Open to buy programs

Find out what goes into a good open-to-buy and how you can put it to use in your business. In the world of retail, open-to-buy is quite a buzzword. Many small retail software packages offer an open-to-buy module as an add-on option. But there are few retail software packages that include an open-to-buy function as part of the core package. As a result, many small retailers struggle to find some way to effectively budget their merchandise dollars.

The clearest and simplest definition is that it is a financial budget for retail merchandise. In the case of fashion or seasonal merchandise, an open-to-buy answers the question of how much to buy, but not necessarily the question of which specific items to buy.

For that, a detailed assortment plan is necessary, one that lays out exactly what items will be coming in and when, and provides a plan for how all of the individual items come together to form a compelling merchandise assortment. In contrast, an open-to-buy is not appropriate as a replenishment tool for day-in and day-out basics. These staple items are more effectively replenished using an automatic replenishment program running off predetermined minimum and maximum inventory parameters.

In the case of these in-stock basics, an open-to-buy may still serve a valuable budget and control function at a department or category level. Like any budget, an open-to-buy starts with a plan, then compares actual results to that plan and quantifies any variances.

Carefully considered planning is the critical first step in constructing an open-to-buy. The planning process begins with building a sales plan. For small retailers, most sales plans are broken out by the month, although in some cases, especially highly seasonal businesses or categories, it may be more appropriate to plan sales by the week.

Once a sales plan has been developed, the next piece of the planning process is to build an inventory plan. From there, other things like inventory adjustments and markdowns need to be planned. Finally, from the plans that have been developed, an inventory receipt plan can be arrived at. The inventory receipt plan serves several important functions. First, it serves as the inventory purchasing plan for future months. Second, because inventory purchases are typically the most significant cash outflow for a small retailer, the inventory purchasing plan serves as a critical input into a financial cash flow plan.

This OTB feature ensures that in planning mode, areas you want frozen and thus not affected by additional or ongoing adjustment will be maintained. The system lets you plan at the season level, ensuring that your results are pertinent and meaningful and reflect a true Open-to-Buy for seasonal merchandise.

Intuitively, the Open-to-Buy consolidates all seasonal plans into a corporate view, ensuring that the sum of the parts matches up with your overall desired retail objectives.

Using historical data from the central database ChainDrive Open-to-Buy offers simple, easy to view comparatives at all levels. This feature enhances your ability to leverage actualized historical statistics and use them as benchmarks against any future plans. Whether selecting this year versus last year, sales versus markdowns, purchases versus gross margin, or any other multiple combination, the retail pos system provides it to you instantaneously.

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Purchases must be limited to Open to Buy dollars provided and when really maximizing turn rates and profitability, deliveries must be planned and staged based on that plan. A good and accurate Merchandise Plan and Open-to-Buy is your best tool to create cash! Open to Buy An Open to Buy merchandising plan, with a properly organized classification structure, is the only way to effectively manage inventory.

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