Retail Stockroom Organization: How to Find Inventory Fast (2023) - Shopify Philippines (2024)

A retail stockroom is the space that holds your store’s inventory. Customers don’t get to explore back here, but it’s one of the most important places in any brick-and-mortar store.

As a retail store owner, you’ve likely put a lot of thought into designing your store layout, but what aboutorganizing your stockroom?

Even though your stockroom isn’t visible to customers, proper layout and organization is just as important there as on your sales floor. The way it’s organized can affect a myriad of things related to store efficiency, from the speed of your customer service and inventory counts to the security of your products.

Ready to turn your disorganization into a retail stockroom you’ll actually enjoy being in? This guide will show you how to do it.

What is a retail stockroom?

A stockroom is the heart of any retail store. Think of it like the store’s headquarters—a place to organize your merchandise before it goes onto the shop floor for sale.

Overloading your shop floor can be intimidating to shoppers. Nobody wants to feel crowded by tall shelving units overflowing with products. Keep the bulk of your inventory in the stockroom and leave a handful of each SKU available on the public racks. Your retail associates are always on-hand to collect the item in another size or color from the stockroom.

The importance of stockroom organization

It’s easy for retailers to let the stockroom overrun itself—especially since it’s a private area where few customers venture. Let’s take a look at why neglecting your stockroom is a mistake.

Quickly find shopper requests

Reduced inventory stores operate with minimal inventory on the shop floor. Hiding stock in the storage room is a technique many retailers use to improve engagement with shoppers. Asking for product availability opens the door to a conversation.

That conversation quickly fades if you then spend 15 minutes wading through a pile of inventory in your stockroom. Meanwhile, the customer waiting on the shopfloor has lost interest because you’ve disappeared into the stockroom for too long.

Keep your customer engaged by having an organized stockroom. Go in, find the item they’re looking for, and bring it back to your shopper as quickly as possible.

Consider your busiest working day. We have a big inventory, and one lost product can take a long time to search for. Having a system in your stockroom that everyone understands can help avoid any last-minute panic and help you save valuable time.

Run efficient inventory counts

Physical inventory counts confirm that the stock levels recorded in your inventory management system are accurate. Items can go AWOL for many reasons: shoplifting, return fraud, or employee theft (more on that later) and this can lead to havingphantom inventory.

Counting physical inventory becomes much easier if you can clearly see the stock sitting in your storeroom. Keep everything organized, in its own place, and easily accessible for accurate stock checks.

For bookkeeping purposes, an organized stockroom makes for easy inventory valuation—something to bear in mind for your end-of-year tax returns.

Had a little peek into the stockroom. I mean, it looks somewhat neater than the shop floor! 🤷🏻‍♂️ #JCP pic.twitter.com/kP9r4Foiz1

— Neil Saunders (@NeilRetail) September 19, 2020

Easily restock inventory

How do you know when you’re low on stock if you have to hunt for new products in your retail stockroom? Granted, a point of sale system with inventory management features helps by showing you when SKUs are running low. But if you have inaccurate inventory counts and a disorganized back office, stock replenishment becomes a problem.

A well-organized stockroom has clearly labeled sections for each product category and SKU. If you notice one shelf is looking bare, prioritize a restock. You’ll have inventory replenished much faster that way than by stumbling upon a low pile by chance.

💡 PRO TIP:Set reorder points in Shopify admin to get low stock notifications and ensure you have enough lead time to replenish inventory of a product before quantities reach zero.

Avoid stockouts

Leave restocks too late and you run the risk of a stockout. In this case, your storeroom is empty of products your customers want to buy—a problem you never want to encounter, especially if potential customers are still coming into your store.

Stockouts cost retailers an estimated $1 trillion per year—a figure that’s on the rise. According to data collected over the last couple of years, the number of stockout messages has increased four to five times–- but that they can largely be avoided by organizing your stockroom.

I visited 12 major retailers today and, on average, 15-20% of shelves were barren and over half of all aisles seemed understocked.

We are simply out of stock.

— Web Smith (@web) August 19, 2021

Jara Moser, Digital Marketing Manager at Shopventory, says, “Without knowing exactly what physical product you have in the stockroom available to customers, you’re more likely to over (or under) sell, creating a poor customer experience.

“A messy stockroom can lead to having excess unprofitable stock and inaccurate inventory valuation tying up important capital for your business.”

Protect your merchandise

As much as we’d like to think our retail store associates are trustworthy, employee theft does happen. It’s a leading cause of inventory shrinkage—a problem that costs retailers $61 billion per year.

