How to calculate how much stock to buy for your clothing shop each season

How much stock to buy each season is something you calculate, not something you decide by eye: you start from the sales you expect, subtract what you already have in store and what you have already ordered, and the difference is your real buying budget. That method has a name in retail and every chain uses it: it is called Open to Buy (OTB), the money you have available to buy merchandise in a given period without losing control of your cash flow. In this guide you will see the formula explained without jargon, a complete example in euros for a women's fashion shop, and a template to apply it to your own. The goal is twofold: not to run short of the items that actually sell, and not to fill the stockroom with the ones that will end up in the 60%-off sale.

Why buying "by eye" drains your cash every season

Buying by eye means deciding your order on intuition or on whatever catches your attention in the showroom, without checking it against what your shop really sells. The problem is not aesthetic, it is financial: you pay for clothing weeks or months before you sell it, so every euro spent badly is liquidity trapped on a rail.

That gap between what you pay and what you take in is the "cash gap" of each season, and it is what sinks most of the shops that close. You buy the autumn-winter season in July, pay at 30 or 60 days, and start recovering that money from September onwards, drop by drop. If you have overbought, that money does not come back in time and you reach the next buy with no strength left.

At Albano's we have been supplying fashion retailers since 1982, and the mistake we see most often in shops that are just starting out is not buying too little: it is buying a lot of what the buyer falls in love with and too little of what the customer asks for. The result is always the same: stockouts on the basics that turn over, and a stockroom full of the "special" piece that sold only half through.

Take a typical case. Marta opens a women's fashion boutique and, in her first season, devotes much of her order to party dresses because she loves them. She sells four. Meanwhile she runs out of sizes in knitwear and basic jeans within three weeks, exactly what customers were asking for. She ended the season with negative cash and a stockroom she had to liquidate. She did not lack taste: she lacked a calculation.

What Open to Buy (OTB) is and why the chains use it

Open to Buy is the buying budget you have available for a season once you have subtracted the stock you already hold and the orders you have already placed. Put simply: how much new merchandise you can buy without overstretching. Inditex, El Corte Inglés or any chain plan their purchasing with this logic; the only difference is that they do it with software and you can do it with a spreadsheet.

The underlying idea is simple. Your shop needs a specific amount of stock to cover the season's sales and close with a reasonable buffer. Part of that amount you already have (what was left over) or have already ordered. The OTB is what is missing. Buying above your OTB means committing cash you do not have; buying well below it means handing sales to the shop next door.

The OTB formula explained without jargon

The formula the chains use is this:

OTB = (forecast sales + closing stock you want) − (stock you already have + orders already placed)

Everything is calculated at cost price, that is, what you pay the wholesaler, not the retail price. It is the most intuitive approach when you buy from a supplier: you speak the same language as your order. If in your multi-brand shop the unit cost is simply the wholesale price, you already have the basis of the calculation done. Always work with net figures, excluding VAT, so the budget matches what you really spend on merchandise.

How to calculate your buying budget step by step

Calculating a season's OTB takes four steps: forecast sales, define closing stock, subtract what you already have, and split the result across categories. You do not need a finance degree; you need last season's figures and half an hour.

Step 1 — Forecast the season's sales

Start from what you sold in the same season last year and adjust it with a realistic expectation: a 5% increase if the year is going well, a drop if conditions are tight. That figure is at retail price. To convert it to cost, multiply it by your cost-to-sales percentage. In the Spanish textile retail sector, gross margin tends to sit between 50% and 60% of the retail price, according to sector data, which means your merchandise costs you between 40% and 50% of what you sell it for.

Step 2 — Define how much stock you want to close with (and your safety stock)

Closing stock is the merchandise you want available at the end of the season to start the sales period with a full range and to bridge into the next delivery. It should be neither zero (you would be left with an empty shop in the final weeks) nor excessive (it would end up liquidated). A healthy buffer is around the equivalent of a few weeks of sales at cost; adjust it to the real speed at which you turn over.

Step 3 — Subtract what you already have and have already ordered

Add up the cost value of the stock left in your shop and stockroom at the start of the season, plus any orders you have confirmed but not yet received. That sum is subtracted from your total need. What remains is your Open to Buy: the money in merchandise you can buy from here on.

