In today’s market, retailers have access to a lot of data and to a small business owner, it can feel overwhelming. So, what inventory productivity metrics should you be analyzing to make better business decisions? Sell thru percentage is a great place to start.
Let’s break down what it is, how to calculate it, and how it can help you make better decisions for your business.
What is Sell Thru Percentage?
Sell-through percentage is a calculation comparing the amount of inventory a retailer receives to what is actually sold.
How do you calculate Sell Thru Percentage?
Sell thru Percentage = Quantity sold during sales period/ quantity sold during sales period + on-hand quantity on inventory date
What can you learn from Sell Thru?
By looking at the sell-thru rate of your inventory, you’ll be able to make informed buying decisions to stock your shelves accordingly and avoid lost opportunities.
Sell thru can also be an indicator of poor product performance. These items add to your inventory value and usually need to be marked down, decreasing profitability while taking up space that could be utilized by better performing products.
The RICS Best and Worst Sellers Report provides this metric in combination with other retail KPIs to allow you to analyze information about top performing products as well as those that are moving slowly.