The target stock level for the end of the period. Why Retailers Use It

While specific variations exist, the fundamental logic behind OTB is:

Plans can be broken down by entire store, specific seasons, departments, or even individual vendors. The Core Formula 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.

Helps identify slow-moving inventory, allowing for faster stock rotation. The target stock level for the end of the period

Prevents over-committing capital by buying too much stock.

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 An OTB plan typically factors in: The projected

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

Open To Buy - Definition

The target stock level for the end of the period. Why Retailers Use It

While specific variations exist, the fundamental logic behind OTB is:

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.

Prevents over-committing capital by buying too much stock.