Open to buy is jargon that has come from the women’s clothing business many, many years ago. It has become a colloquial phrase that indicates something that it isn’t. Earlier, reps would ask buyers if they were “open” to “buy” merchandise, suggesting they had funds to do so. Today, it means something different – or it should.
Open to buy is a mathematical process that almost everyone you talk with has a different formula for. One of the most common is for a retailer to indicate their beginning inventory, subtract their sales, and then set their ideal ending inventory. The amount that would bring them to this ending inventory would be their buying amount or open to buy. Many experts think this is the way to arrive at a buying plan, but sadly it’s not.
The two things that drive any store are sales and turnover. Turnover is missing from the above formula. And more importantly, turnover must be used to determine inventory and buying figures. These cannot be set by the retailer or they will be totally arbitrary. Consequently, the most accurate buying plan is one that uses anticipated sales and desired turn rates to determine inventory values and then creates a buying plan to meet those two elements – sales and turnover. This is critical because sales bring in cash, but turnover brings in profits. A big difference.
Even the “open to buy” term should be revised to “open to receive” (if you must use the “open” part of the phrase), because it is not important as to when the merchandise is ordered, but it is critical as to when it is received. In the fashion retailing business, vendors require retailers to place orders three to 12 months into the future, so without this type of planning, a retailer will be guessing and that always leads to buying too much merchandise.
So, you can forget the terminology, buy you must use the process if you want your store to be profitable. It’s a complicated process, but we have made it easy to understand and use. MYOTBPLAN.COM is sequential (we guide you step by step through the process), accessible (it’s online and can be addressed from any device at anytime), more accurate (we take the steps necessary to insure ample inventory for your strong selling months, but bring inventories down going into your weak selling months to eliminate excess inventory, excess invoices, and markdowns), better supported (we are available by phone or email 10 hours every day of the year), and guaranteed to perform (so there’s no risk).
Without open to buy, you will struggle to survive. With MYOTBPLAN.COM you are guaranteed to succeed. Not a tough choice. Call us today.
