- Head Office
- Point of Sale
Open to buy (OTB) is a term used in retail management to refer to the amount of money or inventory that a store has available to purchase new merchandise.
It is calculated by subtracting the store’s projected end-of-month inventory and outstanding orders from the store’s budget or credit limit.
The resulting amount is the amount of money or inventory that the store can “openly buy” in order to replenish stock or make new purchases.
By regularly calculating the OTB, retailers can ensure that they have enough inventory to meet customer demand without overstocking and tying up valuable financial resources.
By keeping inventory levels in line with demand, retailers can reduce the likelihood of having to mark down overstocked items, which can negatively impact profitability.
By monitoring the OTB, retailers can ensure that they have enough cash available to purchase new merchandise, which can help to maintain healthy cash flow.
By regularly monitoring the OTB, retailers can allocate resources more effectively by allocating them to high-performing products and categories.
By regularly monitoring the OTB, retailers can have better forecasting ability to predict the future trends of their inventory.
By having better forecasting ability, retailers can negotiate better with their suppliers and vendors.
By having the right product available at the right time, retailers can improve the customer experience and increase customer satisfaction.
Track by Department and class and (by store for multi-store operations)