Stock control policy and proceduresInventory controlThe store has clearly defined policies and procedures in place and it is the Supervisor’s responsibility to ensure inventory control is efficient, as loss of stock and damages result in a loss of profit.

The buyer’s role

Forecast sales and budget orders

Keep up-to-date with trends

Order merchandise

Ensure a variety of merchandise

Understand the target market

Monitor stock levels

Supervisor’s role

It is the Supervisor’s responsibility to train staff members in the correct procedures for receiving stock.

Minimise shrinkage (theft and waste)

Control the level of mark-downs

Monitor stock levels

Monitor fast and slow sellers to avoid sell-outs

Coordinate stocktake and prepare reports for Management

Ensure all merchandise is correctly priced, following Company procedures

Monitor re-order levels for fast selling merchandise

Liaise and communicate with the buyer over the sales performance of stock

Inform all staff of new product lines and price changes

Staff member’s role

Check the load

Check delivery records and procedures

Check the quantity and quality at delivery

Check the quantity and quality after delivery

Store the stock securely

Deal with damaged and missing stock after delivery

Inform Supervisor of any damaged or missing stock

Stock handling

Stock handling and storage of goods

Care must be taken in the storage of goods to ensure against damage and theft. A fundamental part of your supervisory duty is to ensure the personal safety of your staff members, and to provide a safe working environment. For more information, refer to the Safe Work Practices Manual. A few issues relating to the safe handling of stock are:

All fire exits and fire extinguishers should be kept clear of stock for easy access in case of an emergency

Stock is to be stacked to prevent it from falling on staff members and customers

There should be at least 30cm clearance above stock and around fire extinguishers

Empty pallets should not be stacked too high and are to be laid down flat and not stored on their sides

Be aware that poor manual handling accounts for the majority of accidents in the retail environment

Stock safety

Stock needs to be placed in security areas and put away as soon as possible. Store procedures are to handle stock in the following manner:

Special items, such as handling stock, must be stacked in the appropriate way and hung on the appropriate fixtures

Fragile items should not be stacked on other stock or on high shelves

Perishable items must be stored at the specified temperature to keep them fresh e.g. milk and frozen foods

Flammable items should be kept clear of heat or combustible materials

Storage for hazardous items must follow manufacturer’s storage and handling instructions

Stock re-orders

Although our Company has a Stock Controller and Buyer, the Supervisor still plays an important role in monitoring stock controls. Our policy is to

always try and avoid the situation of stock out by frequently communicating with the buying office. By doing this, all staff members can be aware of planned promotions, target markets and be informed of new stock items and trends for the new season.

An empty looking store or an overcrowded store will impact badly on sales.

Re-stock shelves and display stands from stock in reserve

Fax or email all order requests to the buying department with an order number

File order forms in due date order

Place orders on a regular basis; weekly or more often if required

Supervisors are responsible for re-ordering all standard stock lines.

The buyer handles all other items, which are known as specialty lines.

Store pricing policyThe Store’s image is up to date, stylish merchandise. The type of customer our store attracts is more image-conscious than price-conscious.

Our merchandise is medium- to high-priced, however, our emphasis is on supplying a wide selection of quality merchandise as well as providing excellent customer service. Furthermore, our store is known for our end of season mark-down sales where merchandise is cleared at bargain prices.

Considering this, the purpose for a store pricing policy is for prices to reflect and fit in with the store image, so that prices are competitive and most importantly, the store makes a profit.

Mark-up and profit margin policies

Mark-up and profit margin polices are confidential to Management, the Stock Controller, Buying Department and selected Supervisors.

There are two key elements to consider when developing a pricing policy. These are mark-ups and margins.

Price Points are to be as follows:

Below $1: to be priced in even multiples of 10c, 20c, 50c, 70c, etc.

$1 and $2: as even dollar amounts $1 and $2

Over $2: prices should end in .95c so $3 becomes $2.95, $5 becomes $4.95 and $10 becomes $9.95

Over $30: revert to even dollar amounts $1 below the $10 multiples. So $50 becomes $49, $70 becomes $69, $100 becomes $99 etc.

Mark-up

Mark-up is the amount added to the cost price of merchandise to give a selling price that meets profit requirements. All items are to be marked up 150% of their true cost price.

The cost price should be multiplied by 150% and added to the cost price. For example:

Cost Price Mark-up Selling price

$10 150% $25 rounded to price point of $24.95

$20 150% $50 rounded to price point of $49

$50 150 % $125 rounded to price point of $125

$100 150 % $250 rounded to price point of $249

Profit margin

Profit margin is the estimated gross profit that would be achieved by selling goods at full selling price. It is calculated by deducting the cost of goods sold from the selling price. For our store to be viable, a profit margin of 60% needs to be achieved.

