Stock audits are an essential tool to monitor the performance of your retail organization. The practice is akin to a 360° appraisal regarding the effectiveness of your retail operations in generating sales. Stock auditing involves evaluating everything from your inventory management system, ensuring that you are neither overstocked nor understocked. It also involves assessing the effectiveness of the product displays, like the location they are placed, etc.
The traditional approach to conducting stock audits involves studying store revenues as the primary success metric to figure out what’s working and what’s not. However, technology today enables business owners to gather complex data to deliver in-depth insights regarding the store’s health like never before.
An audit will help you collect vital information providing invaluable inputs while assessing your store’s performance. These audits are broadly classified into three categories to assist you in determining which one to perform based on your needs. They are as follows:
Market audit
This audit involves surveying customers to get feedback on how they perceive your brand. It also gives you critical insights into how your target customers view your competition vis a vis your retail brand.
Merchandising audit
In this audit, you evaluate and analyze all your inventory data. You will take a closer look at your stock levels, how your products are priced and displayed, and the various product promotions that are carried out.
Loss prevention audit
This audit is essential in cases where stores are facing losses due to lost or stolen merchandise. It will help you re-evaluate your current loss prevention plan by examining which products are frequently stolen, where they are located, and which loss prevention tactics are working.
Conducting a Store Audit
A store audit is all about regularly monitoring your business to give you better control over your store operations. Carrying out a store audit might seem like a daunting task considering all the detailed work involved. However, the following few points can be immensely beneficial:
Audit Goals
You must clearly define the objectives of an audit to get the most out of it. For instance, do you want to evaluate the efficacy of your in-store displays? What’s the first thing that a customer sees when they walk into your store? Are the products placed in suitable locations that encourage purchases? Do I carry sufficient/excess inventory? All such questions will help in assessing the goals for conducting the audit. Even the exterior of a building can influence a customer to visit or walk by your retail establishment, so it is best to cover all the influencing factors.
Scheduling the audit
It’s necessary to ensure that you carry out your audit without causing any inconvenience to your customers. The ideal time to schedule an audit would be during slow times during the opening hours. It would also be good to carry out an audit when your store is closed, although that might require working a few additional hours.
Note down everything
While carrying out the audit, it’s necessary to gather all the data that you discover. No data is too small or insignificant. Every little detail will help paint a clearer picture of your store’s health and assist you in finding solutions and coming up with strategies to make it better. For instance, taking photographs is also highly recommended. This practice will aid in making precise before and after comparisons while evaluating the store’s performance post-audit.
Executing your strategy
Once you’ve drawn up your action plan after completing the audit, it’s necessary to begin delegating the work responsibilities and putting specific staff in charge of particular tasks. Even if you cannot make the changes immediately, it’s good to keep an actionable plan in place to be executed whenever you get an opportunity to do so.
Benefits of Conducting a Stock Audit
Apart from the general benefit of performing the valuable management function of monitoring and improvising your retail operations, stock audits also provide you with the following tangible benefits.
- Detecting and correcting inconsistencies in-store presentation, visual merchandising, and brand compliance
- Identifying store-level issues, e.g. maintenance and operational
- Ensuring pending tasks and actions get completed
- Discovering best practices that you can implement across the store
- Coming up with new in-store processes and procedures
- Develop a framework to evaluate financial metrics, KPIs, and staff performance
- Get feedback from your store managers and associates
- Develop a healthy competition between your stores
- Identify staff training needs
Despite their many benefits carrying out store audits can be pretty taxing as most people find them both time-consuming and challenging. Modern technology makes it more accessible; however, an audit still needs to be detail-oriented to glean the maximum benefit from this activity.
You could rely on software technologies that will enable you to carry out the audit personally with the help of your staff. Another option would be to get the help of experts in the field of conducting store audit. Not only will this take the task off your hands, but it will also give you access to their expert opinions gained by carrying out audits at other retail establishments.