How do grocery stores keep track of inventory?

How Do Grocery Stores Keep Track of Inventory?

Time, effort, and management are the key attributes that help run the grocery stores without any trouble. Keeping the grocery stores well organized attracts the customers, quickly finds the items from the racks, and articles segregated based on their applications. Availability of almost everything is the key reason any customer prefers a grocery store. For fulfilling all the needs, the storekeeper has to keep track of Inventory. We will see how do grocery stores keep track of inventory?


Grocery stores in the olden days used to manage and keep track of the Inventory with pen and paper. They used to write everything and hold the record book of the store. The managers closely looked at which item was in the stock and which item would run out. Moreover, they had to watch which item was in demand as per the trend, very closely. Though it was tedious to manage everything manually, the grocery store ran smoothly, only due to inventory management. But in recent times, computerized software base inventory tracking took the place of manual administration with technological advancements.

Nowadays, almost every grocery store uses inventory management software based on a barcode sensor or any other technology, which helps manage items in real-time. In this generation, maybe the grocery store is small, medium, or large; without tracking the Inventory, it becomes haywire to manage the store and leads to inefficiency. But, no matter how much the software application is used, there will always be a strict watch on the Inventory manually. Inventory plays such an immense role in the stores that the grocery stores may have to face losses for having no or little Inventory and expiration by overstocking the product. Inventory tracking is done in various ways.

Is Inventory Control So Crucial?

Whenever the customer reaches the supermarket or any grocery store to purchase necessities, they hope to find every item within one place. It is infrequent that the racks in the grocery store are found to be empty. This is just because of the inventory control. For running a supermarket or grocery store, it becomes the responsibility of a manager to run the store with complete supplies. The various software integrated with the inventory racks and notifies the computerized system when the management orders the new collection. This never lets the stock in the supermarket get finished. So, there cannot be denying the fact that inventory control is so crucial.

Demands of Grocery Store Owners

Every store owner wants to know how much material he should order; how many days will the current material last? And many more questions like it. If they have the solution to all these, inventory management will be much easier for them. The first and foremost thing that they want can forecast sales. As many items have a short shelf life, like bakery items and dairy products, if the track of Inventory is not done, there will be spoilage and expiration of the products. The prediction of sales traditionally was made solely on guesswork, which made the management more difficult, but nowadays, this is possible with the help of many computerized tools.

The second requirement by any grocery store owner is automatic stock replenishment; the computerized system is so advanced that it has reduced most of the human effort. Rather than manually ordering the products for the grocery store, the system learns the behavior and order history, places the order from historical data, and improves accuracy. In addition, the system notifies the manager system, which item will soon go to deplete.

The third requirement is custom inventory integrations. It helps keep a financial track of purchase orders, receipts, slips, and bills and maintains the data in the cloud storage system, which nullifies the risk of data loss.

Known In the Industry as SKU

SKU is known as Stock Keeping Units. It is an architecture that has become a necessity in any grocery store. It is a unique alphanumeric code given to every item to track the store inventory. SKU is the biodata of any product that contains the article’s information like price, color, size, type, and many more factors. The SKU can be used by every store differently, as the alphanumeric strategy that someone is applying may not be the same as the others. These things make SKU different from barcodes, as barcodes remain the same universally, and remain constant, no matter which grocery store or supermarket is selling it. It is the lack of management of Inventory, which results in many business failures.

Working of Inventory Tracking System

A Point of Sale (POS) system is where the customer makes the bill of the items they have purchased from the store and makes the payment. The system automatically updates on the server that the item having the particular SKU has been sold. The POS acts as the central system, which manages almost everything, and the most important thing is to have a track of Inventory automatically. A POS system will consist of:

  • Display with touch screen 

POS system uses the display screen for the visual represent

  • Keyboard

The function of the keyboard is to enter the data required. 

  • Barcode Scanner

Every item is attached with a barcode, which specifies the manufacturing details and item type. It is an efficient way to identify the item in the grocery store quickly.

  • Receipt Slip Printer

It is used to print the slip of the final cash settlement. The item details, price, cash paid, and change to be paid back to the customer are printed.

  • Cash Storage

Usually, there are various modes of payment in every grocery store. The world is going towards cashless transactions, but cash will always be an option to pay for the customers. For this purpose, cash storage is there in the POS system.

  • Software

Software is required to collaborate all the hardware.

It is the POS Software that runs the POS system. POS software acts as an operating system and uses the available hardware to process and manage orders. Businesses like restaurants, hotel booking, and ticket booking also use a POS system.

The working steps for a POS system are:

  • The POS systems come into the role when the item is being purchased and in the payment process.
  • The customer brings the item to the counter at the POS terminal.
  • The grocery store seller scans the barcode and identifies the product from which shelf and category.
  • The item gets sold from the Inventory and the printer prints out the receipt.
  • The POS terminal asks the mode of payment; it can be cash, credit card, debit card, UPI, or any digital wallet; this is where POS transactions happen.
  • The bank authorizes the payment and pays the amount to the seller.

