletes cash reserves so that cash flow is smoother and less strained.
The more sophisticated POS models will also automatically order products when inventory reaches preset counts. This is particularly advantageous when the owner has more than one store they must supply to manage liquor store inventory.
Most POS systems come with handheld scanners that provide scanning orders as they are delivered. This helps the owner track incoming deliveries, confirm orders, catch any mistakes made by distributors and keep the overall inventory management system running accurately and efficiently.
Promotions & Discounts: Managing & Tracking For Greater Efficiencies
Liquor store POS systems can be programmed to manage and track discounts and promotions. Promotion and discount tracking helps the owner see what is working and further refine marketing efforts to maximize ROI.
Tracking with POS, facilitates assuring that inventory levels are sufficient for promotions, determine the related sales revenue and profit margins as well as the times when cash flow from marketing peaked. This helps the owner know what types of marketing efforts are most effective and should be repeated in the future.
Customer Relationship Management (CRM)
For those liquor stores that want to offer customer loyalty programs, a POS system is perfect to facilitate tailored sales to customers. The POS can be programmed to track customer purchases, their points and/or rewards.
These programs are not overly complicated, and customers love them. They are a great way to manage customer relationships for repeat purchases. The system will also record valuable customer data like names, email addresses, phone numbers, etc.. This information is highly valuable for marketing existing customers via promotions.
POS systems also allow for greater employee management ability. These systems can track shifts, hours, wages, pay, and more, and then compile this data into overall reports for your business.
POS System Reports
One of the best benefits of POS systems is the data can be used to create a variety of different reports on the business. The system provides details regarding profit margins, cost of goods sold (COGS), transactions by employee, inventory turnover ratios, and more. This information is highly informative to identifying best sellers, effective sales strategies, exceptional employees, etc.
Liquor store owners are always challenged by fake IDs. Selling to a minor is a major risk and repeat offenses can lead to the loss of one’s liquor license. Today, fake IDs are becoming more realistic and harder to detect.
Many POS systems now come with age verification systems. Age verification can verify the legitimacy of a drivers license. This reduces the risk of selling liquor to minors and attendant liability.
Liquor inventory is valuable. Managing liquor inventory also means managing against theft. Liquor store owners have to guard against both customers and employees from stealing.
Due to the large volume of inventory carried by many liquor stores, theft may go unnoticed which makes it difficult to track when the theft took place to zero in on who may have done it. With a POS system, however, theft is minimized because discrepancies in inventory counts are easier to catch.
The POS system can help the owner set operational restrictions on employees to minimize theft like receipt voiding, item void restrictions, price edit restrictions to prevent against unauthorized discounts and cash drawer monitoring.
How POS Systems Affect Liquor Store Business Sales
When it comes to the best way to manage liquor store inventory, a POS system is a must. Beyond optimizing efficiencies, having a sophisticated, well-established POS system also directly bears on selling the liquor store business in several ways.
The POS system increases operational and management efficiencies. It improves inventory control which, in turn, improves revenue and profit. Anything that improves revenue and profit directly affects a liquor store’s valuation.
Liquor store buyers want to see modernized businesses. They want to see that the business is well managed and learn the seller’s system. Moreover, the buyer will want to examine inventory records from the POS system as part of their due diligence process. Examining POS system information confirms the seller’s financial representations regarding the business.
Simply put, is the better liquor store owners manage liquor store inventory, the stronger their likelihood of a successful business sale. For more information, find out how you can maximize your business value with proper inventory levels.