5 Inventory Metrics Every Retail Team Should Track Weekly
5 Inventory Metrics Every Retail Team Should Track Weekly
Inventory management is not a set-it-and-forget-it function. Stock moves in and out every day, demand shifts week to week, and problems like shrinkage and stockouts compound silently until they hit your bottom line. The only way to stay ahead is to measure, consistently and frequently.
The problem is that there are dozens of inventory metrics you could track, and trying to track all of them leads to dashboard overload and decision paralysis. You need a focused set of metrics that tell you the most about your inventory health with the least overhead.
These are the five. Track them weekly, and you will catch problems before they become costly, spot opportunities for improvement, and make better purchasing and stocking decisions.
1. Stock Turnover Rate
Stock turnover measures how many times your inventory is sold and replaced over a period. It is the single most important indicator of whether you are carrying the right amount of stock.
The Formula
Stock Turnover Rate = Cost of Goods Sold (COGS) / Average Inventory Value
To calculate for a week:
- COGS for the week: The cost (not retail price) of all items sold that week. Pull this from your Shopify reports or accounting system.
- Average Inventory Value: (Beginning inventory value + Ending inventory value) / 2. Use cost value, not retail value.
To annualize for comparison: multiply weekly turnover by 52.
Example
Your store sold $8,000 in goods this week (at cost). Your inventory at the start of the week was valued at $120,000 and at the end of the week at $115,000.
Average inventory = ($120,000 + $115,000) / 2 = $117,500
Weekly turnover = $8,000 / $117,500 = 0.068
Annualized turnover = 0.068 x 52 = 3.5 turns per year
Benchmarks
Turnover rates vary enormously by retail category:
| Retail Category | Typical Annual Turnover |
|---|---|
| Grocery / perishables | 14-20 |
| Fast fashion | 6-10 |
| General apparel | 3-5 |
| Electronics | 5-8 |
| Furniture / home goods | 3-5 |
| Jewelry / luxury | 1-2 |
Why It Matters
Low turnover means you are sitting on too much stock. Your cash is tied up in products that are not selling, you are paying to store them, and they may be depreciating or going out of season. High turnover is generally good, but extremely high turnover can indicate you are under-stocked and losing sales to stockouts.
What to Do Weekly
Compare this week’s turnover to the previous four weeks. Is it trending up, down, or flat? If it drops significantly, dig into whether sales are slowing (a demand problem) or inventory is growing (a purchasing problem). Break it down by category to see which product lines are dragging.
2. Shrinkage Rate
Shrinkage is the difference between the inventory your system says you have and what you actually have. It captures the combined effect of theft, damage, administrative errors, and supplier fraud.
The Formula
Shrinkage Rate = (Recorded Inventory Value - Actual Inventory Value) / Recorded Inventory Value x 100
You need a physical count to calculate this accurately. This is why regular barcode stocktakes matter — without them, you cannot measure shrinkage.
Example
Your system says you should have $100,000 worth of inventory. Your physical count finds $97,200.
Shrinkage = ($100,000 - $97,200) / $100,000 x 100 = 2.8%
Industry Averages
According to the National Retail Federation’s National Retail Security Survey, the average retail shrinkage rate in the US is approximately 1.4-1.6% of sales. However, this varies by category:
| Category | Typical Shrinkage Rate |
|---|---|
| Supermarkets | 2.0-3.0% |
| Apparel | 1.5-2.5% |
| Electronics | 1.0-2.0% |
| Home improvement | 1.0-1.5% |
| Pharmacies | 1.5-2.5% |
A shrinkage rate above 2% for most general retail categories is a red flag that warrants immediate investigation.
Why It Matters
Shrinkage is pure profit loss. If your store does $1 million in annual revenue and your shrinkage rate is 2.5%, you are losing $25,000 per year. Reducing shrinkage by even half a percentage point goes directly to your bottom line.
What to Do Weekly
You cannot do a full physical count every week, but you can:
- Run weekly cycle counts on your highest-shrinkage categories and track the shrinkage rate for those specific categories.
- Monitor the gap between your cycle count results and system quantities week over week.
- Investigate any week where shrinkage spikes in a category.
Over time, the weekly cycle count data gives you a rolling estimate of your shrinkage rate that is much more current than waiting for an annual full count. Use the discrepancy SOP to ensure your team handles the variances consistently.
