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Practitioner · Course 2: Open-to-Buy and WSSI · Lesson 1 of 5

What open-to-buy actually controls and why it is set before styles are chosen

Level: PractitionerTime: 50 minutesOrder used: A (the T-shirt, Fairway Stores' own export buying against Northline Apparel and Delta Garments)Tool: Open-to-buy and WSSI worksheet
For an export retail buyer who must confirm a spending limit before choosing a style. No previous lesson is required. Figures are teaching examples in US dollars.
RetailerFairway Stores buys Order A wholesale from Northline Apparel
Export orderOrder A, made to order by Delta Garments
Season budgetUSD 90,000, illustrative for this lesson
Committed spendUSD 55,000 already committed this season
BuyerFairway Stores' own buying team
What this lesson measuresRemaining open-to-buy before a new commitment
02Opening

This page explains what open-to-buy controls and why a retailer checks it before choosing any style

This page is for an export retail buyer or planner who has to explain why a spending limit is set before a single style is chosen for a season. At work, a buyer who skips this step can fall in love with a style's own strong margin, place the order, and only then discover the season's own budget was already spent on earlier styles. This lesson mainly teaches the money flow: it shows how open-to-buy, a season budget minus what has already been committed, decides whether a style can be bought at all, before its own margin or its own design is even discussed.

Fairway Stores, a department-store chain that buys Order A wholesale from Northline Apparel, sets a season budget of USD 90,000 for a T-shirt category built around Order A's own quantity and price. Its buying team has already committed USD 55,000 of that budget to other styles already confirmed this season. Without this skill, a buyer approves a new style purely because it looks strong on its own, without first checking whether the season still has open-to-buy left for it.

03Before you start

What you need, and what this lesson does not cover

You need: no previous lesson, though T20-C01-L02 on sell-through and stock cover gives useful background on how a retailer reads its own sales.

By the end of this lesson you can:

  • define open-to-buy as a season budget minus committed spend;
  • calculate how much open-to-buy Fairway Stores has left before approving a new style;
  • explain why open-to-buy is checked before a style's own margin or design;
  • state what a Make to Order buying chain changes about when spend is actually committed;
  • avoid approving a new style purely because it looks attractive on its own.

Not covered here: turning an approved season budget into a week-by-week plan (lesson T20-C02-L02) and adjusting that plan once real sales come in (lesson T20-C02-L03).

04Key terms

Words you will meet in this lesson

TermMeaning
Open-to-buyA retailer's season budget minus its committed spend: the amount still available to commit to any range.
Season budgetThe total amount a retailer plans to spend buying stock for one season, set before it sees every brand's final range.
Committed spendThe value of purchase orders a retailer has already confirmed against its season budget.
WSSIA weekly sales, stock and intake plan: the week-by-week table a retailer builds once open-to-buy is approved.
IntakeNew stock arriving into a retailer's own stockroom or distribution centre in a given week, from a confirmed order.
Wholesale priceThe price a brand charges when it sells the finished goods on, for example to a retailer such as Fairway Stores.
05Teaching
The rule

Open-to-buy, not a style's own margin, decides whether a retailer can commit spend to it at all

A retailer sets a season budget for what it expects to spend on a category, then subtracts every purchase order it has already committed to reach its own open-to-buy: the amount still free to commit. A style's own margin, fabric, or design only matter once open-to-buy confirms there is room to spend on it; a style with an excellent margin cannot be bought if the season budget is already spent. Checking the money available before judging the style is what stops a retailer running out of budget partway through a season.

Fairway Stores' own open-to-buy before this style: 90,000 - 55,000 = USD 35,000
What you meet in real life

Open-to-buy behaves differently depending on how the goods are bought and how the season is timed

A buyer meets several shapes of open-to-buy across a normal working year, and checking each one correctly stops an attractive style from being approved with no real budget behind it.

What can differThe shapes you will meetWhy it matters
Export Make to Order buying through a factoryFairway Stores commits spend once Northline Apparel confirms a production slot with Delta Garments for Order A's own quantity.Spend is committed at order confirmation, well before the goods exist, so open-to-buy must already allow for the full order value, not only a deposit.
Domestic Make to Stock buying against a forecastA domestic retailer such as Cedar & Co. commits its own season budget against its own sales forecast, before any final customer has bought anything.The forecast itself can turn out wrong, so open-to-buy set against a forecast carries more risk than open-to-buy set against a confirmed export order.
A reorder placed on a style that already sold wellFairway Stores reorders more of Order A's own T-shirt once it sells faster than planned.A reorder still draws down open-to-buy exactly like a new style; strong early sales do not create extra budget on their own.
A season budget reallocated between categoriesFairway Stores' buying team moves open-to-buy set aside for one category to a better-performing one instead.Reallocation changes which category gets the remaining open-to-buy, but it never creates open-to-buy beyond the original season budget.
The case we follow

