What is merchandise financial assortment planning and buying?
Merchandise financial assortment planning and buying is a pre-season planning approach that connects demand forecasting, buying decisions, allocation, and OTB (Open-to-Buy) budgets. It helps retailers decide what to buy, how much to buy, and where to allocate inventory to maximize sell-through and profitability.
Why do retailers struggle with inventory planning before every season?
Retailers struggle because planning is often done using Excel or intuition, without real demand visibility. This leads to wrong buying decisions, poor allocation, overstock in some locations, stockouts in others, and cash getting blocked in unsold inventory.
How does poor planning impact retail business performance?
Poor planning leads to low sell-through, higher markdowns, excess inventory, and lost sales. It also reduces inventory ROI, increases working capital requirements, and makes growth less profitable.
What is OTB (Open-to-Buy) and why is it important?
OTB (Open-to-Buy) is a financial planning framework that helps retailers control how much inventory they invest in during a season. It ensures buying decisions are aligned with budgets, sales targets, and margin goals, preventing overbuying and cash lock.
How does demand-driven planning improve sell-through?
Demand-driven planning uses real sales data and forecasting to decide what products to buy and where to allocate them. This ensures top-selling products stay in stock while slow-moving inventory is minimized, improving overall sell-through.