3. Fill Rate (In-Stock Rate)
Fill rate measures the percentage of customer demand that you can fulfill from available stock. In a physical retail context, it is usually expressed as the in-stock rate: the percentage of SKUs that are available for sale at any given time.
The Formula
In-Stock Rate = (Number of SKUs in Stock / Total Active SKUs) x 100
A more nuanced version weights by sales velocity:
Weighted Fill Rate = (Revenue from Available SKUs / Total Potential Revenue) x 100
The weighted version is more meaningful because a stockout on your best-selling SKU is far more damaging than a stockout on a slow mover.
Example
You have 500 active SKUs. This week, 465 of them had stock available throughout the entire week.
In-Stock Rate = 465 / 500 x 100 = 93%
If those 35 out-of-stock SKUs were among your top sellers (say, responsible for 12% of typical weekly revenue), your weighted fill rate would be closer to 88%.
Benchmarks
- Below 90%: You are losing significant revenue to stockouts. Urgent action needed.
- 90-95%: Acceptable for most retailers, but there is room for improvement.
- 95-98%: Good performance. Focus on optimizing the last few percentage points.
- Above 98%: Excellent, but verify you are not over-stocked to achieve this. Carrying excess inventory to hit 99.5% fill rate may cost more than the lost sales from the occasional stockout.
Why It Matters
Every stockout is a missed sale, and often a lost customer. Research consistently shows that when a customer encounters a stockout, roughly 30-40% will buy a substitute product, 20-30% will leave and buy elsewhere, and 10-20% will not buy at all. The revenue loss from stockouts is usually much larger than retailers realize because it is invisible — you do not see the sales you did not make.
What to Do Weekly
Pull a report of every SKU that hit zero stock at any point during the week. For each one, note:
- How long was it out of stock?
- What is its average weekly sales velocity?
- Is a replenishment order already in transit?
- Could the stockout have been prevented with an earlier reorder?
Prioritize fixing stockouts on high-velocity SKUs. A slow-moving SKU that goes out of stock for two days has minimal revenue impact. A fast-moving SKU that goes out of stock for two days could cost you thousands.
4. Days of Supply
Days of supply tells you how many days your current inventory will last at the current rate of sales. It is the most practical metric for day-to-day reorder decisions.
The Formula
Days of Supply = Current Inventory Quantity / Average Daily Sales Quantity
Calculate this per SKU or per category, depending on how you manage reordering.
Example
You have 84 units of a product in stock. You sell an average of 4 units per day.
Days of Supply = 84 / 4 = 21 days
If your supplier lead time is 14 days, you have 7 days of buffer. If your lead time is 25 days, you are already late on your reorder.
How to Use It
Days of supply is most powerful when compared to your supplier lead time:
| Days of Supply vs. Lead Time | Status | Action |
|---|---|---|
| Days of supply > lead time + safety stock | Comfortable | No action needed |
| Days of supply = lead time + safety stock | Reorder point | Place replenishment order now |
| Days of supply < lead time | Critical | Expedite order or find alternative supplier |
| Days of supply = 0 | Stockout | Emergency restock, update fill rate metrics |
Safety stock is a buffer you maintain to absorb demand variability and lead time variability. A common starting point is 7-14 days of safety stock for reliable suppliers, and 21-30 days for suppliers with inconsistent lead times.
Why It Matters
Days of supply converts abstract inventory numbers into actionable time horizons. Knowing you have “200 units” of something is not very useful. Knowing you have “12 days of supply and a 15-day lead time” tells you exactly what to do: order now.
What to Do Weekly
Generate a days-of-supply report for all active SKUs, sorted ascending (lowest days of supply first). The top of this list is your immediate attention list — these are the products that will stock out first if you do not act.
Flag any SKU where days of supply has dropped below lead time plus safety stock. These need reorder decisions this week. Also flag SKUs with unusually high days of supply (over 90 days for most categories) — these may be over-stocked and candidates for markdowns or promotional pushes.
5. Inventory Accuracy
Inventory accuracy measures how closely your system quantities match your actual physical quantities. It is the meta-metric — it tells you how much you can trust all your other metrics.
The Formula
Inventory Accuracy = (Number of SKUs with Correct System Count / Total SKUs Counted) x 100
A SKU is “correct” if the system quantity matches the physical count exactly. Some teams use a tolerance (e.g., within 1 unit counts as accurate for high-volume SKUs), but strict accuracy — exact match only — gives you the most honest picture.