Protect your merchandise with a properly organized stockroom. While it’s not a foolproof way to prevent employees from stealing goods from your store room, it could deter them from stashing products in their bags if they’re doing so in plain sight. You’re much more likely to notice an employee stealing a product from a vertical shelf than from a disorganized pile.

There are a few other logical reasons to bring order to the stockroom, such as reduced product theft. For warehouses with CCTV that have clear coverage of the entire product lines, it is a deterrent for internal and external stakeholders to steal stock.

How to organize your stockroom

Are you ready to put more thought into how your retail stockroom is organized? Let’s take a look at seven simple ways to get things in order.

1. Choose the right stockroom layout

The size of your stockroom will limit what you can—and can’t—do when it comes to arranging your products. If you have a large, open warehouse-style backroom, the sky's the limit. But if you have a smaller, segmented stockroom, you may have to get creative with shelving and off-site storage..

Regardless, determine your operational workflow for optimal stockroom usage. Answer these questions:

• How often do I go into my stockroom?
• When I go to the stockroom, how long does it take me to find what I’m looking for?
• Do I use the stockroom for packing and shipping, or simply for storage?
• What is my ideal stockroom layout? What’s keeping me from achieving it?

As you answer these questions, you may find that the stockroom you currently have doesn’t suit your needs at all. A complete store rearrangement would give quicker and easier access to products you use all the time when assisting customers.

We have looked at many ways of organizing our stockroom: By wine type (red, white, rose etc) and by delivery date, but have settled on a simple SKU system. Each of our 150 lines has a four-digit SKU, and each shelf is marked with the number. We have found this to be the simplest and quickest way of managing orders.

Take these things into consideration when designing your new stockroom layout:

1. Frequency: How often do you use or need access to the stockroom?
2. Size: Experiment with placements of large versus small products for accessibility without damage or disruption.
3. Groupings: What products fit in a natural category and should be placed near each other?
4. Naming: How do you establish a naming convention for labels for aisles, bins, boxes, and parts?
5. Order: Organize items alphabetically or with some other cataloging system.

Mirroring your store product groupings with your stockroom shelving is one technique with the potential to shave hours off of restocking time.

Plus, moving everything that’s not inventory off of free-standing shelf space and onto wall-mounted shelf space could improve your packing efficiency. It’d also reduce time spent looking for items that previously were homeless.

Here are two retail store layouts that work symbiotically. They demonstrate the way a stockroom and storeroom should work together to help improve your workflow.

Store Layout Example

Stockroom Layout Example

Remember: The stockroom should be working with you, not against you. By simply sketching out your ideal stockroom as a labeled floor plan, you’ll see ways to rearrange things and improve its flow.

2. Set up stockroom guidelines

Once you’ve established the type of layout you’d like for your stockroom, make sure your retail team can properly utilize the structure and maintain it.

Document your processes for all operations that take place in the stockroom, making it simple enough for a trainee to use and readily available for all users. Build a prioritized list of every function you and your staff perform in the stockroom, such as:

• Inventory audits and cycle counting
• Vendor merchandise management
• Store restocking and seasonal rearranging
• Stockroom shelving management
• Quality assurance and safety
• Product shipments and delivery management
• Packaging and supplies organization

Then, list the steps required to complete each process or task using process maps, checklists, tutorials, forms, images, and videos. Tools like Creately and Miro exist to make this easier. Answer who should do what, when, and how.

For store owners busy with a thousand other things required to run their business, taking the time to map out processes may seem like a low priority. But by doing it, you’re saving time when you go into the stockroom to access a material or product. Plus, with team-wide adoption, efficiency gains multiply and stockroom organization can be maintained on an ongoing basis.

Finally, think about ways retail signage and placards can help locate products and materials. But don’t go overboard—be strategic about where you use labels and what you put on them. Keep it intuitive, simple, and not too wordy.

3. Invest in storage units and shelving

Part of what makes a successful stockroom is the way storage supports your workflow. Depending on your space and your style, standard wire shelving may be ideal. Other retailers prefer bespoke solutions.

For stores that want to store lots of small parts and pieces in a stylish way, check out the hashtag #haberdashery on Instagram. You’ll find a collection of ideas on how to achieve a storage style originating from the British term for sewing notions like buttons, zippers, and thread. It’s a storage style that has swept the interior design world with its quaint, naturalistic, and almost apothecary vibe.

London store The Old Haberdashery achieves this look with its crowded yet pristinely categorical store arrangement. Sharing pictures of its stockroom and store displays on its social media is a key part of its brand, and proves that stockroom workflow is not one size fits all.

View this post on Instagram

A post shared by THE OLD HABERDASHERY (@theoldhaberdashery)

Need something less standardized? Stockroom organization can be a balancing act to determine what makes the most sense for your space and your workflow, as well as your budget and inventory growth.

