A cheeky, insider glossary from the planning side. Every term has a definition, a POV, and a real reason it matters. Save it. Send it to the new hire. Argue with it.
26 terms. 26 opinions. This isn't a Wikipedia article. It's what Two and Six actually think about the words the industry throws around.
Distributing inventory across stores, regions, or channels based on demand. Over-allocation creates stuck stock at the slow doors. Under-allocation creates lost sales at the hot ones. The math should drive allocation, not the gut feel of the buyer who flew to one market last quarter.
Planning & BuyingThe pre-season forecast that says how much to buy, by category, by month. It's a hypothesis with a budget attached. The good buy plans build in their own failure modes - assuming you'll be wrong by 10–15% and leaving OTB headroom to react.
Planning & BuyingHolding seasonless or evergreen product into the next season instead of marking it down. Works beautifully for basics and core (white tee, classic denim). A disaster for trend-driven novelty. The math is simple: storage cost + cost-of-capital vs the margin you'd recover next season.
InventoryA timed product release outside the regular seasonal calendar. Used right, drops build urgency and feed the loyalty loop. Used wrong, they fragment the buy plan, starve the core assortment, and train your customer to wait for the next one.
Product & RangeEnd-of-month inventory snapshot. Used for cover calculations, OTB resets, and figuring out what next month inherits. A clean EOM is its own KPI. A messy one is next month's problem with last month's price tag.
ReportingThe volume and timing prediction underneath every buy decision. The best forecasters aren't trying to be exactly right - they're trying to be consistently wrong by less than 10%. Forecasting is the most underrated skill in merch.
Planning & Buying(Sales − Cost of Goods Sold) ÷ Sales. The headline profitability metric. Watch the trend, not the snapshot. A 52% GM month means nothing without context - whether last year's was 56% or 48% is what matters.
FinanceThe top-selling style that pulls disproportionate revenue. Every brand has one. The best brands know which one - and protect it with replenishment, marketing, and never letting it go out of stock. The rest find out at year-end when the report tells them.
Product & RangeThe cost-to-retail spread at launch. Higher IMU = more cushion for markdowns later. Most apparel brands need a 60–70% IMU to survive a normal markdown cycle. Below that, you're already behind on day one.
FinanceReceiving inventory exactly when demand needs it, minimising holding costs. Works beautifully when forecasting is sharp and partners are reliable. Breaks the moment anything goes wrong upstream. The trade-off is risk vs cash efficiency.
Sourcing & LogisticsKey Performance Indicator. The metrics that matter most for your category. Pick five - usually some combination of sell-through, AUR, WOS, gross margin, and full-price rate. Watch them weekly. Ignore everything else until end-of-quarter.
ReportingCost of goods + freight + duties + handling fees + first-mile logistics. The number that actually goes into margin math. If your IMU is built on PO cost only, your margin is fiction. Build everything off the landed cost or pay for it later.
FinanceA planned reduction in retail price to move slow-moving inventory. Used right, it's a tool. Used wrong, it's a confession that the buy plan was off. The data tells you which.
InventoryGross sales minus returns, exchanges, and discounts. The real revenue number. Brands with high return rates have a wildly different gross and net - and the gap is where the truth lives. Always report on net, never gross.
ReportingThe dollars or units remaining in your buy budget for a season or month. Manage it like a runway, not a piggy bank. Tight OTB = limited reactivity. Bloated OTB = uncommitted spend that someone will pressure you to use.
Planning & BuyingThe pre-season forecast that says what to buy, when, and how much. The plan vs actuals gap is where merchandisers spend their entire careers. Adjust early > defend late. The plan is a starting line, not a finish line.
Planning & BuyingHow many units to order, constrained by MOQs, capital, storage, and forecast confidence. The art is buying enough to win without enough to lose. Most brands over-buy on novelty and under-buy on core. Should be the opposite.
Sourcing & LogisticsAutomated reorder triggers that refill core stock when weeks-of-supply drops below threshold. The opposite of one-and-done. The math behind "they always have it in stock" is a replenishment trigger doing its job on Mondays.
InventoryST% = Units Sold ÷ Units Received. The cleanest signal of whether you bought right. Under 50% in week 4 = you bought too deep. 60–70% = the sweet spot. 80%+ = you could have bought deeper. (You probably know which one you're in right now.)
ReportingInventory Turn. COGS ÷ Average Inventory. The speed your inventory cycles through the business. Higher turn = better cash efficiency. Most apparel sits between 3x and 6x annually. The big winners are pushing 8–12x.
FinanceAverage units per purchase, online or in-store. A signal of cross-merchandising effectiveness, styling cohesion, and how good your assortment is at suggesting "and this too." Rising UPT = your story is connecting.
ReportingThe factory, mill, or supplier behind your goods. Vendor relationships are a leverage point most brands undervalue. The good ones feel like a marriage - flexible, honest, mutually invested. The bad ones feel like emergency rooms. Choose carefully.
Sourcing & LogisticsOH ÷ Average Weekly Units Sold. Tells you when to reorder, when to slow down, and when to start the markdown countdown. If your WOS doubles in 30 days and nothing else changed, the price is wrong.
InventoryThe silent killer of cash flow - stock sitting beyond planned coverage with no clear exit. Letter X is the hardest in merch. Excess inventory is the most honest term for what brands carry on their balance sheets and refuse to talk about at board meetings.
InventoryRunning totals from January 1 to today. Used in every executive report. Watch the trend curve, not just the single number. YTD up doesn't mean Q4 will be - and YTD down can mask a strong recovery quarter.
ReportingOut-of-stock. When a customer wants to buy and you have nothing to sell them. Every zero-stock event is a lost sale plus a lost trust point. Most of them are fixable with a replenishment rule and a WOS threshold. See: R is for Replenishment.
InventoryTwo and Six does that. From buy plans and sell-through analysis to vendor management and range strategy.
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