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“Best Practices for Physical Inventories” by Heartland Retail (BRA Supporting Vendor Partner)

“Best Practices for Physical Inventories” by Heartland Retail (BRA Supporting Vendor Partner)

What is a physical inventory?


An audit of a store’s inventory to confirm that what the point of sale says you have on hand is actually there, either on the store floor or in backstock. They help identify things like discrepant transfers, fulfillment errors, theft or products that were never received in or received incorrectly. While frequency can vary depending on size of your store, seasonality and staffing, performing one full physical inventory (PI)—or count—every six months is generally recommended. Because you’ll want to freeze your store’s inventory while doing so, schedule PIs after hours or on a day you are closed (remember to communicate any closures to your customers ahead of time!). Traditionally, PIs were done on paper or spreadsheets, but affordable, mobile technology has made this once dreaded task far more efficient for many retailers.


Necessary Materials

  • Mobile, cloud POS with inventory management
  • iPads (one for every member of the PI team is ideal)
  • Bluetooth scanners
  • A few empty baskets or boxes
  • Sanitizer to wipe down hardware in between uses
  • Water and snacks

Preparing the Store

Dividing your store into scannable “batches” keeps both the physical space and operations organized.

  • Draw a map of your store, including front and
    back of house.
  • Section off manageable areas, including all fixtures:
    tables, shelves, racks and display cases—the smaller
    the batches, the higher the accuracy.
    In the days leading up to the count, give your store a
    literal sweep.
  • Check for products under racks, in forgotten bins
    or dressing rooms, behind the cash wrap and every
    dark corner where something could be hiding.
  • Tidy your backstock, making sure apparel is folded
    and products are in the appropriate packaging.
  • Confirm that everything is scannable: Every item
    must have a barcode, and tags or labels must be
    attached, legible and undamaged.
    What is a physical inventory?

POS Housekeeping

Just as you want a neat store, you want a neat system. Inventory cannot be in limbo during a count, so dedicate time to cleaning it up.

  • Clear out on-hold tickets.
  • Check on layaways: Is everything still accurate?
  • Look at open sales orders: They cannot be in a
    status that is going to affect your inventory, so
    either fulfill and close or do not pull
    until after the count is complete.
  • Confirm all Open POs are still open and
    awaiting shipment.
  • Make sure there are no unresolved discrepant
    transfers or transfers left in transit.

Heartland Retail users: Prior to the start of your PI,
check your settings:

  • Settings >> Reason Codes >> Inventory Adjustments: Create a “Physical Count” reason.
  • Settings >> Roles: “Create physical counts” and “Review discrepancies and accept physical counts” should only be toggled on for whoever is going to fully oversee the PI, not all scanners and participants.

It may be tempting to say “all hands on deck,“ but too large of a crew can actually distract and contribute to mistakes. Especially in the age of COVID-19, consider how many people you can safely fit while maintaining social distancing.


Physical Count Teams

Your team will depend on many factors, including the size and complexity of the store. For a well-prepared location with 10,000-15,000 scannable SKUs, a six person team with experienced leadership should be able to complete the count in 4-6 hours. A larger count would require more people (or time), while a smaller location could be covered with less. Defining and communicating roles ahead of time is critical, so leave time for a kickoff meeting.

For the six-person roster above, the roles might look as follows:

Team Lead: Assigns sections to scanners, manages the count on the POS and reviews discrepancies.

Specialist Counter: Identifies, researches and counts non-scanning items.

4 Scanners: Divide this group into pairs; one person scans inventory while the other physically counts the items to confirm it matches the number scanned. Pairs should always work on their own batch, never multiple
groups scanning the same.


The Night Before
With customers out of the way, it’s time to physically prep the store:

  • Block it based on what you mapped into batches. Use painters tape; it’s inexpensive and won’t damage anything.
  • Pull out all tags and place them to the same side.
  • Arrange boxes, both on display and in the stockroom, with barcodes facing out.
  • Test and charge scanners and tablets. Finally, run a Negative On Hand report to give you a heads up of what’s going to be discrepant.

Day Of Best Practices

  • Scanning shelved items: Start scanning with the leftmost item on the top shelf of each section, then proceed to the right. When you reach the rightmost side of the section, move down to the next shelf and start again on the left.
  • Scanning hung apparel: Slide all items to the left side of the rack. As you scan each item, slide it as far right as possible.
  • Items that won’t scan: No matter how carefully you vet your barcodes, there will always be items that don’t cooperate. Provide each team member a basket in which to consolidate these items for review by the Specialist Counter.
  • Do not ring in sales during the PI.
  • Do not review discrepancies until the count is complete (Heartland Retail users: These will appear on their own Discrepancies tab; review them after you are “Done Counting” but before you “Accept Count.”)
  • Wear comfortable shoes, stay hydrated and fed! Schedule breaks for the latter; greasy pizza hands
    and merchandise counting do not mix.

The new standard in point of sale.
Stay agile and meet demand with robust retail management software.
Heartland Retail’s built-in inventory tools give you unparalleled control and the ability to easily manage stock across your enterprise, keeping customers happy and operations streamlined.

  • Real-Time Data
  • Omnichannel Functionality
  • Partial & Full Inventory Counts
  • Unlimited Custom Fields & Reports
  • Transfer Management

Heartland Retail is a powerful cloud POS and retail management platform designed for retailers, by retailers. With robust inventory, order, promotions, tax, reporting and customer management tools, the software is easy to use, easy to deploy and delivers actionable real-time data across the entire enterprise. Watch a demo or schedule a consultation to learn how our platform addresses the unique needs of board specialty retailers.


BRA note: We are very pleased to mention that Heartland Retail is a BRA Supporting Vendor Partner who is currently offering an exclusive promotion for all BRA Distinguished Retail Members. Be sure to mention BRA when connecting with Jonathan and the good people behind this outstanding resource.

– Doug Works, Executive Director BRA


If you are not yet a BRA Retail Member, you can easily opt in to either Regular (no cost) or Distinguished ($99/yr.) Membership via this super simple join form