Inventory Management Practices and Business Performance of Convenience Stores

Abstract

Sales for convenience stores in Malaysia decreased by 13.8% in the second quarter of 2024, indicating a need to improve the business performance of these stores. Prior research has suggested that inventory management practices play a critical role in enhancing performance. Therefore, this study aims to identify key inventory management practices for convenience stores (RO1), and assess the relationship between inventory management practices and business performance (RO2). Based on a review of relevant literature, this study focuses on four key practices: Vendor Managed Inventory (VMI) practices, inventory stock taking practices, strategic supplier management practices and Lean practices. This quantitative research targets convenience stores located in Shah Alam, with a population size of 45. Using Krejcie and Morgan's sampling table, 40 samples were selected through a combination of stratified and random sampling. A structured questionnaire was distributed, and 40 responses were collected. Descriptive analysis identified strategic supplier management practices as the most important inventory management practice as perceived by the convenience stores. Pearson correlation analysis revealed that all four inventory management practices were significantly correlated with the business performance of convenience stores in Shah Alam, with Vendor Managed Inventory (VMI) practices yielded the highest correlation coefficient with business performance. This study offers practical implications for convenience store operators. The findings may serve as a valuable reference to enhance business performance and identify areas requiring improvement.