The Power of Open-to-Buy Reserve in Assortment Planning for Retail
At daVinci Retail, we know that effective inventory management is at the heart of successful assortment planning. Retail winners don’t just create Open-to-Buy (OTB) budgets—they manage them strategically. One key best practice is keeping an Open-to-Buy reserve that allows retailers to make nimble purchasing decisions based on real-time sales trends.
This proactive approach enables retailers to adapt quickly to customer demand, reduce financial risk, and improve profitability.
Why an Open-to-Buy Reserve Matters in Retail
An Open-to-Buy reserve is a portion of the OTB budget that is intentionally held back. Instead of committing the entire assortment budget upfront, leading retailers save a reserve to adjust their buys as sales performance and consumer preferences evolve.
The benefits of this strategy are clear:
- Flexibility: Align inventory to what customers are actually buying.
- Risk mitigation: Avoid overstocking and costly markdowns.
- Cash flow optimization: Spend gradually, keeping budget in sync with revenue.
- Customer satisfaction: Reduce stockouts and keep high-demand items on the shelves.
- Data-driven decisions: Make smarter buys based on actual sales insights, not just forecasts.
Lessons from the Industry
Recent industry news highlights why an OTB reserve strategy is more important than ever:
1. Neiman Marcus: Managing Excess Inventory
According to Retail Dive, Neiman Marcus experienced margin pressure from excess inventory, leading to markdowns and weaker profits. With a strong OTB reserve, retailers can pivot faster, buying in smaller increments based on weekly sales trends to avoid inventory bloat.
2. Nordstrom Rack: Mitigating Sales Declines
Nordstrom Rack’s Q1 earnings showed declining sales and heavier markdowns. By maintaining an OTB reserve and adjusting purchases weekly, retailers can fine-tune product assortments, prevent stockouts, and capture more full-price sales.
3. Macy’s: Inventory Discipline Pays Off
Macy’s demonstrated how disciplined inventory planning can boost earnings. Their data-driven OTB strategy helped optimize stock levels and improve overall profitability—proof that a thoughtful OTB reserve can drive stronger business results.
How daVinci Retail Helps
Strategic OTB management isn’t just about numbers—it’s about agility, customer focus, and profitability. At daVinci Retail, we help retailers:
- Build an OTB reserve tailored to their assortment planning needs.
- Leverage real-time sales data for smarter purchasing.
- Balance cash flow while reducing overstock risk.
- Create customer-centric assortments that drive loyalty.
Final Thoughts
Success in retail depends on staying agile and proactive. An Open-to-Buy reserve for assortment planning gives retailers the flexibility to respond to shifting demand, safeguard margins, and strengthen customer relationships.
Embrace the power of OTB reserve management—and let daVinci Retail guide you toward smarter merchandise planning that delivers results.
Related Product
daVinci Assortment Planning
daVinci’s Assortment Planning solution gives merchants the power to tailor buys by the customer to improve sell-thru and ensure each assortment is profitable from the start.