Fairway Stores checks a new style against its own remaining open-to-buy before confirming Order A's quantity

Fairway Stores set a season budget of USD 90,000 for its T-shirt category and has already committed USD 55,000 across other confirmed styles. Its buying team wants to confirm Order A's own 15,000-piece run at Northline Apparel's wholesale price of USD 8.00 per piece, but only for a first commitment of 5,000 pieces this season, worth USD 40,000. Before agreeing anything with Northline Apparel, the buying team checks whether that USD 40,000 fits inside what remains of the season budget.

Fairway Stores: season budget compared with committed spend and the new commitment's own costCommitted spend, USD 55,00035,000 openOrder A needs 40,000
Fairway Stores' remaining USD 35,000 open-to-buy is close to, but smaller than, the USD 40,000 Order A commitment. Even a strong style cannot be confirmed at full quantity until this gap is resolved.
The worked number

Fairway Stores' own open-to-buy falls short of the full Order A commitment by a small, fixable margin

Fairway Stores' own season budget: USD 90,000
Fairway Stores' own committed spend so far: USD 55,000
Fairway Stores' own open-to-buy remaining: 90,000 - 55,000 = USD 35,000
Shortfall against the 5,000-piece Order A commitment of USD 40,000: 40,000 - 35,000 = USD 5,000

The 5,000-piece commitment is short by USD 5,000 against Fairway Stores' own remaining open-to-buy. The buying team cannot confirm the full 5,000 pieces with Northline Apparel until it either reduces the quantity to about 4,375 pieces, reallocates open-to-buy from a weaker style already committed, or asks for a season budget increase.

The method

Five steps an export retail buyer follows before confirming any new style

  1. State the season's total budget for the relevant category, agreed before the season starts.
  2. Total every purchase order already committed against that budget, including reorders already placed.
  3. Subtract committed spend from the season budget to find open-to-buy, updating the figure each time a new order is confirmed.
  4. Compare the new style's own required spend against that remaining open-to-buy before its own margin or design is discussed.
  5. Confirm the order with the factory only once the spend fits, or agree a reduced quantity that does fit.
The trap

A common mistake is confirming an order with a factory before checking whether open-to-buy actually covers it

A common mistake is a buyer confirming a production slot with a factory because the style looks strong on its own, without first checking whether the season budget has open-to-buy left. Once Delta Garments starts cutting fabric against a confirmed Make to Order commitment, cancelling or reducing the quantity later carries its own real cost, since cut fabric and part-made goods cannot simply be returned to stock. What this costs a retailer that gets it wrong is real: a USD 5,000 overcommitment on one style can force a cut to a later, possibly better-performing style once the season's true remaining open-to-buy is discovered. It also damages the relationship with the factory: Delta Garments plans its own cutting room around confirmed orders, and a retailer that confirms, then reduces, a quantity after cutting has begun asks the factory to absorb fabric it already cut for a piece count that no longer exists. A buyer who checks open-to-buy first, before any word reaches Northline Apparel or Delta Garments, never puts the factory in that position at all.

Two confirmation orders compared against Fairway Stores' own USD 90,000 season budgetConfirm first, check budget afterOver by 5,000Check open-to-buy first, then confirm what fitsFits within 35,000 open
Checking open-to-buy before confirming keeps the commitment inside the season budget. Confirming first risks a USD 5,000 overcommitment that a Make to Order factory cannot simply absorb once cutting has started.
06In plain words

A retailer decides how much it can spend before it decides what to spend it on. The season budget is the total available; committed spend is what has already been promised to suppliers; open-to-buy is the difference, the money still free to commit. A style's own strengths only matter once open-to-buy confirms there is room to buy it. A retailer that confirms an order with a factory before checking its own remaining budget can promise more money than it actually has, forcing a costly change once cutting has already started.

07Quick check
  • Open-to-buy is a season budget minus committed spend.
  • A new style's own required spend is checked against open-to-buy before its own margin or design.
  • A reorder draws down open-to-buy exactly the same way a brand-new style does.
  • Reallocating open-to-buy moves it between categories but never creates budget beyond the original season total.
  • An export Make to Order commitment draws down open-to-buy at order confirmation, before the goods are even cut.
  • Confirming with a factory before checking open-to-buy risks a costly change once fabric has already been cut.
08Workplace scenario

Fairway Stores' buying team must decide whether to confirm the full 5,000-piece Order A commitment

Fairway Stores' season budget for its T-shirt category is USD 90,000, with USD 55,000 already committed. Northline Apparel offers to confirm a 5,000-piece first commitment of Order A at its wholesale price of USD 8.00 per piece, worth USD 40,000, with Delta Garments ready to start cutting fabric within the week if confirmed.

