Color Coded Inventory Tags for Reducing Stock Errors in Small Indian Retail Shops

Abstract

Small retail establishments in India, including kirana stores and neighborhood grocery outlets, operate in highly competitive, resource-constrained environments. Despite their economic importance in India’s retail ecosystem, many such establishments rely on manual stock management practices that are prone to inaccuracies, overstocking, understocking, and expiry-related losses. The absence of structured inventory classification mechanisms results in stock discrepancies that directly impact profitability and operational efficiency. This study proposes and evaluates a low-cost color-coded inventory tagging system designed specifically for small Indian retail shops that lack sophisticated technological infrastructure. Drawing from principles of visual management and lean retail operations, the system categorizes products using distinct color tags based on demand velocity, expiry sensitivity, and profit margin priority. A four-month field implementation across twelve retail stores in Tamil Nadu was conducted to compare stock discrepancy rates before and after system adoption. Findings indicate a significant reduction in inventory errors, improved replenishment accuracy, reduced stock-out frequency, and decreased expiry-related losses. The intervention demonstrates that process innovation, rather than capital-intensive digitization, can substantially improve operational control.