Choose shelving that’s flexible and can grow with your business. Consider all parts of your business, from seasonality to shipping and delivery. What types of storage systems will work best for your store year-round and long term?

Let’s take a look at four stockroom storage examples.

Tall shelving racks

Tall shelving racks are narrow units that squeeze in narrow aisle space. By taking advantage of high ceilings, you can stack higher shelving and maximize your upward square footage. It’s the simplest kind of shelving to acquire, the easiest to assemble, and the most affordable, and is great for small to medium-size retailers with vertical space to fill.

Once the shelving is in place, decide which items need to be the easiest to get to. Keep bestsellers within reach and excess or low-performing stock up top.

High-density mobile shelving

Another innovative solution to save storage space and create a more efficient stockroom is mobile shelving. You’ll create and condense aisles—as simple as wire shelves on wheels.

Other commercial options are installed on tracks. This type of mobile shelving can be compacted into pods or groups by turning a handle or (if automated) by pushing a button. This reduces needed storage floor space by 50%.

Stockroom second level or mezzanine

For warehouse-scale storage solutions, consider adding a second-level platform to your stockroom, known as a stockroom mezzanine.

These are typically freestanding units and customized for your space, making them a great option for stores considering a costly relocation or additional warehouse rental due to space constraints.

Modular options for shelving

Lastly, modular options for shelving fall under the organization category of stockroom storage. But there are lots of ways you can categorize and bin products to create a streamlined stockroom. Shelf bin organizers come in all shapes and sizes, and work well with label systems and other categorical methods of storage.

4. Hold a stockroom organization day with your staff

When the day arrives for you to overhaul your stockroom, have an organization day to involve your team in the process of stockroom reorganization. Order food, pay overtime, and make it a fun environment.

Adoption and change management may seem like lofty corporate initiatives, but they need to be on the radar of every retailer when making significant stockroom changes.

If your stockroom redesign comes with additional business process changes—which it might, if you follow tip #2—then adaptation will be necessary. And in many cases, resistance will follow.

So, involve the people that are going to be participating in carrying out the new processes daily. In fact, empower them to make workflow suggestions, optimizations, and improvements during the stockroom redesign phase.

Garner your team’s approval and endorsem*nt before announcing a major stockroom overhaul. And brush up on important change model principles, like Jeffrey Hiatt’s ADKAR (Adoption, Desire, Knowledge, Ability, Reinforcement)—a five-phased framework for successfully navigating business changes.

5. Set up warehouse KPIs

Setting Key Performance Indicators (KPIs) edges more into inventory and warehouse management best practices, but stockroom and inventory are intrinsically connected. The way you manage your stockroom directly impacts the knowledge of your stock and product inventory.

Do you have inventory management systems in place? If not, setting up these systems is a step to take prior to organizing your retail business’ storeroom. An effective stockroom workflow is influenced by how you intake merchandise, unpack and shelve, label and organize, input into your POS, and ultimately sell and restock products.

Stockroom KPIs and metrics should blend in with your existing inventory management goals and metrics. Tracking where you stock items in your stockroom is one way to add visibility to your existing inventory data.

6. Assign your team members stockroom responsibilities

Create and assign responsibilities to your retail store’s team if you want your new organization methods to stick. Remember: Involving staff and encouraging team adoption is a critical component of the ongoing success of stockroom management.

Whether you’re hiring a dedicated stockroom assistant or dividing tasks among your existing team, regular stockroom maintenance avoids massive overhauls and reorganizations at the end of a quarter or year.

Some of the ongoing tasks we recommend assigning for stockroom maintenance include:

• Organizing bags and packing materials
• Taking stock of incoming supplies and materials
• Performing weekly inventory checks and counts
• Entering stockroom data into POS software
• Ensuring accurate placement of products and doing shelving checks
• Managing stockroom procedures and ensuring compliance among the team
• Receiving vendor goods and processing them into inventory
• Overseeing customer deliveries and shipments
• Running weekly KPI reports and presenting to team

These responsibilities will help your store to run more smoothly and set you up for success when it comes to organizing and maintaining a stockroom. Without a person or group of people devoted to executing these daily tasks, your stockroom can quickly become a mess of materials, papers, products, and boxes.

To keep things organized once the organization novelty wears off, set up incentives for your team to meet stockroom goals. Whether it’s additional bonus opportunities or a simple paid-for company outing or lunch, reward your team for taking on additional responsibilities and achieving your goals.

7. Keep it clean

You’ve invested time, energy, resources, and money into achieving a more streamlined stockroom. The next challenge is to keep it clean and organized.

