For a deeper dive into retail planning, resources like the Shopify Retail Blog and Board's Glossary offer detailed guides and formulas for different business sizes. AI responses may include mistakes. Learn more
is a financial budget and retail planning process that calculates the amount of merchandise a retailer can purchase within a specific timeframe. It acts as a guardrail to ensure businesses remain within their financial goals while maintaining enough stock to meet customer demand. Key Components of OTB
Ensures key products are available when customers want them. open to buy definition
Retailers use data rather than "gut instinct" to manage their inventory levels. An OTB plan typically factors in: The projected revenue for the period. Current Inventory: The physical stock already on hand. Projected Markdowns: Discounts expected during the period.
Prevents over-committing capital by buying too much stock. For a deeper dive into retail planning, resources
Plans can be broken down by entire store, specific seasons, departments, or even individual vendors. The Core Formula
Helps identify slow-moving inventory, allowing for faster stock rotation. It acts as a guardrail to ensure businesses
While specific variations exist, the fundamental logic behind OTB is: