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Retail Open To Buy Template



Brigitte is a retail specialist and staff writer with brick and mortar management experience. She is versed in retail sales analysis, merchandising, and buying with an emphasis in retail sales and marketing across platforms. She has a BA in writing from Washington University, St. Louis.




retail open to buy template



Open-to-buy (OTB) is an inventory management strategy and formula businesses use to create buying budgets for specific periods of time. It takes into account expected beginning-of-month and end-of-month inventory, planned sales, and planned markdowns. Basically, an open-to-buy budget tells retailers how much they can spend on inventory at some future date, whether it be the holiday season or the month of May.


With open-to-buy planning, retailers can forecast and spend proportionately to sales, meet demands for popular products, and prepare for seasonal surges. By helping retailers keep track of on-hand inventory compared to what is actually needed, open-to-buy planning reduces excessive spending and minimizes waste.


Say you want to create an open-to-buy plan for the holiday season (November to January) at your clothing store. You anticipate heading into the season with $7,000 of inventory. Last year you made $78,000 in sales during this time. This year, however, your customer base has grown and your business is making slightly more, so you anticipate making closer to $90,000. Additionally, you plan to mark down summer items valued at $3,000 by 20% ($600), and you anticipate having about $5,000 of inventory in stock once the holiday period is complete. With all this, your OTB calculation would be:


While larger businesses and corporations make longer-term open-to-buy plans (quarterly, semi-annually, etc.), those running smaller operations with tighter budgets should use shorter-term plans.


For businesses that see large seasonal spikes, create open-to-buy plans for each week. This will ensure you stay on top of seasonal flows and also help your buyers understand which products need to be ordered at higher volumes more frequently during busy periods.


Understanding your inventory and making accurate projections is a key part of open-to-buy planning, and it all comes down to good inventory management. Make your life easier with a fully integrated POS system with inventory controls, so that you can get automated reports, insights, and real-time data on your inventory.


Brigitte is a retail specialist and staff writer with brick-and-mortar management experience. Before joining FSB, she managed a storefront for several years, working in everything from merchandising, to buying, to sales analysis. Brigitte also has a background in writing, research, and publishing with an undergraduate degree in writing.


This is a complete guide to the OTB (Open-to-Buy) concept in retail, and a detailed step-by-step explanation of the entire process. The Open to Buy process is used to calculate how much inventory the business should buy.


OTB calculation is one of the most important tasks to master when starting a retail business. Failing to calculate the open to buy budget can be detrimental for the business, due to stock problems that will soon arise from improper planning. In fact, a lot of retail & ecommerce startups fail, mainly due to cash flow problems created by poor inventory management.


Here we will explain the steps of creating a retail buying plan for a 6 months period, and we will use an example of July 2020 to December 2020. This means we want to plan for the orders that we will place in order to arrive in the period from July 20 to Dec 20.


If you were budgeting for a period that starts tomorrow, this would have been your current stock value (at cost). However; since we always budget for a period well in advance (usually 6 months ahead) this would mean calculating your opening stock well in advance.


Once you have defined your sales, margins and opening stocks in the previous steps, you will plug those numbers in one of the Open to Buy tools we discuss below, to calculate your total buying budget.


The template includes monthly sales and intakes, and is expandable to include more departments/ categories. The sheet also automatically calculates the forward stock cover for each category, every month, so you can increase/decrease your purchases based on the stock cover you want to target for each category.


The retail buying plan template is a very useful tool that is used throughout the year, and not only at the Open to Buy planning time. Once you have ordered your inventory, you can start tracking actual sales and intakes every month in the sheet, and this will allow you to always be on top of your inventory.


The second option to calculate your retail buying budget is our online Open to Buy calculation tool, which is a quicker, easy to use, step-by-step tool for retail & ecommerce store owners to calculate their buying budget by department/category or class.


Because your stock situation is dependent on your sales performance overall and also the performance of different departments within your stores, it is hard to be 100% accurate on your planning. Usually 5% deviation (up or down) is considered a good result in retail OTB planning.


For example, retailers carrying too much inventory or too much of the wrong product will tie up cash flow restricting them from ordering products their store needs. In these situations, they are often forced to implement markdowns to move excess inventory reducing profits and lowering GMROI.


Using an OTB formula, retailers create a plan in which they can calculate the money required to purchase future inventory orders for a specific sales period. Or, open-to-buy (OTB) planning lets retailers control inventory and stay cash flow positive.


An open-to-buy plan is a purchasing budget for future inventory orders that a retailer creates for a specific period. It helps a retailer stock the right amount of the right products at the right time by showing the difference between how much inventory is needed and how much is available.


Open-to-buy (OTB) is an inventory management strategy that helps retailers calculate how many products they need to buy. This includes physical inventory on hand and in transit, as well as any outstanding orders.


Because of this, some retailers strategically spend only a part of their OTB budget so they can take advantage of special buys. Your manufacturer might give discounts on summer products when the season ends, for example. A higher OTB budget here means you can capitalize on low-cost items in preparation for next summer.


The open-to-buy formula will help you create forecasts for your OTB plan. The values in your open-to-buy are projections, so they may not be perfectly accurate. But a sensible way to check your numbers is if your actual month-end inventory is within 5% of your prediction.


Initial markup (IMU) is the calculation used to determine the retail price of an item in your store. For example, if you have a wallet that costs you $15 to make or to purchase at wholesale, then the IMU is the measurement of how much you mark up the wallet when you sell it to the customer.


Calculate your businesses cost of goods sold, sell through rate, inventory turnover, saftey stock, economic order quantity, or reorder point with ease using these custom templates. (No math required!)


Unlike quarterly or yearly inventory replenishment, most retailers do their OTB planning on a monthly or weekly basis. Your budget will change accordingly, giving you the flexibility to order more (or less) inventory on any given week or month.


Inventory budget should be set well in advance, as inventory purchasing should begin no later than one month prior to opening to account for potential shipping delays and merchandising needs adequately.


Note that we have gathered two key types of information: sales information (in retail dollars, costs and units) and inventory information (in dollars and units) for the end of each month and the beginning of the first month. That's all you need! Input this information into the gray section in the Inputs tab of your Open-to-Buy template which is shown in Figure 1. Once you enter in all that information and switch over to the Open-to-Buy tab, Figure 2 is what you will see.


You can clearly see the gross margin dollars and gross margin % you achieved along with the other retail metrics pertaining to last year's performance. Note that this year's forecasts are the same as last year, since we haven't added any target information for this year yet. That's what we will do next.


Starting with February, once the month is over, pull that month's selling reports from your POS and inventory systems and add the actual sales and inventory metrics in the Inputs tab of the template. See Figure 5 below for what it would look like.


The Retail Analysis built-in sample contains a dashboard, report, and dataset that analyzes retail sales data of items sold across multiple stores and districts. The metrics compare this year's performance to last year's for sales, units, gross margin, variance, and new-store analysis.


After you open the file in Power BI Desktop, select File > Publish > Publish to Power BI or choose Publish in the Home ribbon.


If you got the built-in report in the Power BI service, in the workspace where you saved the sample, open the Retail Analysis Sample dashboard. On the dashboard, select the Total Stores New & Existing Stores tile, which opens to the Store Sales Overview page in the Retail Analysis Sample report.


While open-to-buy planning is a replenishment tool used by all types of businesses, it is not suitable for all commodity categories. The industries that will benefit most from OTB are those where product specifications change regularly, but the classifications and subclassifications of those products remain the same. 041b061a72


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