Top 5 Inventory KPIs You Must Track In Your Retail Business

Monitoring and measuring your retail business’ inventory KPIs (key performance indicators) against a predefined set of metrics is key to your progress. By continuously doing this you can spot trends and gain insight that can help you make better decisions about your inventory. There are quite a few things to track, but where is a good place to start? First, start with your point-of-sale (POS) system to help you pull data and analytics. Then start tracking these top 5 inventory KPIs.

1. Product Performance

Always be aware of what your top and lowest selling products are. If you know what sells the most, you can stay stocked. If you know what sells the least, you can begin to think about how to move that inventory faster through promotions, bundles, or discounts. Plus, you’ll know not to order it anymore.

2. Stock Turn

How fast is my inventory selling? You need to know this metric because, as long as your stock is selling, you are creating cash flow. Stock that sits in inventory too long stops cash flow, increases costs, and bores your customers. These bored customers will find other places to shop very quickly.

3. Gross Margin Return on Investment (GMROI)

The GMROI will tell you how hard your inventory is working for you. It tells you if you are effective at generating cash flow and profits. To produce a good GMROI you can have inventory that turns more slowly but produces higher margins, or inventory that turns quickly but produces lower margins. A low GMROI tells you that a product is moving too slowly, has an insufficient margin, or both.

4. Sell-Through

This performance indicator will tell you how much stock has actually sold. Use this metric to keep core products stocked up throughout the year. Some retailers look at this daily and others look at it monthly. It just depends on your retail store.

5. Shrinkage

This can be defined as a reduction in inventory that isn’t caused by sales. The causes for this are employee theft, shoplifting, staff errors, and supplier fraud. Keep a measurement of the shrinkage in your store and see how you stack up to other retailers in your space.

Remember your POS can help you track all these inventory KPIs with a click of a button. Want to learn how? Give Bepoz a call for a free demo today and start making smarter decisions about your inventory.