Blog
The retail landscape continues evolving, presenting opportunities and challenges for small to medium-sized retailers.
Many retailers ask: How much inventory should they commit to early? When should they place orders? How can they balance risk while ensuring adequate stock levels? And since we love a new retail season, we will share some insights with you!
This guide explores proven Open-to-Buy (OTB) strategies that successful retailers use to navigate seasonal inventory planning. Whether new to formal inventory planning or looking to refine your existing approach, these insights will help you make confident decisions in an increasingly complex market.
Open-to-Buy planning goes beyond simply ordering products for the upcoming season. It encompasses a strategic approach that balances customer demand, cash flow, storage capacity, and market risk.
At its core, OTB planning answers critical questions about what to buy, when to buy it, and how much capital to allocate across different product categories. Most retailers operate under constraints that influence their buying decisions.
Vendors often require early commitments to guarantee shipments, especially for imported goods with long lead times. Many retailers reorder successful products from previous seasons, creating patterns of early purchasing decisions.
The key distinction lies between retailers who must commit early due to operational necessities and those who choose to commit early as a strategic decision. Savvy retailers recognize that buying inventory essentially represents calculated gambling. Each purchase order places a bet on future customer demand, and the goal is to make informed decisions that maximize sales potential and profitability while minimizing end-of-season markdowns.
One of the most powerful strategies in seasonal inventory planning involves time-phasing receipts, staggering purchase orders. Hence, inventory arrives throughout the season rather than all at once. When retailers concentrate all deliveries at the beginning of a season, they create unnecessary strain on storage capacity and tie up substantial cash.
Reduced upfront storage requirements: Prevents warehouse overcrowding and eliminates costly overflow storage.
Improved cash flow management: Capital remains available longer, allowing for better financial flexibility.
Lower risk exposure: Less committed inventory at risk if product demand shifts unexpectedly.
Enhanced decision-making opportunities: Later deliveries can be adjusted based on early-season performance.
Reduced end-of-season markdowns: Better alignment between inventory levels and actual demand patterns.
This strategy proves particularly effective for retailers who can negotiate flexible delivery terms with their vendors. Even retailers working with vendors offering limited flexibility can often achieve some degree of time-phasing through careful order structuring and communication.
Successful inventory planning requires understanding product risk levels and developing appropriate strategies for each category. Not all products carry the same level of uncertainty, and retailers must approach different risk profiles strategically.
Low-risk products include items supported by substantial historical data, products with long selling windows, and merchandise that performs consistently across multiple seasons. High-risk products present greater uncertainty but often offer higher potential rewards, including novel products, highly seasonal merchandise, expensive items, and trend-driven products.
| Product Risk Category | Characteristics | Optimal Buying Strategy | Timeline Considerations |
|---|---|---|---|
| Low-Risk Products | Historical data support, consistent demand, and long selling windows. | Early commitment with negotiated terms. | 4-6 months of planning is acceptable. |
| Medium-Risk Products | Some historical data, moderate seasonality, and an established customer base. | Partial early commitment with in-season flexibility. | 2-4 months planning with reorder capability. |
| High-Risk Products | Limited history, high seasonality, trend-dependent, premium pricing. | Delayed commitment, small initial orders. | 1-2 months planning with rapid response capability. |
The strategic approach involves timing purchase commitments appropriately for each category. For low-risk products, early commitments often make financial sense. For high-risk products, delaying commitments provides valuable time to gather market intelligence and make more informed decisions.
Effective inventory planning requires collaborative systems that align various stakeholders around common goals. The most successful retailers establish formal planning processes that bring together buyers, financial managers, store operations teams, and supply chain coordinators.
The foundation begins with a comprehensive planning calendar mapping out all critical decisions and review points throughout the year. Most successful retailers follow a structured approach: pre-season planning, regular in-season reviews, and post-season analysis.
The collaborative approach extends to vendor relationships. Retailers must analyze partnerships, determining which suppliers deserve larger commitments.
Successful businesses negotiate beyond standard vendor programs, working to customize terms involving receipt timing, payment schedules, return privileges, or markdown support.
Create a monthly “inventory health check” meeting where your buyer, store manager, and whoever handles finances spend 30 minutes reviewing three key metrics: sell-through rates by category, weeks remaining supply, and any past-due orders. This single practice can prevent most major inventory disasters and save time.
Even retailers who commit to most seasonal inventory early benefit significantly from effective in-season management strategies. The cornerstone involves maintaining budget reserves for opportunistic purchasing: reserving a portion of the total inventory budget for in-season reorders, emergency replenishments, and unexpected opportunities.
Regular performance assessment forms the backbone of in-season management. Two specific areas deserve particular attention: backloading prevention and past-due order management. Backloading occurs when inventory arrives too late in the season to generate full-price sales. Past-due order management requires a systematic review of orders failing to arrive on schedule.
The concept of “weeks of supply” provides a valuable tool, dividing current inventory by expected weekly sales to show how long current stock will last. Retailers use this information to make informed decisions about markdowns, reorders, and promotional activities.
Q1: How much of my inventory budget should I reserve for in-season purchases?
Successful retailers reserve 15-25% of their seasonal budget for in-season opportunities. This flexibility provides the ability to respond to actual demand patterns while ensuring adequate initial inventory levels.
Q2: What if my vendors won’t allow staggered deliveries?
Start by requesting delivery flexibility for your best-selling, lowest-risk items. Many vendors will accommodate loyal customers on core products. If that fails, focus on varying your order quantities rather than timing.
Q3: How do I know if a product is high-risk or low-risk?
Look at three factors: sales history (more than two seasons of data indicates lower risk), price point (higher prices typically mean higher risk), and seasonality (shorter selling windows increase risk).
Q4: What’s the biggest mistake small retailers make with inventory planning?
Buying too much too early without reserving budget for in-season adjustments. Proper planning leaves no flexibility to respond to customer demand or unexpected opportunities.
Q5: How often should I review my inventory performance during the season?
At a minimum, conduct formal reviews monthly during the selling season. However, monitor key metrics weekly, especially weeks of supply for your fastest-moving items and any past-due orders.
A retail management system that includes information tracking, like Stratus Analytics, can simplify inventory optimization. By allowing you to keep a close eye on stock levels and automating reordering for your top-performing items, you can avoid overstocking while ensuring your shelves have what your customers want most. Real-time insights also help you respond faster to trends, giving you an edge in a competitive market.
Mastering Open-to-Buy strategies for Fall 2025 requires developing comprehensive systems that support consistent, profitable decision-making. Small and medium retailers who invest in structured planning approaches position themselves to compete effectively while maintaining their key competitive advantage: agility.
Success in seasonal inventory planning comes from balancing multiple priorities: maximizing sales opportunities while minimizing markdowns, maintaining adequate cash flow while ensuring sufficient inventory levels, and responding to market changes while maintaining strategic focus.
The Fall 2025 season presents both challenges and opportunities for retailers willing to embrace strategic inventory planning. By implementing time-phased receipts, managing product risk appropriately, building collaborative planning systems, and maintaining effective in-season management practices, retailers can achieve the confident planning that drives long-term success in today’s complex retail environment.
