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.

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

What is Open-to-Buy (OTB)? Definition, Meaning & Examples - Board open to buy definition

Prevents over-committing capital by buying too much stock.

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 Retailers use data rather than "gut instinct" to

Ensures key products are available when customers want them.

Plans can be broken down by entire store, specific seasons, departments, or even individual vendors. The Core Formula Projected Markdowns: Discounts expected during the period

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