Liquor Store Inventory

What are the Challenges of Managing Liquor Store Inventory?

Liquor store inventory management can be incredibly challenging, particularly for new business owners who are not experienced in managing large inventories. From the number of products liquor stores need to carry, to the volume they have to purchase to be able to offer competitive prices, proper inventory management will always mean the difference between success and failure for liquor stores. In fact, while there are a number of pros to owning a liquor store, the difficulty of inventory management with liquor stores is one of their biggest cons. In this article, we will cover some of the methods small business owners can use to manage liquor inventory as well as how your business can utilize a point of sale software to smooth our your entire business operation.

Thousands of Products

One of the biggest challenges liquor stores face is the fact that in order to remain competitive they have to carry hundreds or even thousands of different products, which are referred to as SKUs. If a liquor store doesn’t, they face losing their customers to what are known as “liquor supermarkets”, which are massive retailers that carry thousands of products.

Cash Flow Issues

Not only is it difficult to track and stock thousands of products on a regular basis, but it is also a serious cash commitment. In order to buy this many different products, liquor stores must lay out large amounts of cash, especially since many states require that liquor stores pay for all of their purchases within 30 days of their delivery. This can cause serious liquidity issues for small businesses, which are often cash-strapped to begin with. Compounding this is the fact that in order to get alcohol for the lowest price possible, retail stores must purchase new product in large volumes. Since liquor stores have to compete with large “liquor supermarkets”, they often have to buy months worth of supply at a time, further increasing the total cash outlay required.

What is the Solution?

It is not unusual for small business owners to keep track of inventory by hand or on Excel on their computer. For many small businesses, this is a great solution for inventory management and it works just fine. However, the nature of liquor stores makes it so that such a method of inventory management really isn’t feasible. Instead, liquor stores should use a point of sale system, also known as a POS system. Not only will such a system help with inventory management, but in addition it can help businesses smooth out their entire operation, from promotions and discounts to employee management and more.

What is a POS System?

POS systems, or point of sale systems, are designed to help businesses run their operations through a centralized hub. These systems make it possible for businesses to track and manage inventory in real-time, track profit margins, generate sales reports, and more. In this next section, we’ll go over some of the features of POS softwares and discuss how they can help take your liquor retail business to the next level.

Real-Time Inventory Tracking

One of the best aspects of a liquor store POS system is that it tracks inventory levels in real time, enabling liquor stores to have sophisticated and advanced inventory control. As soon as an item is purchased, the system updates the inventory levels. This is much more efficient than updating your inventory at the end of the day, and it will allow you to save vital time and ensure accuracy. In addition, POS softwares are designed to allow you to track more than just the sale of an item. You can track broken bottles and other merchandise, customer comps and more, all of which will be utilized by the software when it generates reports. This will help you see where your business needs to improve. For example, lets say recently there have been a lot of broken bottles and other merchandise in your store. If you are using your own do-it-yourself inventory system, you may not notice the problem right away. Indeed, you may have even forgotten to keep count of the broken bottles and just reduced the inventory each time something breaks. With a POS system, you’ll not only be able to see how many bottles are being broken, but you will be able to see how this is cutting into your profit and impacting your bottom line. Once you have identified that there is an issue, you can then take action to fix the problem, such as retraining staff or adjusting how you arrange items on shelves. This could be a huge help to your business and it could save you a lot of money in the long run. POS systems can also track case counts. This is important because liquor stores purchase most products by the case and sell the products individually. POS systems can keep track of both case and individual counts, making reordering and inventory tracking much easier.

Instantaneous Understock and Overstock Notifications

The understock and overstock notifications feature in POS systems is a huge benefit and time saver. Once you get a good idea of the inventory levels you need to maintain, you can set up the POS system to notify you whenever there is an inventory imbalance and inventory counts are not at the levels they should be. In a store with thousands of products, it would be incredibly time consuming to examine the inventory level of each individual product at the end of each day or even week. POS systems will do this for you automatically and let you know the minute there is an issue. This will not only make sure that you have enough inventory to keep your customers satisfied, but it will ensure that you aren’t overstocking inventory, which will help smooth our your cash flow and stock levels. If you want to get really advanced, you can even set up your POS system to automatically order products when inventory gets low and reaches preset counts. Ordering new product is time consuming, especially when you have multiple suppliers you are ordering from. Ordering can become even more time consuming when you are running more than one store and have to place forty or more orders a week. Thus, automatic orders can be an incredible time saver. However, you also need to be careful with such a feature and ensure that you are accurate in your preset counts so that you aren’t order too much stock or too little stock.

Order Scanning

Many POS systems come with handheld scanners that will allow you to scan in orders as they are delivered. Even if the system doesn’t come with scanners though, it should still be able to track incoming deliveries. This will enable you to catch any mistakes your suppliers may make and keep your overall inventory management system running smoothly and efficiently.

