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Hey everyone, welcome back to another Boutique Chat Podcast episode! Today, I’m thrilled to dive into a topic that’s crucial for all retailers: inventory planning. I had the pleasure of chatting with Dane, a retail expert from Management One, on our podcast, and we’re here to make understanding your numbers simple and actionable.

Inventory Planning, Data-Driven Decisions, and Adaptive Strategies in Retail
The Foundation: What is Management One?
First things first, let’s demystify Management One. This company steps in as your surrogate planning team, helping you understand what to expect from your business over the next 12 months. They forecast your sales, inventory goals, profit goals, and build budgets so you can go to market with clear category budgets. Essentially, they help you know how much to buy to meet your sales goals.
Why Knowing Your Numbers is Essential
Many retailers feel overwhelmed by terms like inventory planning, sales forecasts, and open-to-buy. Dane emphasizes that these concepts are fundamental. Imagine going to market with a plan instead of winging it. It prevents overbuying, which can hurt your cash flow and profits.
Breaking Down Inventory Planning
1. Establishing a Class Structure:
- It’s vital to have a detailed class structure for your inventory, such as department, category, class, and subclass.
- Avoid broad labels like “tops” and instead, specify categories like “tank tops,” “graphic tees,” etc.
- For smaller retailers (under $500K in sales), start with 10-15 categories.
2. Sales and Inventory Analysis:
- Look at your past sales and inventory data, particularly comparing similar time periods from the previous year.
- Understand your stock-to-sales ratio by assessing how much inventory was needed to achieve past sales.
3. Seasonal Budgeting:
- Start by planning on a seasonal basis if month-to-month feels overwhelming.
- Compare your receiving budget (how much inventory you brought in) with your sales to find patterns.
- Use this analysis to decide where to increase or decrease inventory.
Key Reports to Pull
- Aged Inventory Report:
- Identify how long inventory has been sitting unsold.
- Merchandise older than 10 weeks should be considered for markdowns.
- Sales and Receiving Report:
- Track how much you received versus how much you sold.
- Calculate sell-through rates to understand how well products are performing.
- Markdown Strategy:
- Regularly review inventory that’s 8-10 weeks old.
- Implement maintenance markdowns to keep inventory fresh and unlock cash for new, productive inventory.
Real Talk on Retail Inventory Management
Ashley shares a vivid analogy from Paul at Management One, comparing inventory to bananas: green (fresh), yellow (ripe and ready to sell), and brown (overdue for markdowns). Retail inventory isn’t like fine wine—it doesn’t get better with age. Implementing a strategic markdown policy ensures you’re not stuck with “stinky bananas.”
Taking Action
If you’re feeling overwhelmed, remember that knowing your numbers starts with small, manageable steps:
- Ensure you have a proper class structure.
- Regularly pull and analyze sales and inventory reports.
- Plan seasonally and review your strategy month-to-month as you get more comfortable.
For new retailers, consider reaching out to inventory planning experts like Management One to guide you through the process. As you become more familiar with your numbers, you’ll find it easier to make informed decisions that drive your business forward.
In This Episode
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