How Accurate is the Average Retailer's Inventory?

How Accurate is Your Inventory?

Did you know the average retail store’s inventory accuracy is about 65%?

That sounds like a ridiculously low number, right? Most people would assume this number insinuates that 40% of a store’s inventory is unaccounted for. Not exactly. What it means is accuracy to product type on the floor. In other words – what exactly is on the retail floor. If an employee looks into an inventory product system, and the system is counting twelve size 30 slim jeans, but there is actually only 20, the product type alone is only around 60%.

This is a compounding problem. Replenishment can end up costing much more money than it should as stores order too much, or not enough of a certain item. This also causes problems in shrink. If an inventory product system is only about 60% accurate, certain items can easily go missing without a trace.


How does inventory become inaccurate? It starts with cycle counting. Merchandise tagged with barcodes require attentive employees to count one product after another. This process is time consuming, and prone to mistakes. An inattentive employee can easily miscount inventory. And, typically, cycle counting takes a very long time, so most times, it is only done once a quarter or so. We’ve spoken to retail store owners who only do inventory once a year due to time constraints. With barcodes, and a staff trying their best, 65% is really the best you can ask for.

That’s why so many retailers are adopting RFID technology. RFID tagged merchandise can be counted all at once. It’s counted by a computer, so it’s right 100% of the time. Typically, a quick employee can count a handful of items in a minute. An employee armed with an RFID scanner can scan 200 – 300 items in a minute. With RFID, accurate cycle counting can be done daily. That’s how RFID can usually raise a retailer’s in store inventory accuracy to 95% or higher.