Step 4 — Split the budget across categories

A global OTB is not enough: you have to split it. Distribute the budget across your product families according to the weight each one carried in last season's sales, not according to your preferences. If knitwear was 25% of your sales, give it around 25% of the budget. Before splitting, set aside around 10% of the OTB unassigned: that fund is for restocking the best sellers during the season and for taking up opportunities from your supplier. It is common practice among experienced retailers, and it is what lets you react instead of watching a hit sell out.

A real example: the OTB of a women's fashion shop over one season

Let's see it with numbers. "Boutique Marta" took €60,000 (excluding VAT) in last year's autumn-winter season and expects to grow by 5%, to €63,000. She works on a 55% gross margin, so her merchandise costs her 45% of what she sells it for.

• Forecast sales at cost: 63,000 × 45% = €28,350
• Closing stock she wants (at cost): €6,000
• Total stock need: 28,350 + 6,000 = €34,350
• Stock she already has at the start (at cost): €8,000
• Orders already placed (at cost): €4,000

OTB = 34,350 − (8,000 + 4,000) = €22,350 at cost price.

That is what Marta can buy this season from her suppliers. Of that €22,350, she sets aside 10% (around €2,235) for restocking and splits the remaining 90% (€20,115) across her product families according to last year's sales:

With this split, Marta does not decide her order on a hunch. She knows she has €3,621 for dresses and not a euro more, however much she falls for the collection. And she knows the bulk of her money goes to knitwear and jeans, which are the ones that pay the rent.

Your Open to Buy template, step by step

You can build your own calculation in an Excel or Google Sheets file in five minutes. Create these rows and fill in only the first four with your data; the last two are formulas:

1. Forecast sales for the season (at retail, excluding VAT): last year's sales ± your adjustment.
2. Your cost-to-sales percentage: 45% if you work on a 55% margin; adjust it to yours.
3. Desired closing stock (at cost): the buffer you want to end with.
4. Current stock + orders in progress (at cost): what you already have and what is already committed.
5. Total need = (row 1 × row 2) + row 3.
6. Your OTB = row 5 − row 4. Set aside 10% and split the rest across categories.

Repeat the calculation for each season and keep the history: in two or three seasons you will have your own split percentages fine-tuned, which are worth more than any general rule.

How much to reserve for restocking your best sellers

Set aside between 10% and 15% of your buying budget unassigned from the initial order, for restocking during the season. That fund is what separates the shop that reacts from the one that just watches. When a line sells out in two weeks, that is the signal the customer wants it: with reserved budget you can order more; without it, you can only regret it.

The metric that tells you what to restock is the sell-through: the percentage of units you have sold relative to those you bought of a given line. A high, early sell-through is a green light to restock; a low one halfway through the season is the clue that the piece is heading for the sale and that pushing it further is not worth it. We go deeper into how to measure and use this in the inventory turnover guide.

Frequently asked questions

How much stock do I need to open a clothing shop?

To open, the initial stock of a clothing shop in Spain tends to range between €5,000 for very small formats and €30,000 or more for complete shops, according to sector estimates. It is an opening figure, distinct from the season recalculation: when you open you have no sales history, so you start from the size of the premises and the minimum range needed to fill the shop without it looking empty.

How often should I recalculate the OTB?

The minimum is to calculate it once per season, before the main buy, and to review it halfway through the season to reallocate the reserve budget according to what is working. The chains recalculate it every month; a small shop can do it twice per season without complicating things.

What do I do if I run out of budget halfway through the season?

It means forecast sales fell short or the initial split did not respect the real weight of each category. The solution is to move budget from the categories that do not turn over to the ones that do, using the reserve fund, rather than borrowing more. If even that is not enough, it is a sign the starting calculation was optimistic and worth correcting next season.

How do the wholesaler's minimum orders and packs affect the calculation?

Minimum orders and size packs condition how finely you can adjust the split, because a category's budget does not always match the supplier's pack exactly. Prioritise rounding down in the lower-turnover categories and up in the ones that sell most. We explain how these minimums work in detail in the guide on minimum orders and packs.

Buy with your head, not your heart

Calculating the OTB does not take away your judgement or your taste: it gives you a frame to exercise them without ruining yourself. Taste decides which dresses you choose within the €3,621; the calculation decides that it is €3,621 and not €8,000. That is the difference between a season that leaves cash and one that leaves stockroom.

At Albano's we work to make that calculation add up for you: a broad range to split your budget across categories, agile restocking for your reserve fund, and terms designed for the neighbourhood shop, not just the big chain.