Open to buy is not static. It’s not a “min/max” fill in application. Nothing about retailing is static. The only given is that everything is constantly changing. In order for a retailer to keep up and make money, they must embrace the concept of change. This means projecting, analyzing, revising and then doing it again next month.
In order to keep on top of this change, retailers have to know what’s going on in trends, in the marketplace and with their customers. They have to have the best available merchandise to support their sales and keep their inventories turning at ever improving rates. The only way to accomplish this is with open to buy planning.
One of the confusing things about open to buy is that it is always looking at the next month. The buying that is planned for arrival in Month 1 is actually going to build the beginning inventory for Month 2, and so on. So, it’s not very straight forward and many retailers looking at an open to buy plan will question the wisdom of receiving large amounts of merchandise in slow months (leading to stronger selling months) and diminished shipments in strong selling months (leading into weak selling months).
But that’s the nature of an accurate open to buy plan. In order to insure that you have adequate merchandise in your strong selling months, and (more importantly) have reduced inventories going into your weak selling months, your open to buy plan will sometimes look a little strange. And while it’s (obviously) important to have adequate stock in your strong selling months, it’s critical to your success that your buying plan slow shipments going into weaker selling months to avoid excess invoices and markdowns. If you don’t take this into account, you won’t be able to pay the excess invoices and the markdowns will rob you of the profits you made when your sales were strong.
So, open to buy is very much a flow concept. Used properly, a good open to buy will keep your profits flowing.