How Grocery Stores Manage Inventory

Long gone are the days of paper ledgers to keep track of grocery inventory. Mom and Pop convenience stores have been replaced by big-box stores such as Costco, Walmart, and Kroger.

How Grocery Stores Manage Inventory

With this growth, there is a need for efficient inventory tracking and rotation of products. How do these grocery giants manage it all?

Supermarket Sweep

Incoming grocery inventory is scanned before it hits the shelves. The software used by the grocer logs each item so when it’s scanned at the register for purchase, the item count is automatically updated. Those barcodes you see on every item at the store are called stock-keeping units, or SKUs. 

Some grocery stores have integrated replenishment lists linked to their inventory system. This means that when item counts hit a certain point, they’re added to a list for reorder.

But what about damaged goods that are never scanned at a register because they’re never purchased? Many stores implement quarterly counts of inventory. This is performed manually by employees and the resulting numbers are compared to what’s in the digital inventory system. 

The numbers calculated during manual inventory may vary due to expired or damaged goods, or theft. These losses are recorded to help estimate profits, and what needs to be reordered. Adjustments will be made to update the accuracy of what’s in stock after item losses have been recorded.

Inventory Services

While many stores still have employees conduct inventory, some hire out this task. It frees up store employees to continue working the register and offering customer service on the floor. There are companies that specialize in inventory management, with some using robots to conduct the work! This inventory may come from distribution centers, depending on what specific produce is required. Efficiency is key here, which is why robots are used, however, human input is also need for some of these tasks, and to ensure that they are done correctly, these centers will have the appropriate equipment, from forklifts to rolling tri-arc ladders to monitor and check stock levels throughout the days/weeks/months.

Inventory Robots

Walmart is among some of the retail stores using robots from Bossa Nova Robotics to check inventory. These “employees” are docked at charging stations in the store until needed. The benefit of having robots conduct inventory counts is that they not only collect the data but can analyze it as well.

Another task robots perform is identifying consumer habits. They scan the shelves to see what is being purchased at a greater rate, comparing products to see which is preferential. For example, if one variety of apples is selling out faster than another, it indicates a customer preference. Future restocks will be influenced by the data collected from the robots to avoid purchasing apples that end up going to waste.

Third-Party Inventory Services

Instead of closing the store early or having employees conduct inventory overnight, consider hiring a third-party inventory service. They can come in during the day without disrupting regular work schedules and provide accurate information that’s worth the investment.

A well-known leader in inventory services is Retail Grocery Inventory Services (RGIS). They started in 1958 as a means for the Nicholson family to make ends meet while providing a valuable service to grocers. RGIS has since grown from a small operation in the Midwest to a global service with over 200 offices worldwide.

What Do Grocery Stores do with Waste?

Have you ever been confused about food with “sell-by” and “use-by” dates? How do you know if something is really expired, or if it’s just deemed too old to stay on a grocery store shelf?

Grocery stores are in the practice of removing items from the shelves by a certain sell-by date. This means the item is no longer at its freshest, whether it’s canned goods or ground beef. This doesn’t mean, however, that the food is already spoiled and is unfit for consumption.

What Happens to Food Past its Sell-By Date?

Some supermarkets will use items at their sell-by date to prepare new offerings in their stores. For example, Costco uses its famous rotisserie chicken to make street taco platters and chicken noodle soup. Other stores may cook meat about to pass the sell-by date and use them in salads or other deli dishes so they don’t go to waste.

Additional surplus food often ends up at food banks or discount grocery stores as well. As previously stated, just because a product has passed its sell-by date, it doesn’t mean it’s no longer safe to consume. The Food and Drug Administration (FDA) allows so-called expired foods to be donated, or sold at salvage stores, which are both ideal alternatives to throwing food away.

Quality Control for Food Banks

Lest you fear that discarded food isn’t being monitored when it’s donated to food banks, rest assured that there’s usually a certified dietician on staff to vet products. If there’s any concern that items are not fit for consumption, the dietician can step in and make an assessment. Often, simply looking at an item can help anyone determine whether it’s safe or not; truly expired, spoiled goods will have misshapen packaging (bulging cans, for example), or foul odors.

Many food banks do have a protocol that they keep items past their sell-by dates, but not the ones past their expiration dates.

Passing Savings On to Consumers

Why would customers shop at salvage grocery stores for products past their sell-by dates? It often comes down to the savings. Individual store practices may vary but, generally, items in salvage or discount grocery stores can be up to 50% less expensive than when the items were at Walmart or Kroger.

What Goes in the Landfill

The U.S. Department of Agriculture estimates that 30% of grocery store inventory (food products) ends up in a landfill each year. That adds up to about 16 billion pounds of food. Food waste may seem like a non-issue since it’s biodegradable, but that is actually the problem. As food decomposes in landfills, it releases greenhouse gases. Food waste in landfills accounts for about 8% of the greenhouse gas emissions created by humans.

Western Elite has an insightful article on how we as individuals can reduce the amount of food we send to landfills. Check it out HERE. Hopefully, over time, improved inventory systems management can help large grocers reduce the amount of waste they produce as well.

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