The Importance of Inventory Reconciliation for Retail Businesses in Kenya
- January 15, 2026
- Posted by: simba001
- Category: Business Insights
When’s the last time you compared the inventory records from your point of sale system in Kenya to the counted inventory levels in your stores?
By reconciling inventory, retailers can address discrepancies between the results of their physical inventory counts and the recorded inventory levels in their point of sale.
As every retailer unfortunately knows, inventory records and the results of an inventory count rarely match. While you always hope the discrepancy isn’t too large, you do need to reconcile inventory records against the physical inventory in stock to deal with the fallout.
In this post, you’ll learn exactly what inventory reconciliation is, how it works, why it’s important and how to reconcile inventory records without having to close up shop and miss out on sales opportunities.
What is inventory reconciliation
To recap, a quick inventory reconciliation definition: it’s the process of matching inventory levels in your POS system in Kenya with the physical inventory levels in your stores and stockroom.
By reconciling inventory, retailers can address discrepancies between the results of their physical inventory counts and the recorded inventory levels in their point of sale.
By reconciling inventory often, retailers can better understand why there are discrepancies and better prevent them in the future.
What happens when there’s an inventory discrepancy?
When there’s a discrepancy between what your point of sale has on record and what you actually have on hand, you’ll need to update your POS system in Kenya.
Did human error lead to an over or undercounting of available inventory? This can happen when receiving a stock order, transferring inventory between locations or during inventory counts (especially if you’re using pen and paper). You’ll probably need to adjust any inventory forecasting and projected revenue based on the incorrect numbers.
Have there been problems with theft or shrinkage—is the inventory outright gone instead of just miscounted? In addition to adjusting your forecasting and projected revenue, you might need to take a look at your budget to make room for more anti-theft measures.
No matter the cause of an inventory discrepancy, here’s how you’d address it:
- Reconcile the inventory in your POS.
- Address how large the discrepancy is. Order new stock or transfer stock between locations as needed.
- Look into ways to minimize inventory discrepancies.
Why is inventory reconciliation important?
If inventory reconciliation reports don’t match records of inventory on hand, retailers have a problem.
Even with the right inventory management software in Kenya, shrinkage (either an excess or shortage of inventory on hand compared to recorded inventory levels that cannot be accounted for) is inevitable. The National Retail Federation of Kenya reports that the average shrink rate expressed as a percentage of total sales is 1.38% for Kenya retailers.
By cycle counting and reconciling inventory frequently, retailers can better monitor shrinkage and uncover the reasons behind discrepancies. While it may be caused by administrative human error—like inaccurate inventory counts or misplacing items in the stock room—it may also be caused by a larger issue like employee theft or supplier fraud.
If your shrinkage rate grows from one inventory reconciliation to the next, it may be a signal that you need to perform some investigative work and establish loss prevention strategies to keep that number as low as possible.
Cycle counting is generally the most efficient method because staff can audit small sections of inventory without closing the store. The strategy prevents massive end-of-year discrepancies and keeps data accurate for real-time decisions.
