Using Merchandise Planning to Hit Your Inventory Sweet Spot

merchandise planning

“Out-of-stock.” After all the hard work—and dollars—retailers spend getting customers to their storefronts and websites, inventory hiccups make customers cringe, and business owners shutter with lost sales opportunities. According to survey results, one of the top problems OFFPRICE business owners face is having enough (or too many!) products to match customer demand.

Retailers can use several strategies to hit their inventory sweet spots…

Merchandise Planning

According to Ott Niggulis, a Shopify Contributor, “Merchandise planning is a systematic approach to planning, buying, and selling merchandise to maximize your return on investment (ROI) while simultaneously making merchandise available at the places, times, prices and quantities that the market demands.”

In other words, when a customer comes to your retail business looking for a particular product, you’re going to have it available. The customer is not only satisfied, but you didn’t miss out on a valuable sale.

Niggulis recommends starting your merchandise planning by evaluating last year’s results. “What’s important here is to really dive into the data, looking at not only the total number of sales but going deeper into monthly and even weekly results on an item, category, department, and store basis.”

Make sure you’re keeping notes on which styles, colors, and styles sell quickly in your store. If you really know—not just guess—how your product performed last year, you can go into trade shows with a buying plan that’s backed with hard data. If you couldn’t keep up with your customers’ demand for size medium dresses last June, keep that in mind when you do your order-writing for next season. Catalog vendor information so you can reach out for additional orders, if necessary.

Niggulis also suggests taking your marketing and sales strategy into consideration when merchandise planning. If you’re highlighting your new line of men’s ball caps this summer, make sure your inventory is going to be able to fulfill the demand. Keep the changing seasons and weather in mind when buying, as well as upcoming holidays and vacations so you can re-stock the right categories at the right time. Of course, knowing how much you have to spend per category before heading to a trade show is always a good idea.


According to RMSA Retail Solutions, “Open-to-Buy is a financial budget for retail merchandise that is most appropriate for seasonal merchandise where goods are brought in at the beginning of the season and need to be managed down to pre-determined levels at the end of the season.”

Retailers who use open-to-buy strategies calculate inventory levels based on best-guess forecasts for the months ahead. “After you account for existing on-orders, markdowns, transfers and returns, your open-to-buy will be what is required to make sure you have the correct amount of inventory to meet your established sales plan,” says RMSA Retail Solutions. The Balance offers a great explanation for using the open-to-buy formula.

Incorporating and Online Strategy

Easy-to-use online marketplaces, like OFFPRICE365, help retailers find quick-fill ins if all else fails. Online marketplaces smart, cost-effective resources for buyers, who can re-stock products in-between trade shows. Other retailers rely on online buying more than others, and that’s okay too.

It’s important to use an online marketplace that is reliable. All vendors on OFFPRICE365 are verified and approved by OFFPRICE staff, so you can shop worry-free in our community. Before ever placing an order online, ask the vendor for their return policy so you know what your options are if the product is not what you’d expected.

Drop Shipping

Having a supplier that drop ships merchandise directly to your customers can also be helpful for keeping up with demand, so long as you think that supplier is reliable. With drop shipping, retailers can sell products without ever having to store, stock, or ship, because the manufacturer sends the product straight to the customer’s door.

Not every OFFPRICE vendor has the ability to drop ship, but it’s a good idea to ask before you place an order. For most off-price retailers, relying solely on drop shipping probably isn’t the best practice, but it can definitely help prevent customer dissatisfaction.

Re-stock your inventory in all categories of apparel, footwear, and accessories, at the upcoming OFFPRICE Shows, June 11-12 in New York City, or August 11-14 in Las Vegas. Registration is now open online.

About Author

Stay In touch