An action plan to increase perpetual inventory accuracy in retail

Huge upside awaits retailers who make the right moves to improve perpetual inventory accuracy

Perpetual inventory – knowing exactly what you have, how much, and where – is a major challenge in grocery retail due to incredibly complex supply chains, operational challenges and demanding shoppers. Add to this equation the fact that inventory represents approximately two thirds of a typical grocery retailer’s balance sheet, and it is easy to see why increasing perpetual inventory accuracy is a C-suite priority. Because those who make even modest improvements can realize financial benefits, operational efficiencies and increased shopper loyalty. 

However, doing so is a daunting challenge that requires understanding the root causes of inaccuracy, identifying solutions and prioritizing actions. To add clarity and inspire fresh thinking on the subject, SymphonyAI hosted an online panel discussion with three industry experts who provided a unique perspective on the subject of, “How Retailers Can Increase Sales by Improving Perpetual Inventory Accuracy.” 

Featured speakers included Craig Rosenblum, a principal with Columbus Consulting, a highly regarded firm known for its work in retail systems, integrated planning, IT and digital commerce, along with two SymphonyAI executives, Gina Hargrave, head of solution consulting for the Americas, and Paul Warren, vice president of Store Intelligence. The topics of conversation included: 

• Why perpetual inventory accuracy (PIA) is difficult to achieve and practical steps to improve it. 

• How retailers can fix master data management and the benefits of doing so. 

• Eliminating data silos to improve data quality and demand forecast accuracy. 

• Innovative ways retailers are improving on-shelf availability and retail execution. 

Understanding the PIA challenge 

Research shared during the webinar indicates that nearly 60% of perpetual inventory records are inaccurate, creating a cascade of problems throughout grocery retail operations. This inaccuracy leads to customer frustration when products shown as available aren’t actually on shelves, makes reliable omnichannel fulfillment nearly impossible, and results in missed sales opportunities that directly impact revenue. 

For grocery retailers specifically, the complexity is magnified by the interconnected nature of departments affecting inventory. From merchandising to procurement, warehouse operations to store shelves, each touchpoint introduces potential discrepancies. The perishable nature of many products adds another layer of difficulty, as does the common practice of inter-department product movements, such as when ingredients from one department are used in prepared foods. 

“Perpetual inventory is very, very complex,” noted Rosenblum. “What you’re trying to figure out is what you have, how much and where, and more importantly, what don’t you have?” This real-time visibility has become increasingly important as consumer expectations for product availability—both in-store and online—continue to rise. 

The Benefits of Getting Inventory Right 

Retailers who successfully implement perpetual inventory systems witness transformative results across their operations. Real-time visibility into inventory levels allows for more intelligent decision-making regarding promotions, pricing, and markdown strategies. As Rosenblum explained, “If I know items are going out of stock, I may not want to promote them. Or because we have a lot of dated product in the grocery environment, maybe I want to mark it down or change my pricing to get rid of it before it goes bad.” 

This visibility also drives operational efficiency by maximizing inventory utilization and reducing carrying costs. Better tracking means reduced shrink and waste, a particularly important benefit for grocers dealing with perishable goods. The financial impact extends beyond just the inventory itself—labor costs decrease as manual counting processes become automated, allowing staff to focus on customer service and other value-added activities. 

Perhaps most importantly, accurate inventory records enhance customer satisfaction and loyalty. In today’s competitive retail environment, shoppers quickly lose patience with retailers who cannot reliably provide the products they advertise as available. This frustration is especially acute in omnichannel scenarios where consumers expect seamless integration between online visibility and in-store reality. 

Obstacles on the Path to Accuracy 

Despite the clear benefits, several key obstacles prevent retailers from achieving inventory accuracy. SymphonyAI’s Gina Hargrave highlighted how traditionally disconnected systems between distribution centers and stores create information gaps that make real-time inventory tracking nearly impossible. Labor constraints at both DC and store levels further compound the problem, as do misalignments between planograms and forecasted demand. 

Many retailers continue to overestimate safety stock levels in an attempt to avoid stockouts. While this approach may seem prudent, Hargrave noted that it “can just kill your inventory turns and make your inventory very inefficient. It also creates waste, especially when we talk about fresh categories, because if you overestimate the need, then you’re at risk of having spoilage and items going bad at the DC before they even really get to the store level.” 

The underlying technology infrastructure often presents another significant hurdle. Most retailers operate with siloed data solutions that don’t communicate effectively, relying on batch processes that may run nightly or intermittently during the day. These disconnected systems frequently generate conflicting information, making true data accuracy unattainable. 

Compounding these challenges is the increasingly volatile nature of consumer behavior. As Hargrave observed, “If COVID taught us one thing, it’s that there’s probably going to be some type of continual upheaval in our economic markets every two to three years that causes consumer preferences to change very rapidly.” Traditional forecasting methods struggle to adapt to these sudden shifts, creating inventory imbalances that lead to simultaneous overstocking and stockouts across the retail network. 

