Inventory Count: 7 Things You Should Know

As a retailer, doing physical counts of inventory is likely one of the most annoying task you have to do. It’s a tedious task, counting store merchandise can take several hours, and for some merchants, it may require closing the store down for a period of time.

While it’s likely not a job you’re fond of, taking a physical count of inventory is vital for any retailer. Keeping a close eye on the stock you have on paper vs. what’s actually in-store enables is key to efficient retail inventory management. It allows you to maintain inventory accuracy, spot causes of shrinkage early, and ensure that you always have the right amount of stock at the right time.

What Is A Physical Inventory Count?

A physical inventory count is the practice of counting your retail products in person. The process typically involves a retail staff member (or team of workers) going through the retailer’ sales floor and stock room and counting each item. The data is then recorded either manually, using pen and paper or electronically using a mobile device.

To objective of a physical inventory count is to audit a store’s inventory and ensure that the stock data the retailer has on paper matches the inventory that’s is actually in the store.

To help make this task easier on you, we’ve compiled a few practical pointers on establishing your physical inventory count process, conducting stock counts, and more.

(1) Physically Counting Inventory

If you’ve never heard of cycle counting, you may want to look it up, it’s an effective way to count inventory.

This process refers to partially counting merchandise on a regular basis so you can monitor stock levels without disrupting your store hours in any capacity. Cycle counting can be done daily or weekly (usually before the store opens) and can free you from having to do full inventory counts. Most retailers will tell you this is the most effective and efficient way to count inventory.

On the other hand, if cycle counting isn’t your cup of tea, or if you feel that you have to do a full inventory count in addition to partial stock takes (as some retailers do), the tips below should make your life easier:

(2) Use Inventory Scanners And Stock Counting Technologies

Traditional retailers would do their physical inventory counts with a pen and paper. They would use an inventory count sheet to add up their products and later enter the data into a system.

Even with all the advancements in technology, some retailers still use this old school inventory counting. While this inventory counting method can get the job done, it’s highly inefficient and it requires double entry. If you have a small retail store, an inventory count may not take long at all. However, if you have thousands.tens of thousands of products, you need a more efficient way to count merchandise.

If you’re using a POS or inventory management software, you may find that they have an inventory counting feature. Here at Accelerated Analytics, our POS reporting solution has an inventory counting feature. If you want to learn more about it, be sure to schedule a demo.

(3) Schedule Inventory Counts Ahead Of Time

When you choose to count your inventory matters, so you should be thinking ahead, what data and time is going to be best fore the company?

As for the recommended when and how often, it really depends on you. Some stores count merchandise once a year, others conduct it on a bi-annual basis, while other stores use cycle counting and counting inventory regularly.

A lot of retail gurus claim that the last weekend of January or at the end of July is the best time to count because your SKUs are potentially at their lowest during these periods.

What ever you decide on, you’ll want to settle on a date well in advance (weeks or even months before) and make sure your employees know what’s coming up. At this stage, you need to take down the names of the people who’ll be helping you with your physical inventory count. Make sure they can make themselves available on the decided date.

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Ideally, you don’t want to interrupt store operations, so schedule your inventory count after business hours or early in the morning. If you do have to shut down, make sure customers know well in advance.

(4) Labeling Boxes And Shelves

You always want to label your boxes and shelves. If you’re doing a physical count of your inventory, be sure your stockroom is properly prepared.

If the area is cluttered, stray pallets here and there, it’s going to cost you more time, effort and money. If you do need a new location for your count, put everything in a well-marked and defined place, and leave it there.

You also need to make sure everything is where it needs to be. Walk around the store or stockroom and keep an eye out for items that aren’t in their proper place. Are there tank tops lurking in footwear section? Did someone mislabel a box of merchandise? Be sure to correct these issues before you begin counting.

(5) Map Out Your Store

One of the best things you can do is building a map of your store and stock room that illustrates exactly where your products are located.

This will give everyone a clear idea where items need to be placed or where items can be found. It’s going to make it easier for you to assign people to different sections so you can determine the best way to go about the counting process.

Your map also serves as a checklist when you begin counting your products. You can mark off each section as it’s counted and completed.

Plus, if you do have new employees, they have a map to follow without having to ask someone every few minutes.

(6) Choosing The Right Team

Companies have a lot of different strategies as it pertains to choosing the right employees to count inventory. We do recommend that you don’t assign inventory counts to just any employee. The employees that are going to be doing your stock counts should be experienced. Now, we do recommend having new employees in your rotation.

Your most experienced employees should be familiar with your policies and the locations of different items. Still, you want to introduce new employees to learn this process.

You do have the option to hire 3rd party inventory counters. If you don’t have the in-house experience or resources, you may want to consider doing that. If you do plan to hire a 3rd party, make sure you do your research.

(7) Post-Inventory Count

Once you’ve completed your counting, this is a good time to improve your processes and ensure your count was accurate.

  • You always want to double check your counts. Once you’ve counted items, make sure you immediately count it again.
  • Keep your inventory reports close. Where was you right? Where was you off? What can be done to improve accuracy?
  • Compare multiple inventory count reports.
  • Compare past inventory count reports. Are discrepancies decreasing over time?
  • POS reporting and retail analytics can make the process easier and more efficient.
  • Identify high-risk zones


If you want to see first hand how our POS reporting are helping retailers, schedule a demo here. If you don’t take action, you’re never going to see the results you could see when you have the right data in hand to make key business decisions that are going to allow your company to thrive.