Merits of Using POS System in Inventory Tracking

It is the various advantages of the system, which is why the POS system is adopted by almost every successful grocery store to keep track of the Inventory.


It becomes challenging when the employees in any grocery stores change or a new employee is hired; this, in turn, becomes very difficult for the management, which leads to a decline in the store’s efficiency. The new employees have to learn many processes and terms for seamless operation of the grocery store. But in the case of the POS system, the employees have to only learn about the automated system rather than the actual Inventory. The employees only need to scan the product, and the system does all the work on its own, from checking out the item from Inventory to printing the receipt and managing the finances. Due to this, the whole cash counter system became faster.

Better Inventory Management

The management of the Inventory is operated and managed on its own by a POS system. It is the software that controls the number of items in the Inventory. Even at the time of replacement or any defects in the item, the POS system manages it. The product again reverts to the Inventory, and all the quantity and finance management is taken care of by the system itself.

Managing Finances

Managing finances for large grocery stores is not an easy task. Earlier, people did the job manually, but the POS system has eased the work and manages all the finances smoothly. From making sales reports to trend analysis, which is very useful to determine the business’s profitability, it is done by the automated system.

Grocery Store Inventory Tracking Process

The fundamentals and processes related to the inventory tracking process are discussed. The inventory tracking process involves specific steps to be followed:

  1. Placing an Order

Goods are ordered when the Inventory lacks the item. The POS system orders the goods automatically according to the permissions given by the operators.

  1. Bar code helps in ensuring the data.

As the order is placed, the shipment of bulk lots is delivered to the store. The bar code helps in recognizing the SKU.

  1. Record of Products

In this process, from lacking the product from the Inventory to placing the order via POS, there will be accurate records of the current product available in the Inventory and the store.

  1. Updating The system

This is a continuous automated process. When the goods are sold, the system automatically updates itself in real-time.

  1. Defective Product Detection

The items which are defected or expired, detected and separated from the main Inventory.

  1. Generate Replenishment List

All the items from the previous process are gathered and a list is generated. The software generates the list automatically.

  1. Preset Reorder Level

The item again gets reorder and sets a preset order.

  1. New Inventory

Again the new Inventory is purchased, and the cycle gets repeated.

Different Methods To Track Inventory

Stores use different methods to track the Inventory in their stores; the POS system integrates the technique.

Universal Product Code (UPC)

UPC is also known as bar code; it is the most used method to track the Inventory, almost every store. Each item carries a label, which holds all the necessary details of the products. The bar code reader scans the code at the billing counter, and the details are uploaded to the system.

Log Book

One of the traditional methods to track the Inventory is the logbook. The logbook contains many columns, and data is to be recorded. The log can be maintained on the computer as well.


Radio Frequency Identification Tags are attached to each item in the Inventory, which is enabled with a microchip containing the information about the items. The tags are also used for anti-theft, as without removing the label, the items cannot be taken out to the store.


It is one of the famous Japanese techniques used in inventory management and tracking. The items in the Inventory are presented on the mainboard, which can be seen by every member working in the store. This method helps in anti-theft and managing the Inventory properly from everyone’s end.

Inventory Management Practices

Every business needs some fundamental practices that should be followed to maintain a good customer base. Many stores fail just because of the methods they follow.

Remove the ones that don’t leave the shelf

It’s not a surety that the customer accepts every product, what the stores sell. There may be times when a few of the products are in the Inventory, more than the time required. If those items are identified and removed from the Inventory, there will be enough room for the new products. This will help maintain the Inventory both by space and profit.

Modified Shelf Labels

This facility cannot be opted by every store, but this facility improves efficiency and reduces the efforts. There are many items whose prices change more frequently, for some items even daily. Every time cutting and pasting new price label tags will be tedious. Electronic shelf labels can be used to overcome that, which will update from the main system’s end.


Grocery stores have many automated systems to keep track of Inventory. The POS system is one such software and hardware integrated system used for maintaining the Inventory. The POS system fulfills the necessities of the store owner and helps keep the store’s efficiency. Apart from this, inventory tracking can also be done with different methods. As, without maintaining proper practices, the Inventory can be neither managed nor tracked.

Frequently Asked Questions

1. Can a standard grocery store be converted into an automated system?

Yes, the ongoing grocery store can be upgraded to an automated system using proper hardware and software.

2. What is the difference between SKU and Barcode?

SKUs are unique to every retailer; while the product’s Barcode is universally constant, it does depend on retailers.

3. Is the POS system applicable only for grocery stores?

No, the POS system can be used in restaurants, ticket booking, and hotel booking as well.

How do grocery stores keep track of inventory?

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