Example
During a cycle count, you count 200 SKUs. 178 of them have system quantities that exactly match the physical count.
Inventory Accuracy = 178 / 200 x 100 = 89%
Target Percentages
| Accuracy Level | Assessment |
|---|---|
| Below 80% | Serious problems. Your system data is unreliable. Reorder points, sales forecasts, and financial reporting are all compromised. |
| 80-90% | Below average. Invest in process improvements, more frequent cycle counts, and staff training. |
| 90-95% | Average for retail. Acceptable, but aim higher. |
| 95-98% | Good. Your processes are working. Focus on eliminating the last few percentage points of error. |
| Above 98% | Excellent. World-class inventory management. Maintain with regular cycle counts. |
Most retailers should target 95% as a realistic goal and 98% as an aspirational one.
Why It Matters
If your inventory accuracy is 85%, then 15% of your SKUs have wrong quantities in the system. That means your reorder points are firing at the wrong times for those products, your financial reporting is off, and your customers may be seeing “in stock” for products you do not actually have (or not seeing products you do have).
Inventory accuracy is also the metric that shows whether your stocktake process is working. If you are running regular counts and your accuracy is not improving, something in your process — counting, receiving, POS operations, or follow-through on adjustments — is broken.
What to Do Weekly
Track your cycle count accuracy rate each week. Plot it over time. You should see it trending upward if your operational processes are tightening. If it plateaus or drops, investigate:
- Have you slipped on processing pending transactions before counts?
- Are new staff members making receiving or POS errors?
- Has a new product line with poor barcode labeling been introduced?
- Are adjustments from previous counts being applied promptly?
Building a Weekly Inventory Dashboard
Tracking these five metrics weekly requires a simple dashboard — nothing fancy, just a consistent place where the numbers live and trends are visible.
What to Include
| Metric | This Week | Last Week | 4-Week Average | Target | Status |
|---|---|---|---|---|---|
| Stock Turnover (annualized) | 3.5 | 3.4 | 3.3 | 4.0 | Improving |
| Shrinkage Rate | 1.8% | 2.1% | 2.0% | < 1.5% | Improving |
| In-Stock Rate | 94% | 92% | 93% | > 95% | Needs attention |
| Days of Supply (avg) | 28 | 31 | 30 | 21-35 | On target |
| Inventory Accuracy | 92% | 91% | 90% | > 95% | Improving |
How to Build It
Option 1: Spreadsheet. A Google Sheet or Excel workbook with a tab per week and a summary tab that charts trends. This is the simplest option and works well for single-store operations.
Option 2: Shopify reports + manual tracking. Use Shopify’s built-in reports for sales and inventory data, then manually calculate the five metrics in a spreadsheet. This is what most Shopify POS merchants do today.
Option 3: Dedicated inventory analytics tool. If you are running multiple locations or have a large catalog, a dedicated tool that pulls data from Shopify’s API and calculates these metrics automatically saves significant time. This is one of the things we are building into Stokka’s reporting module.
The Weekly Review
Set a recurring 15-30 minute meeting (or solo review if you are a single-operator store) to review the dashboard. The agenda is simple:
- Review each metric. Is it improving, stable, or declining?
- Investigate any metric that moved significantly. A 3-percentage-point drop in fill rate or a spike in shrinkage demands attention.
- Identify one action item. Not five. One. The most impactful thing you can do this week to improve one metric. Maybe it is running a cycle count on your most problematic category, or placing a reorder for a product that is about to stock out, or investigating a shrinkage spike.
- Record it. Write down the action item and who owns it. Review it next week.
This 15-minute weekly habit will do more for your inventory management than any single tool or system. The metrics give you visibility. The weekly review gives you accountability. Together, they create a feedback loop that drives continuous improvement.
The Bottom Line
You do not need complex analytics or expensive software to manage your inventory well. You need five numbers, tracked weekly, with a simple process for reviewing them and acting on what they tell you.
- Stock Turnover tells you if you are carrying the right amount of inventory.
- Shrinkage Rate tells you how much inventory is disappearing.
- Fill Rate tells you how often you can actually sell what customers want.
- Days of Supply tells you when to reorder.
- Inventory Accuracy tells you how much to trust all the other numbers.
Start tracking them this week. The data you collect over the next month will change how you think about your inventory — and it will almost certainly reveal at least one problem you did not know you had.