$25 – $10 = $15 profit.

To convert this to a %, use the formula below:

((selling price – cost price) selling price) 100 = Profit Margin

(($25 – $10) $25) 100 = ($15 $25) 100 = 0.60 100 = 60%

It is important to understand that marking up merchandise 150% will only achieve a 60% profit margin. If merchandise is sold for less than the recommended selling price for reasons such as stock losses, mark-downs, shrinkage etc., the overall gross profit is reduced.

Some elements that contribute to the level of profit margin and mark up are:

cost price

freight

storage

wages

rent

Supervisor’s role in mark-downs

All supervisors should be aware of the reason for mark-downs. Remember unwanted stock takes up valuable space and costs our store valuable profits. It is the supervisor’s responsibility to keep an eye out for slow-moving stock and suggest strategies to rectify the problem. Supervisors must keep good records so that Management can keep track of what is being marked down.

When should supervisors mark-down merchandise?

Merchandise is to be marked down at the end of its selling season or if it is slow moving, obsolete, damaged or priced higher than that of our competitors. It is preferred mark-downs are planned for holiday programs or special events.

Benefits of mark-downs:

Increase the traffic flow of customers

Increases the sales of other merchandise in store

Procedures for Mark-downs

Supervisors must carry out a weekly inspection of merchandise in their department and fill in report of slow moving merchandise and suggest mark-downs figures

Mark-down sheet is sent to the Stock Controller for approval and sign same

Once the mark-down sheet is approved and signed by the Stock Controller, it is the Supervisor’s responsibility to inform all staff members of the price mark-downs to prevent embarrassing situations of staff members quoting old prices to customers

The mark-down sheet is to be filed in the mark-down book, which is kept under the counter for easy reference to all staff.

Supervisors have permission to discount up to 15% on any items that are damaged or stained without permission from the buying office. However it must be recorded on the mark-down sheet. It is important for shrinkage and profit records that these are recorded accurately.

A Mark-down Worksheet is attached later in this document.

The Supervisor should carry out spot checks to ensure:

All staff mark merchandise with the correct price and are following store policy

All price tags and tickets have been changed

Staff or customers are not fraudulently changing mark-downs

Price marking

Price marking is a critical area, which, if not properly controlled, can cause major problems with customers.

All price tags are to be attached to the inside label of clothing garments.

Never insert plastic tags through the garments.

Other merchandise price tags are always to be placed on the right-hand corner of the item.

When a price is reduced, over stamping the old label with the mark-down price is permitted.

When the price goes up, all of the old label must be removed without fail.

The price of merchandise on sale is correct and clear to the customer.

Coordinating stocktakeStocktake is the physical count of stock that is in the store at a certain period of time being a true measurement between the physical stocktake figures and the book stock.

Supervisor’s role

Preparation

Preparation and supervision are the key to a successful stocktake. Supervisors need to keep updated. Give staff members clear direction

and training of the store’s procedures. Tasks should be allocated to staff members. Furthermore, all tasks on the stocktake preparation checklist must be carried out.

Rosters

It is the Supervisor’s responsibility to consider budget allocation and time constraints. Always ensure extra staff are rostered on to attend to customers’ needs during this period. Stocktake is only to take place outside normal trading hours. If time constraints allow, finish stocktake before 10am.

Supervisor’s responsibilities

When in progress:

Allocate tasks in a logical order to ensure efficient progress and good end results.

Stocktake should be completed in the shortest possible time.

Issue staff members with stock sheets and direct them to appropriate area to count.

As a control measure, carry out random spot checks on staff counting and recording procedures to ensure that tasks are completed.

On completion:

After the stocktake has been completed for a certain area, another staff member carries out a spot check. It is Company procedure to choose five fixtures from an area and complete their own stocktake.

These records are then compared with the original stocktake documentation and, if there is a discrepancy, a report is compiled.