Involving your team in regular audits and process changes is a great way to keep your stockroom operations evolving and improving. Reinforcement is key to sustaining change, as we learned with the ADKAR model above, so continue to have training and stockroom management meetings to make sure your team is up to speed on what’s required.

5 bonus stockroom management ideas

Once you have systems in place to organize your storeroom, there are a few small tweaks designed to make the process of finding inventory easier, faster, and more efficient.

Keep your best sellers in the front

Earlier, we mentioned how an organized stockroom makes it easier to find goods. The process needs to be fast if you’re leaving customers on the shop floor while you search for inventory. Leave them too long, and you risk their losing interest and leaving the store empty handed.

Make the product search faster by positioning your best-selling products near the entrance of your store room. That way, you don’t need to run around a large stockroom to find popular items. Even 20 fewer steps makes a huge difference.

The biggest time saving tip we implemented was learning what our top selling items were and keeping those closest to our shipping stations. It allowed us to get many more orders shipped each day.

Create a workspace in your stockroom

If you’re offering buy online, pick-up in-store (BOPIS), local delivery, or curbside pickup for shoppers, create a dedicated workspace in the stockroom to pick and pack those orders.

Take it from Best Price Nutrition, a retail store that has a 14,000-square-foot warehouse attached to it. Ecommerce manager John Frigo says, “We organize our warehouse by brand; however, we do have a collection of products which make up a huge portion of our sales. We keep those by our packing tables as they account for probably 30% to 40% of our orders.

“Having these on our packing table saves our packers from having to run around the warehouse with carts to grab these items, and really speeds up our fulfillment process.”

When you run your own business, you want to make life as easy as possible for yourself. A messy stockroom leads to confusion when packing orders which leads to mistakes which leads to an unhappy consumer experience. Solve the problem at its source by keeping things organized and you might just save yourself multiple headaches down the line.

Keep your stockroom well lit

Nobody should need to get their flashlight out when venturing into your storage area. Investing in high-quality lighting—LED lamps are cost-effective and efficient—has its benefits.

First, retail associates can clearly see differences between two items, so you don’t end up with one pile of mismatched SKUs. Coming out of the stockroom with a blue shirt when the customer requested a black one doesn’t make for a great shopping experience. Neither does replenishing your entire stock of ripped jeans because you thought the pile was running low, when in actuality, you’re just out of slim fit.

Plus, well lit stockrooms can deter employees from stealing inventory. It’s harder to get away with theft if they’re stealing goods in broad daylight, as it were.

Get rid of dead stock

Stockrooms quickly become a disorganized mess if old inventory is cluttering the storage space. Returned goods, damaged products, and out-of-season items should claim minimal space (if any), leaving more shelving for products customers will purchase.

Have a designated section for dead stock, and work to keep it at a minimum. Here’s how you can get rid of dead stock without throwing it in the trash:

• Donate it: Support your community by donating clothes, packaged goods, and books to local shelters. Many will even take food that’s slightly past (or approaching) its sell-by date.
• Run a clearance sale: If there’s anything that will motivate shoppers to visit your store, it’s the promise of a bargain. Mark down goods and host a “flash sale” to squeeze revenue out of dead stock.
• Bundle it: Pair old inventory with newer stock to shift it from your storeroom. If your candles are usually $10, for example, create a two for $15 bundle—with the latter being a product cluttering your stockroom.

Invest in inventory management tools

Inventory management software exists to make your life easier—so much so, Stephen Light, CMO and co-owner of Nolah Sleep, says, “​​Investing in inventory management software is one of the best moves a retailer can make to keep track and organize stock.”

One of the things it helps with in terms of organization is the implementation of a labeling system, which if done manually can be tedious and leave a lot of room for error. Giving every product a barcode label eliminates a lot of error and can help keep everything organized twofold: physically and digitally.

To make your new inventory management system work for your store, develop a stock tracking procedure. Prevent overstock or dead inventory, and gain valuable insights into how your stockroom is performing for your business, though techniques like:

• SKU mapping
• RFID technology
• Bar codes

The best part? Point of sale (POS) systems like Shopify POS can integrate physical inventory and stockroom management tracking into one system. Stores have a better chance of knowing what data is most valuable if it's easily accessible and stored all in one place.

Where possible, we would advise others to lean on technology such as inventory management systems to make your life easier. It also reduces the chances of human error, which prove fairly high when warehouse operatives are bored or disinterested.

Organize your store’s stockroom

Retail stockrooms are not static. They are highly dynamic places with lots of moving parts and pieces. Think about ways you can create empty spaces for inventory swells and business growth to avoid overcrowding and intimidating pile ups.

This post was originally written by Kameron Jenkins and has been updated by Elise Dopson.