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The Real Cost of Poor Stock Accuracy in Retail: Why You Can’t Ignore Stock Control Failures

Posted on October 16, 2024

You know how people say stock control is expensive? I’ve heard it all before. But here’s the thing: not having solid stock control is costing you way more. 

Think of it like health insurance. We hate paying for it, but when something goes wrong, we’re really glad it’s there. In retail, stock accuracy is your insurance policy—and trust me, you’ll wish you had it when things go south. So let’s talk about what really happens when your stock numbers are off. 

Let’s break down the costs first: 

Visible Costs: The Stuff You Can See and Calculate 

Let’s do the math. The costs of stockouts and errors are probably bigger than you think. Here’s a quick formula for figuring out how much you might be losing: 

Lost Of Opportunity Formula Altavant Consulting
Lost Of Opportunity Formula Altavant Consulting

It’s that simple. Here’s where this formula hits hard: 

Lost Sales When You Run Out 

Think of a hot-selling product that’s out of stock. Every minute it’s not on your shelf, you’re missing out on sales. That’s money flying out the door because your inventory wasn’t accurate. 

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Reordering the Wrong Quantities 

When your stock levels are off, your replenishment system starts ordering the wrong stuff. Either you’re getting too much (wasting money on overstock) or not enough (losing more sales). It’s a downward spiral. 

Invisible Costs: The Stuff You Don’t See (But You’ll Feel) 

Now, these are the sneaky ones. The costs that won’t show up on your P&L statement but will hit you where it hurts—your reputation and customer trust. 

Customers Won’t Come Back 

Here’s a hard truth: 84% of customers don’t come back after a bad experience. That’s almost 9 out of 10 people! They might not tell you directly, but they’ll walk away and not look back. Now multiply that by their average yearly spend, then add two years of what could’ve been future sales—just gone. 

“Came for Nothing” 

Picture this: A customer takes the time to come to your store for a specific item, but guess what? It’s not there in their size or color. That’s frustrating. And where do they go next? Probably your competitor.

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“Waited for Nothing”

Even worse—your staff spends 10 minutes looking for an item that the system says is there, only to come back empty-handed. The customer just wasted their time, and you’ve wasted an opportunity to build trust. 

“Paid for Nothing”

Or how about this scenario: A customer orders an item online, pays for it, and then finds out later it’s out of stock. Delivery is delayed, or worse, the order is canceled. That customer? They’ll think twice before ordering from you again. 

The Fix: What You Can Do About It 

Okay, so what’s the solution? It’s actually pretty straightforward—but it takes consistent effort. Here’s a simple plan to get your inventory accuracy back on track: 

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Tighten Up Your Systems 

The foundation of all this is having strong Standard Operating Procedures (SOPs) and a solid Warehouse Management System (WMS). You can’t rely on manual processes—things need to be scanned, tracked, and any errors caught right away. No more guessing. 

Count More, Miss Less

A full stock take twice a year? Not enough. You need to cycle count. This means doing regular, smaller counts throughout the year, especially on the items that matter most (like your best-sellers). 

Tip: Don’t make the mistake of thinking you have to count everything all the time. Focus on what’s most important—your high-value or high-risk items. 

Plan Ahead—Use Tools to Stay Organized 

You need a system to help plan your cycle counts, and that’s where technology can really save you. A good stocktake planning tool helps you keep track of what’s been counted, what hasn’t, and when to focus on specific items. 

  • Focus on the SKUs that matter. Not every item needs the same level of attention. 
  • Avoid the chaos of doing big counts at the busiest times. Plan ahead and spread things out. 
  • Make sure you know exactly what’s happening in real time—don’t wait until the year’s almost over to scramble with backlogs. 

 Prioritize the Items That Drive Your Sales 

Some products move faster than others, so count those more often. Make sure your best-sellers are checked multiple times a year. Keep track of who’s responsible for counting what, and check how accurate the data is between your stock counts and your final numbers. 

