Inventory management is not the most exciting retail topic, but it is crucial for all businesses. It can make or break your bottom line. By having too little inventory on hand, you risk losing customers as products quickly sell out. However, having too much inventory ties up valuable cash flow and costs more to store and track. Effective inventory management sits between these two extremes. While it takes more work and planning, your profits will reflect the effort you put in. Thankfully, there are proven best practices for effective inventory management.


1: Focus on Your Customers First

When looking at inventory management, it is important to focus on your best customers. They are key to your future success. “Best customers” are those who shop often, spend the most, and already love your products. By keeping them happy, they will keep coming back. It is part of the important 80:20 rule. This rule states that 20% of your customers are responsible for 80% of your profits.

Look at the products these customers are buying. Products that sell well with these dedicated customers are likely to attract new customers. Consider them a representation of market trends by analysing what your best customers buy will keep you ahead of the pack.

Consistent quality and product categories also help strengthen your brand. The more you can deliver on high quality, recognisable and branded products that appeal to your “best customers”, the better these products will sell.

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