Manage and Track Promotions and Discounts

Liquor store POS software can also track and manage promotions and discounts. Tracking this with your system will enable to you make sure your inventory levels, sales revenue, and profit margins are all correct before, during, and after promotions and discounts. Plus, it will enable you to see how effective a particular promotion, sale, or discount was. That way, you know whether or not you should repeat it in the future. In particular, many liquor stores will sell gift sets, which include a bundle of multiple products at a value price. When set up properly, POS systems can both sell gift sets and keep track of the individual product inventory at the same time, preventing inventory count mishaps and inaccuracy.

Customer Rewards and Customer Relationship Management (CRM)

Many liquor stores offer customer loyalty programs. A POS system is exactly what enables liquor store businesses to offer such programs, since it keeps track of customer purchases and resulting points and/or rewards. These programs are not overly complex, and they are a great way to manage your customer relationships, keeping shoppers coming back again and again to redeem their rewards and purchase new product. Plus, when customers sign up for the program, the system will record valuable customer information like their email address, name, and phone number. This information is invaluable when it comes to customer management and marketing efforts, as it will give you ways to reach out to and market to your loyal customers by sending e-mails and other promotional material to them. Many POS systems can also manage gift cards. Gift cards are a great way for businesses to make money, as not only do they drive sales around holiday seasons, but they also entice new customers to come to your store when they receive them as a gift. This can help your business continue to grow its customer base.

Complete Integration

POS systems are not just limited to one store. Indeed, they can be used to manage multiple stores and even an e-commerce website. What this means is that a POS system will give your business the ability to expand as much or as little as you want to. If your goal is to eventually have more than one store, a POS system will enable you to do that. If you want to eventually start selling online for, as an example, in-store pickup or special discounts, a POS system will again enable you to do that. At the end of the day, what a POS system offers two core benefits to business owners: efficiency and scalability. Both of these are valuable strengths for any business to have, whether they are a liquor store or not. That said, it is important to remember that the liquor industry is one of the most regulated industries around, so it is important that whatever plans you have and decisions you make for your liquor store business are in line with local, state, and federal laws. Whenever you plan to expand your liquor store business into new, unfamiliar territory, such as e-commerce, it is always best to seek out expert advice from qualified lawyers who have a strong knowledge of the industry both on the state and federal levels.

Employee Management

POS systems also allow for greater employee management ability. These systems can track shifts, hours, wages, pay, and more, and then compile this data into overall reports for your business.

Report Generation

One of the huge benefits of POS systems is that they can generate a number of different reports from the data in their system, and provide important data for your business, including profit margins, cost of goods sold (COGS), transactions by employee, inventory turnover ratios, and more. These can help you identify your best products and whether particular sales strategies, such as promotions and discounts, are working.

Age Verification

One of the biggest problems liquor stores face is the use of fake IDs by minors looking to get their hands on alcohol. Not only are fake IDs becoming more and more sophisticated in appearance, but the litigious nature of society is increasing as well, meaning it is more and more likely for liquor stores to be on the wrong side of a lawsuit. In order to help prevent such problems, many POS systems now come with age verification systems which can be used to verify the legitimacy of a drivers license. Such a system can help ensure that you and your employees are never duped by a fake ID, and help your reduce the risk of being held liable for a minor getting their hands on alcohol sold by your store.

Theft Prevention

Alcohol is an expensive product, and, as such, one of the issues liquor stores face is theft. While customers are often responsible for theft, it is often not uncommon for employees to steal either. In addition, liquor stores are particularly vulnerable because they carry a high volume of many different products. As such, theft can go unnoticed for a substantial period of time, making them an easy target if they fail to take the proper precautions. If you are operating with a do it yourself inventory management system, it could be difficult to keep track of everything that is going on in your store, especially when you have hundreds or thousands of different products. Having the sophisticated inventory software that comes with a POS system will enable you to notice discrepancies in inventory counts early on, allowing you to get to the bottom of the problem quickly before more damage can be done. In line with employee management and theft prevention, POS systems also enable businesses to set a number of restrictions on employees that would otherwise not be possible. These include the following: – Receipt Void Restriction – Receipt voiding should typically be reserved for managers. A POS system will enable this. – Item Void Restrictions – Item voiding should again typically be reserved for managers. – Price Edit Restrictions – This enables owners to prevent or limit the number of times employees can edit prices or add discounts. This can help prevent employees from giving unauthorized discounts to friends and family. – Cash Drawer Monitoring – This requires employees to fully close the drawer on the cash register before they can checkout another customer, preventing them from keeping it ajar in between transactions.


Overall, while it is possible for some small business owners to keep track of and manage their inventory on their own, it is almost impossible for liquor stores to operate without a liquor store point of sale (POS) system. In addition, POS solutions are priced fairly reasonably, and liquor store owners can take advantage of a sophisticated inventory system for a relatively small cost. Plus, the added savings in time and efficiency are almost certain to offset any upfront costs that will be incurred with implementing a POS system. Remember, time is money, and the more time you can free up as a small business owner the better. As the old maxim goes, “knowledge is power”. This is exactly what a POS system provides business owners with. It provides them with detailed and thorough knowledge of their business and its operations to allow them to make effective, beneficial, and powerful decisions. In the end, if you are a liquor store owner, or thinking about getting into the liquor store business, we highly recommend you take a look at the various POS systems available and consider how they could help take your business to the next level.

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