This isn’t just about keeping things tidy—it’s about knowing your best products are always available when your customers need them. 

Hold Your Team Accountable 

Here’s an important one: Make sure you know who’s doing the stock counts and what corrections they’re making. If you don’t have visibility into this, you’ll never know if the problem is human error or a bigger issue with your systems. 

Hold people accountable for their part in the process, and make stock accuracy a team priority, not just an occasional headache. 

The Bottom Line: You Can’t Afford to Skip Stock Control 

You might think stock control is too expensive or too time-consuming, but the truth is, you’re already paying for not having it. Every miscount is a missed sale, a lost customer, and an opportunity for your competitors to scoop up what you left behind. 

Stock control isn’t optional—it’s essential if you want to deliver the best experience for your customers. And at the end of the day, that’s what keeps them coming back. 

Here’s the Simple Formula: 

Customer Satisfaction = Customer Experience – Customer Expectation

So, are you delivering on your customers’ expectations, or are you setting them up for disappointment? The choice is yours. 

Take Action: 

  • Tighten your processes with solid SOPs and a WMS. 
  • Implement regular cycle counts—don’t just rely on full stock takes. 
  • Prioritize frequent counts for high-demand items. 
  • Make sure your team is accountable for accuracy. 

Final Thought

Getting your stock accuracy right isn’t just about avoiding headaches—it’s about ensuring your customers never have to experience disappointment when they shop with you. Start with these steps, and watch how accuracy changes your operations and, more importantly, your customer relationships. 

Learn more about Our Stock Accuracy Solutions

 

Frequently Asked Questions

Stock accuracy refers to the correctness of your inventory records compared to what you physically have on hand. Stock control, on the other hand, is the broader process of managing your stock levels, ensuring that the right amount of inventory is available at the right time. Inaccurate stock counts impact stock control, leading to poor replenishment decisions.

Poor stock control can lead to stockouts or delays in fulfilling orders, resulting in dissatisfied customers. If customers can't find what they need, they may switch to a competitor. Over time, repeated issues with stock availability can damage your brand’s reputation, leading to customer churn and negative word-of-mouth.

To improve stock accuracy, you can use warehouse management systems (WMS) that allow for real-time tracking of inventory. Additionally, technologies like RFID, barcoding systems, and automated data entry tools help reduce human error and ensure precise stock counts.

A full stock audit twice a year is recommended at a minimum, but regular cycle counting throughout the year, especially for high-turnover or high-value items, is critical. The frequency depends on the size of your inventory and how dynamic your stock is, but frequent checks prevent major discrepancies from occurring.

By improving stock control, you reduce the risk of overstocking, which ties up cash in unnecessary inventory. Simultaneously, you prevent stockouts that could lead to lost sales. With accurate inventory management, you’re able to free up capital and ensure smoother operations, optimizing cash flow for your business.

One common mistake is relying solely on manual processes, which are prone to errors. Another is not adjusting stock levels frequently enough, especially for fast-selling items. Lastly, some businesses overlook the importance of staff training and accountability, which are essential to maintaining stock accuracy.

Yes, poor stock control can lead to incorrect ordering quantities, causing strain on supplier relationships. If you're constantly under or over-ordering, it could result in delays or financial penalties, damaging trust and disrupting your supply chain.

The key to balancing stock levels is using a well-implemented demand forecasting system. With accurate stock control, historical sales data, and trends, businesses can predict demand and order optimal quantities, avoiding overstock and stockouts.

While technology such as a WMS or RFID system plays a crucial role in improving stock accuracy, human oversight and process consistency are equally important. Regular staff training, clear SOPs, and accountability must complement technological solutions to fully address stock accuracy issues.

Overstocking leads to costs that go beyond just tying up cash. These include additional storage expenses, risks of stock obsolescence or damage, and sometimes forced discounting to clear excess inventory. These factors can eat into profit margins over time.