Managing discontinued merchandise is a critical aspect of inventory control that directly impacts profitability, store space optimization, and operational efficiency. When products are phased out due to manufacturer decisions, changing trends, or product life cycle completion, retailers must have a clear and accurate understanding of how much discontinued stock remains in each location. An inventory audit for discontinued merchandise helps retailers reconcile inventory records, identify excess or misplaced items, and take appropriate actions for markdown, liquidation, or disposal. Our proven auditing process supports clean data, informed decision-making, and compliance with corporate inventory policies.
Ensure Proper Execution with Discontinued Inventory Audits
Discontinued merchandise poses unique challenges. These items are no longer replenished and may not appear in active planograms or replenishment systems. Yet they often remain on shelves, in backrooms, or incorrectly included in active inventory counts. Failure to isolate and manage discontinued stock can result in inaccurate inventory valuation, overstated inventory levels, and poor merchandising execution.
At PICS, we conduct targeted audits specifically for discontinued items to ensure they are properly identified, quantified, and reconciled. This process supports retailers by:
- Reducing inventory distortion caused by outdated products still recorded in system counts
- Freeing up shelf and stockroom space for new merchandise
- Ensuring discontinued products are prepared for markdown, return, or liquidation
- Aligning physical counts with system data for accurate reporting and accounting
Auditing discontinued items also plays a role in shrink reduction. Items marked as discontinued may be overlooked during standard audits and become more susceptible to loss, damage, or theft. By identifying and isolating this merchandise, we help reduce exposure to preventable inventory loss.
Process for Conducting Discontinued Merchandise Audits
Our inventory audit for discontinued merchandise process is structured and repeatable across multiple store formats and regions. The audit typically begins with a data review, using a client-supplied list of discontinued SKUs or product codes. We then isolate these items during a physical inventory audit, using our proprietary handheld scanners and interactive mapping tools to tag each item and confirm exact location within the store.
We start with pre-audit coordination, confirming store-level participation and expectations. Our team collaborates with store management to understand how discontinued items are currently handled—whether they’re marked for clearance, stored separately, or mixed in with active inventory. This input allows us to tailor the process and ensure accuracy in environments with non-standard merchandising practices.
During the audit, PICS team members perform wall-to-wall sweeps of sales floors, stockrooms, and clearance sections. Using our RF-enabled Titans and Bluetooth® scanners, we verify each discontinued SKU against the client’s list. We flag any discrepancies between expected and actual quantities and document location-specific findings. The audit results are uploaded to our reporting platform in real time, providing instant visibility to our clients.
If discontinued items are found in locations where they shouldn’t be, such as in active planogram areas or among replenishable items, we note those issues separately for corrective action. The final audit report includes detailed summaries of quantity on hand, product status, and recommendations for disposition.
Reporting, Reconciliation, and Follow-Up
One of the most valuable components of our service is the post-audit reporting and reconciliation. At PICS, we generate detailed variance reports that compare system quantities against actual counts for all discontinued SKUs. These reports identify overages, shortages, and items not found, and they can be sorted by location, department, or SKU.
We provide our clients with actionable data, not just raw numbers. This includes flags for misplaced items, gaps in merchandise handling, and any inventory movement patterns that suggest deeper operational issues. For example, if a discontinued item consistently appears in active stock locations across multiple stores, it may indicate a breakdown in store-level communication or execution. We help clients spot and address those patterns.
Our reporting tools also support broader inventory reconciliation initiatives. Many retailers use our discontinued merchandise audits as a precursor to system updates, data cleansing, or end-of-season resets. The clean data we provide helps reduce inventory distortion, align records with physical reality, and support accurate financial reporting.
Where needed, we also assist with label printing, stock separation, and item staging for return or disposal. Our services can be expanded to support return-to-vendor (RTV) programs, salvage collection, or liquidation prep, depending on the retailer’s policies.
Integrating Discontinued Audits into Broader Inventory Programs
Our inventory audit for discontinued merchandise is often integrated into larger inventory programs. We can conduct these audits during scheduled wall-to-wall inventories, targeted cycle counts, or standalone projects depending on client needs. This flexibility allows retailers to balance accuracy with operational efficiency.
In multi-store rollouts, we use our regional presence and centralized scheduling system to execute large-scale discontinued merchandise audits across multiple locations within tight timeframes. Our vertically integrated technology and internal IT team ensure that all audits are supported by customized programming, data security, and seamless reporting capabilities.
We also coordinate with clients’ supply chain and merchandising teams to ensure our process supports internal planning. For example, if discontinued inventory is slated for removal ahead of a seasonal reset or fixture reallocation, we align our audit schedules and reporting format to meet those goals.
For first-time clients or locations with recent management changes, we perform pre-inventory walkthroughs and discovery interviews to ensure all discontinued item handling procedures are accounted for. We customize our audit workflows accordingly to ensure comprehensive coverage and accuracy.
Contact PICS Today!
An inventory audit for discontinued merchandise maintains accurate stock levels, improving store space utilization, and reducing operational risk. At PICS, we provide structured, data-driven audits that give retailers full visibility into discontinued inventory, helping them make informed decisions about markdowns, returns, or liquidation. Our auditing process is built on efficiency, accuracy, and flexibility, allowing us to support any retail environment at scale.
If you need to assess and manage your discontinued inventory with precision, contact PICS for a quote. Our inventory services are designed to meet your operational needs and deliver results across all store formats.