Inventory Turnover

Inventory turnover is a key retail metric that measures how many times your inventory is sold and replaced during a specific period. It is calculated by dividing the cost of goods sold (COGS) by the average inventory value. A higher turnover rate indicates strong sales and efficient inventory management; a lower rate suggests overstocking, weak demand, or poor merchandising. For collection management, inventory turnover provides critical intelligence. Products with high turnover should be featured prominently in collections — they are proven sellers. Products with low turnover may need merchandising intervention: repositioning in collections, bundling with popular items, or moving to sale collections. Monitoring turnover at the collection level reveals which groupings are driving efficient sales and which are stagnating. Industry benchmarks vary significantly. Fashion retailers typically aim for 4-6 turns per year. Electronics retailers may see 8-12 turns. Grocery stores turn inventory 14-20 times annually. Understanding your category's benchmark helps you set realistic targets. Consistently low turnover in a collection signals that the products do not match customer demand — a cue to restructure the collection or swap in different products.