Here is the note Fairway Stores' buying team actually wrote before replying to Northline Apparel:

New commitment review. Season budget: USD 90,000. Committed spend to date: USD 55,000. Proposed Order A commitment: 5,000 pieces at USD 8.00 per piece, USD 40,000 total. Delta Garments ready to cut fabric within one week of confirmation.

Can Fairway Stores confirm the full 5,000-piece commitment this week? Decide before opening the answer.

Show decision

No, not at the full 5,000 pieces. Two figures in the buying team's own note decide this.

First, Fairway Stores' own open-to-buy is USD 35,000. That is the season budget of USD 90,000 minus the committed spend of USD 55,000, and it is USD 5,000 short of the proposed USD 40,000 commitment.

Second, once Delta Garments starts cutting fabric, that commitment is hard to unwind. Confirming the full quantity and finding the shortfall later would mean paying for cut fabric the season budget never actually covered.

Fairway Stores' buying team can confirm about 4,375 pieces (USD 35,000 divided by USD 8.00), confirm the full 5,000 pieces only after reallocating open-to-buy from a weaker style, or ask Northline Apparel to hold the slot one more week while a budget increase is requested. Confirming the full quantity without one of those three steps would overcommit the season budget by USD 5,000.

09What it costs

What overcommitting the season budget costs Fairway Stores

Using this lesson's own illustrative figures:

Fairway Stores' own remaining open-to-buy: USD 35,000
Proposed Order A commitment: USD 40,000
Amount the season budget would be overcommitted by, if confirmed in full: 40,000 - 35,000 = USD 5,000

A USD 5,000 overcommitment against a USD 90,000 season budget is a 5.6% overrun on this one style alone. Once fabric is cut against a confirmed Make to Order commitment, Delta Garments cannot simply return that fabric to stock, so an overcommitment discovered after cutting starts costs more than the same overcommitment discovered before confirmation, when the quantity can still be adjusted for free.

10Working template

Open-to-buy and WSSI worksheet: track season budget, committed spend and open-to-buy before confirming any style

Open the course workbook's "Open-to-buy" sheet. It lists the season budget, every committed purchase order, and calculates remaining open-to-buy automatically. Enter a new style's own required spend to see immediately whether it fits inside the remaining open-to-buy, before Northline Apparel is asked to confirm anything with Delta Garments.

[Download the Open-to-buy and WSSI worksheet](../../templates/T20-C02-open-to-buy-and-wssi-worksheet.xlsx)

Download the Open-to-buy and WSSI worksheet (Excel)

11Check yourself

1. What does open-to-buy measure?

2. A retailer has a season budget of USD 60,000 and has committed USD 48,000. A new style needs USD 9,000. Can it be confirmed from open-to-buy alone?

12Glossary
ENARFRTRMeaning
Open-to-buyالرصيد المتاح للشراءBudget disponible (open-to-buy)Alıma açık bütçe (open-to-buy)A retailer's season budget minus its committed spend: the amount still available to commit to any range.
Season budgetميزانية الموسمBudget de saisonSezon bütçesiThe total amount a retailer plans to spend buying stock for one season, set before it sees every brand's final range.
Committed spendالإنفاق الملتزم بهDépenses engagéesTaahhüt edilen harcamaThe value of purchase orders a retailer has already confirmed against its season budget.
WSSIWSSIPlan hebdomadaire ventes, stock et réassort (WSSI)WSSIA weekly sales, stock and intake plan: the week-by-week table a retailer builds once open-to-buy is approved.
IntakeالواردArrivageMal girişi (intake)New stock arriving into a retailer's own stockroom or distribution centre in a given week, from a confirmed order.
Wholesale priceسعر الجملةPrix de grosToptan fiyatThe price a brand charges when it sells the finished goods on, for example to a retailer such as Fairway Stores.
13Next

Lesson 2.2: Building a weekly sales, stock and intake plan from a season's own targets

You now know open-to-buy is checked before any style is chosen. The next lesson shows how a retailer turns an approved season budget into a week-by-week sales, stock and intake plan. Back to the course map

14Ladder

RecognizeTell open-to-buy apart from a style's own margin or design.
ConnectSee how committed spend reduces a season budget down to its remaining open-to-buy.
CompareWeigh a new commitment's own required spend against remaining open-to-buy before confirming.
DecideJudge whether a commitment can be confirmed in full, reduced, or delayed against the season budget.