Understanding Retail Open-to-Buy
How we calculate. OTB = planned sales + planned ending inventory − BOM − on-order. The form uses the same arithmetic as the worked examples on this page. See our methodology and accuracy policy.
Real-world scenario: A typical Retail Open-to-Buy case uses planned sales 80000 and planned ending inventory 40000. Enter the same figures below to reproduce the worked path.
What is Retail Open-to-Buy?
A merchandising purchase budget KPI. Distinct from stock-to-sales (coverage ratio) and GMROI (productivity).
- Same dollar basis (retail or cost—label it)
- On-order = already committed receipts
- Negative OTB = overbought vs plan
The Formula
Worked Example
Common Use Cases
- Monthly OTB: buy budget
- Category plans: remaining buy
- Receipt pacing: on-order impact
Pro Tips
- Freeze retail vs cost method
- Update on-order often
- Pair with weeks of supply
Limitations: Retail Open-to-Buy results are educational retail merchandising aids—not accounting, tax, or inventory-system advice. Confirm definitions with your POS, ERP, and brand reporting standards.
FAQ
Same as stock-to-sales?
No. Stock-to-sales is inventory÷sales. OTB is a purchase budget: planned sales + EOM − beginning − on-order.
Can OTB be negative?
Yes. Negative OTB means inventory and on-order already exceed the plan—pause buys or revise the plan.
Authoritative References
For retail merchandising and store performance concepts, consult:
- National Retail Federation — retail industry context
- Retail Council — retail operations resources
- Shopify Blog — ecommerce and retail KPI explainers