7 Tips for Taking an Accurate Retail Inventory

Over the course of my career I have worked with and supervised thousands of retail employees and with a few notable exceptions, I have rarely come across a person who really enjoyed taking a physical inventory of their store’s merchandise.  And I don’t think there is anyone in the retail industry that would tell you that taking inventory is their favorite activity.

Even though taking inventory is labor intensive and time consuming, it is a critical activity for your business.  So if you have to count…do it right!

Once upon a time I worked for a specialty retailer that stocked over 3,000 individual skus and required that each store conduct a full physical count every thirty days.  Needless to say, I got very good at counting my store.  Here are some tips that you can use to make your count more accurate while taking less time.

1.       Prepare in advance– Prior to the count you should touch every shelf, bin and peg hook.  Ensure that the right items are in the right places.  Front all items on the shelves and consolidate your products so that you do not have multiples the same item spread around the store unnecessarily.  Organize each product by size, style or stock number and don’t forget to get any shipments processed and put away prior to the count!

2.       Check your shelf tags– Hopefully each of you has kept the store organized and there are no issues with having the wrong item in the wrong place.  But mistakes happen and while we know that your team members are supposed to count the merchandise and not the tags, I guarantee that human nature will take over.  So make sure the item matches the style, color, size, description listed on the tag.

3.       Create a map– Make a map of your store and all the fixtures in it.  The map will be used to document that each area of the store has been counted and by whom.  Once an employee has counted the fixture, they will cross it off on the map and initial.

4.       Touch Every Item– When counting you and your team members should physically touch every item as they count it.  This means physically shaking the boxes (you do not want to count empties), touching hangers and hanging merchandise.  Do not make any estimates as to quantity.

5.       Use “counting tags”– Every item that is counted should have a tag placed on it.  I always liked using bright yellow pieces of paper that were placed on the end of a peg hook, the top of a stack or the front of a display.  Once the count is “done” you can now quickly scan the store for any missed areas – and I guarantee you will find one or two!

6.       Stay focused– I have seen where retailers turn their inventories into a party.  Almost inevitably when there is a big problem with that count.  Instead, keep the music turned off and the chatter to a minimum.  You will find that your count goes much faster and is more accurate.

7.       Inspect what you expect– During the count, the responsible party (owner or manager) needs to double check that everything is going smoothly.  That starts with creating accountability by having each team member initial the map and any physical counting sheets.  Then do spot checks on the every other counting sheet.  If you are reconciling against a perpetual inventory kept by your POS system, verify every item.  Do not take the accuracy of the counter or the POS inventory for granted.


Taking an accurate physical inventory is a critical activity.  It ensures you are accounting for the financial value of your assets, assures that you are re-ordering the correct products so you do not get out of balance and it helps you to keep your business organized.

Want to learn more about how you can improve the retail management skills for you and your team?  Contact us for a free one-hour consultation!

–          David Goodwin is the Principal of the Retail Advocacy Group.  As a 30 year veteran of the retail industry he has hired, trained, and performance managed thousands of retail sales representatives and retail managers.  You can learn more about instructor-led, e-learning, and other training solutions for retailers at www.retailertrainingservices.com.