Five Minute Friday: How Much Inventory Should You REALLY Have? | Open to Buy Planning Explained

Boutique Chat

Ashley Alderson

Business, Marketing, Retail, Boutiquetips, Fashionindustry, Fashionbusiness, Entrepreneurship, Businessstrategy

5 • 853 Ratings

🗓️ 12 September 2025

⏱️ 7 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

In this episode of Five Minute Friday, we’re answering another frequently asked question from retailers and small business owners: How much inventory should I really have on hand?

It’s one of the biggest challenges boutique owners face—and getting it wrong can tie up your cash flow, leave you with dead stock, or cost you sales when you don’t have enough on the floor. In this episode, Sarah from The Boutique Hub breaks down the science of buying inventory using an Open to Buy Plan, so you can stop guessing and start investing wisely.

🔑 Key Takeaways:

Why There’s No Easy Button

Inventory decisions depend on seasonality, customer demand, and your current stock.
Buying inventory is an investment, not guesswork.

The 5 Reports You Need

Sales, discounts, on-hand inventory, receipts, and on-order commitments.
Run these reports by category (denim, sweaters, accessories, etc.) for accuracy.

How an Open to Buy Plan Works

Use your reports to calculate planned sales, markdowns, and ending inventory.
Apply the formula by classification to forecast exactly how much to buy.

Avoid Overbuying & Underspending

Too much inventory kills cash flow.
Too little inventory means missed opportunities.
Finding balance protects profit and positions your store for growth.

Not a member yet? These are the kinds of retail strategies waiting for you inside The Hub to help you grow smarter.

👉 Want more? Join The Boutique Hub: https://tbhub.co/podcastjoin

Transcript

Click on a timestamp to play from that location

0:00.0	Hey guys, it's Sarah at the Boutique Hub, and I'm here today to talk to you about another one of the
0:05.0	questions that were asked all the time here at the hub, and it's how much inventory should I have on
0:10.4	hand or how much inventory should I be buying? Well, the truth is there's no easy button there. There's
0:18.0	so many things that go into account when we're trying to figure out how
0:21.3	much inventory should a store have on hand. Just a few of the players in this question are,
0:26.4	what's the time of year is it? What is the demand of your customers? How much inventory do you
0:31.2	currently have in stock? Right? What's happening in the community? What's happening in the world?
0:36.7	Is it holiday time is it summertime what are
0:40.5	the demands so many different things there's no cookie cutter example there's no cookie cutter answer for that
0:48.5	so there lies the science of the investing in your business.
0:58.4	In Retail Boot Camp and our other courses here at the Hub, I always talk about how when you go to market, you're not the buyer, you're the investor.
1:01.7	Well, there's a science on how much to buy, from who to buy it, when to have it delivered,
1:06.6	and at what price point, right?
1:09.0	That's called Open to Buy Planning.
1:11.4	And basically what that is, is it's a real fancy way to say,
1:15.3	how much do you go and invest?
1:17.7	What is the difference of what you need to have on hand,
1:20.1	what you already have on hand?
1:22.3	And it gets even further than that.
1:24.6	It's not for your overall store, guys.
1:26.7	It's for your individual inventory
1:28.7	classifications you sell denim you sell tops graphic tops casual tops
	...

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