Building a Foundation for Inventory Excellence 

Improving perpetual inventory accuracy requires a multi-faceted approach beginning with master data management. Rosenblum emphasized that a strong foundation of clean, accurate data forms the cornerstone of any successful inventory management system. “There’s nothing more important, as you think about the one record of truth, than a strong foundation of clean and accurate data,” he stated. 

This foundation requires establishing standardized product item masters and implementing robust data governance rules and models. Without this discipline, retailers may temporarily fix inventory discrepancies only to find themselves facing the same problems six months later as new items enter the system and seasonal fluctuations occur. 

Building on this foundation, Hargrave advocated for moving away from siloed solutions toward what she called a “canonical data model”—a unified data platform that houses everything from master data to replenishment information, customer insights, and store execution data. This integrated approach allows for better forecasting accuracy which, in turn, drives more precise inventory management. 

Technology plays a crucial enabling role, though Rosenblum cautioned that it “is not a silver bullet. It’s really to enable you to solve these problems and these issues.” Modern tools leveraging artificial intelligence and machine learning can significantly improve forecast accuracy, generate predictive analytics for better decision-making, and create actionable insights with quantified impacts. 

The Power of Visual Intelligence 

One particularly promising technological advancement discussed during the event was in-store image recognition. SymphonyAI’s Paul Warren detailed how computer vision technology can transform inventory management by replacing inaccurate manual shelf scans, which typically achieve only 65% accuracy even under ideal conditions. 

“This is why retailers today spend an enormous amount on labor doing these repetitive tasks,” Warren explained. “They walk around, and they scan the planograms. They scan the labels, the price tags, the products, and they do this manually.” The inherent problem with this approach is that “they can’t see what they can’t see, so they don’t know when a product is not in the right place. They don’t know when a product is over-faced because it’s trying to fill up another gap.” 

Image recognition systems can identify out-of-stocks in real-time, locate misplaced inventory, and automatically create prioritized task lists for restocking. More importantly, these systems can correct perpetual inventory records when discrepancies are found. “If the perpetual inventory is saying there is some in the store, but we can’t see it on the shelf, then adjust it there and then,” Warren advised. “If you do that over a course of a few weeks, you’ll very quickly notice your perpetual inventory comes in line.” 

This technology, referred to as Store Intelligence by SymphonyAI, is already proving its value in reducing “phantom inventory”—items that appear in the system but aren’t actually available. As Hargrave noted, “We’ve seen a couple of instances with retailers that have deployed Store Intelligence where in the matter of just a month’s time of using the technology and correcting cycle counts in the store, they’re reducing their phantom inventory.” 

The Human Element: Change Management 

While data and technology form critical components of inventory accuracy improvement, the human element remains equally important. Successful implementation requires thoughtful change management across the organization. Rosenblum stressed that “there’s probably nothing more important than making sure that you change your processes, you train your organization, and then lastly you make sure you communicate to the organization the requirements, the needs, and how things have changed.” 

This organizational alignment must extend across merchandising, procurement, operations, and store teams. Without this cohesive approach, even the most sophisticated inventory management system will struggle to deliver its promised benefits. 

Practical Next Steps for Retailers 

In the spirit of looking forward, the speakers shared their thoughts on one immediate action retailers can take to begin improving inventory accuracy. 

Rosenblum suggested that even without major technology investments, retailers can focus on process enhancements that give better visibility into products moving through their stores. “Unfortunately today there’s lack of verification or validation of what is coming in at too many retailers,” he noted. “Focus on the processes of truly understanding and validating what is coming in the back of your stores and trying to reconcile it as best as possible with what is being sold.” 

For Hargrave, the priority should be data accuracy and creating a single source of truth. “Retailers that go on a journey of data harmonization and really getting to that one source of truth in a data lake are going to empower their technology systems to work more efficiently,” she advised. This data foundation supports everything from inventory management to invoice reconciliation. 

Warren emphasized the importance of automation: “Get your valuable workforce doing something that’s more useful. Get them putting product back on the shelf and get them looking after your customers and focus on that side of the business and let the technology do the bit that it’s really good at, which is automating and being accurate.” 

The Bottom Line: Results Retailers Can Expect 

Retailers who successfully implement these strategies can anticipate meaningful results. Beyond the operational improvements, financial benefits typically include reduction in waste and markdowns by 5-10%, decreased safety stock requirements, and lower inventory carrying costs. Sales increase through better on-shelf availability, while labor utilization becomes more efficient as staff focus on value-adding activities rather than repetitive counting tasks. 

Perhaps most importantly, customer satisfaction improves as product availability becomes more reliable. In today’s competitive retail landscape, this enhanced shopping experience translates directly into increased loyalty and sustained revenue growth. 

By addressing perpetual inventory accuracy, retailers create a virtuous cycle of better forecasting, more efficient operations, and improved customer experiences. The journey to perpetual inventory improvement is challenging, but the rewards justify the commitment.