Discrepancies must be investigated and reported when preparing accurate reports for Management. (Discrepancy Report attached)

Stocktake checklist

Preparation and supervision is the key to successful stocktake. All Supervisors are to ensure all tasks are carried out before commencing a stocktake

Develop a concise set of instructions that can be used. Explain how to carry out stocktaking to a new staff member

Design a roster, allocate group members areas of responsibility

Conduct a price check of tagging and bar code of fixtures

Be aware of cut-off points for orders, deliveries and shelf filling. Plan a cut-off day or time that these activities are carried out

Ensure lay-bys are put aside and follow up and record any stock out of store on loan

Design a floor plan of the department where all fixtures are labelled and numbered for easy identification. Numbered stock sheets are allocated to correct staff members

Discrepancy reports

Obvious discrepancies to identify:

Mark-downs that are not recorded for known shrinkage e.g. damage and theft

Incorrect registration of mark-downs and transfers in and out

Stock in the wrong position on fixtures for example, in reserve areas, above eye level, on display, in drawers or closed bins

Bar code for an item that does not correspond with fixture bar code

Invoices or credits input incorrectly

Staff incorrectly counting or pricing items

Stocktake staff training

It is the Supervisor’s responsibility to ensure all staff members are trained in the correct procedures. The following instructions will make a good starting point for training staff.

To ensure a successful stocktake, please observe the following instructions:

Your Supervisor will issue you with the appropriate stocktake sheets and direct you to the area you will be counting.

You must count each fixture as a separate unit because each has a separate stocktake sheet.

Every fixture is numbered and this number appears on the top-right hand corner of the stocktake sheet.

You must count each shelf from left to right, starting at the top shelf and working your way down to floor level.

You must not interfere or talk to other staff members when they are counting.

You must not leave your fixture in mid count.

You must always count from physical stock to the stocktake sheet to minimise counting errors

You must make sure the fixture bar code corresponds with the product bar code.

Your supervisor will carry out random spot checks for quality control.

Our Company has developed a coloured tagging system as a communication tool to ensure a successful and accurate stocktake.

Green stickers indicate that all items are checked and correct.

Red stickers indicate there is a problem with the count or the bar code needs investigating.

Yellow stickers indicate counting is in progress and a Supervisor is to be called for clarification.

Blue stickers indicate second count has occurred.

Preparing accurate reports

When the physical count has been completed and recorded on stock sheets, stock sheets need to be collated and put in fixture numerical order. Check that all addition, cross calculations and totals are correct. Keep an eye out for obvious discrepancies. After investigating any obvious discrepancies and reporting, it is the Supervisor’s responsibility to collate into a report as follows:

Computer Data

Department Name:

Sales figures:

Stock level computer print out for the department:

Previous stocktake results for comparison:

Manual Data

Stocktake sheet for actual stock figures for the department:

Shrinkage sheets, mark-down sheet and a discrepancy report:

Shrinkage report

Our store allows for 3% shrinkage in our budget as we realise mistakes will happen. However, effective stock control can minimise shrinkage. If you neglect control of shrinkage, you may be out of a job. It is the Supervisor’s responsibility to ensure all shrinkages are recorded correctly on the shrinkage sheets.

Possible valid reasons for shrinkage:

Goods expire or go past their Use By date.

Thefts sometimes occur.

Items are wrongly priced.

Goods sometimes are accidentally damaged.

Display items get damaged or soiled.

Stocktake sheetFixture number:

Product reference

Quantity Price Total quantity

Total value

167929 $1.55 15 $23.25

723496 $2.45 4 $9.80

235782 $6.55 45 $294.75

1122341 $7.45 2 $14.90

Staff member: ______________________________________

Supervisor: _________________________________________

Date: / / Time: : AM/PM

Shrinkage sheet

Description Ref No Dept

Qty Price New Price

Reason Total loss

Ladies socks 4702 7 1 $12.95 $7.95 Damaged $5.00

Mens training shoes

2648 5 1 $69.00 NA Stolen $69.00

Staff member: ______________________________________

Supervisor: _________________________________________

Date: / / Time: : AM/PM

Discrepancy sheet

Area Fixture/Item

Description Price Original count

Recount Variance

Socks H2 Black Kayser

$2.95

20 17 3

Sports brief

4 Blue X brand

$11.95

15 14 1

Staff member: ______________________________________

Supervisor: _________________________________________

Date: / / Time: : AM/PM

Mark-down Worksheet

Fix-ture No.

Product Brand Size Bar Code Qty Price Mark-down %

New Sale Price

3 Ladies Pyjamas

X Brand

14 97341249907

11 $29.95 25% $22.95

7 Boots Y Brand

5 57291288934

7 $89.00 30% $62.00

10 Board-shorts

Z Brand

16 86431539845

6 $44.95 15% $35.95

Supervisor: _________________________________________

Stock controller: ___________________________________

Date: / / Time: : AM/PM