How to make your physical inventory count in your store?

Yes, it’s that time of the year again! No, we are not talking about the annual Christmas party or New Years, but the infamous physical inventory count! Hated by (almost) everyone but a necessary evil for the business. The time of the year where the entire inventory is counted manually and there are several reasons why we do this: 

  • For income tax reporting: many retailers are mandated by law to do this and have to report this in their tax forms. 
  • To minimize theft and loss: it’s important to keep track of inventory to spot losses or theft. If your inventory is disappearing but you can’t see that they are sold, then you need to take a look into it. 
  • To get rid of out of date products: if products are not being sold and will expire, you need to get rid of them. 
  • To evaluate specific items: if there are products that are not being sold at all, you need to evaluate if it is even necessary to have it in the store. 


Inventory counting is a time-consuming task and it can be costly if not done correctly. How much time spent is depending on how big the business is and how many people are involved in the counting. Some bigger businesses hire a third party to do the inventory for them to save time and money, while smaller ones do it themselves. But there are ways to make it easier and maybe even fun to do inventory count:

  • Plan: The business should be tidy and the counting products should be accessible for the staff to count. Give everyone tasks so that nothing is counted twice.
  • Train your staff: Show your employees that are partaking the inventory count how to do it and it has to be taken seriously. They need to know what to look for and what needs to be done, especially if there is any deviation. 
  • Use inventory software: To save time and money some tools and solutions can make the inventory count less time consuming and less manual. 
  • Make it fun: Yes, inventory counting may be boring, but there are ways to make it fun. Order in pizza (or anything else) to show your appreciation for the staff being there and maybe even throw an after-party when all the tasks are done. 
  • Do cycle counts: It is easier to spot theft or other reasons why products are disappearing when you do inventory count more often. The more often the staff does this, the easier and faster it will be when it is made into a routine.
  • FIFO: Implement the “first in, first out” principle when stocking and it will be easier to detect products that are expiring or have expired. 


These are just suggestions on how it could be done since there are no “right” ways to do this. Businesses vary from size and personnel and it is up to the managers to figure out the best way for their business. Hiring third party to do inventory is not for everyone either, because it depends on what you sell. Expensive and fragile products should be counted by qualified personnel that is trained to handle it. Although there are no right ways to do it, you can always show appreciation for the personnel by ordering food and drinks – we do work faster and more efficient when we are full and energized. 

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