Open-to-buy is the uncommitted merchandise purchasing capacity remaining within a retailer’s inventory plan for a defined period.
How it works in retail
An OTB plan connects expected sales, reductions, stock targets and existing commitments. A retail-value approach starts with planned sales plus planned markdowns plus planned ending stock, less beginning stock and committed receipts.
A retail example
Planned sales are $40,000, markdowns $5,000 and ending stock $60,000. With $70,000 beginning stock and $20,000 committed receipts, the remaining OTB is $15,000 at retail value.
What to keep in mind
Keep every input on the same cost or retail basis and avoid subtracting commitments twice. An OTB figure is a merchandise plan, not proof that cash is available to spend.
Reading a positive or negative OTB
A positive balance indicates room for additional merchandise commitments within the stated plan. A negative balance means current stock and commitments exceed what that plan allows. That can prompt a review of receipts, sales assumptions or stock targets; it is not automatically an instruction to cancel orders, which may already be contractually committed.
Why the cost basis matters
Retail-value OTB expresses stock and reductions at planned selling values. Cost-value planning expresses the investment differently. A buyer should not compare a supplier’s cost quotation directly with a retail-value budget. Convert using the intended costing and margin assumptions, then check cash and payment timing separately.
Keeping the plan useful
Revisit the plan when actual sales, markdowns or delivery dates differ from expectations. For example, a late receipt can move a commitment into a different trading period even though the overall order value has not changed. Category-level plans help show where flexibility remains without treating every product as interchangeable.
Sources & further reading
Examples are illustrative. Terminology and measurement conventions can vary by business and market.