Calculation of sell-through rate and stock turnover

Optimizing stock management relies on two levers: reducing storage-related costs and improving operational efficiency. In other words, everything depends on your existing processes and your ability to analyze and finely manage your stocks, notably through precise indicators and ratios.

How do you calculate the sell-through rate and the turnover rate of your stocks? Why are they important for optimizing your stock management? How can stock management software help you implement your strategies? We provide you with the keys in this article

Calculation of sell-through rate: managing your stocks well

How to calculate the sell-through rate?

The sell-through rate, a major key performance indicator (KPI) for calculating your stock, reflects the speed at which your sports items are sold. It is calculated by dividing the number of units sold over a given period (month, quarter, etc.) by the average stock during that same period. The result is then expressed as a percentage.

Imagine that one of your stores sold 100 footballs in March, with an average stock of 50 footballs during that month. Your sell-through rate for the month of March therefore amounts to 200%.

The advantages of an optimal sell-through rate

A well-managed sell-through rate provides considerable advantages for your sports brand, namely:

• Reduction of stockouts: precise monitoring of the sell-through rate allows you to anticipate needs and order products at the right time, thus avoiding stockouts that frustrate customers and harm your brand image.
• Decrease in excess stock: an optimized sell-through rate helps you identify stagnant items and adjust your orders accordingly. You free up tied-up capital and reduce storage costs, thereby optimizing your cash flow.
• Better decision-making: by analyzing rates by product category, brand, season, etc., you obtain valuable information to guide your purchasing, promotion, and merchandising strategies.

By adopting stock management based on the sell-through rate, you equip your sports brand with an undeniable strategic asset. You gain visibility over your stocks, optimize your orders, and reduce costs, all while improving customer satisfaction and stimulating your sales.

Strategies to optimize the sell-through rate

Analyze sales trends to predict demand 

Understanding your customers’ buying behaviors is essential for forecasting future demand. By analyzing historical sales data, seasonal trends, major sporting events, and marketing campaigns, you identify items that are trending and those likely to stagnate.

For example, if your previous year’s sales analysis reveals a sharp increase in football jersey sales during an international competition, you are able to anticipate this trend. You can order a substantial stock of jerseys from the start of the event and thus guarantee optimal availability for your customers, while maximizing your sales.

Opt for an agile replenishment system 

An efficient replenishment system adapts in real-time to changing demand. By closely monitoring your stock levels, you can trigger automatic orders as soon as a critical stock threshold is reached or rely on transfers between stores to achieve balance.

A high-performance replenishment system allows for real-time sales monitoring. As soon as an item sells well, a new order is automatically triggered with the supplier, ensuring near-constant stock and avoiding untimely stockouts.

Optimizing your sell-through rate through these strategies is a powerful lever to boost the profitability and customer satisfaction of your sports brand. To transform your stock management into a true competitive advantage, rely on a stock sheet or rather a high-performance management software that allows you to centralize and analyze all your sales data, implement automated replenishment rules, and manage your multi-store stocks.

Determining the ideal stock turnover

How to calculate the stock turnover rate?

The stock turnover rate indicates the speed at which your sports items are sold and replaced during a given period (usually a year). It is calculated by dividing the cost of goods sold by the average stock (at cost price). The result is then expressed as a number of rotations (turns).

The link between stock turnover and storage duration is inversely proportional. This means that the higher the stock turnover, the shorter the storage duration. Indeed, if your stocks are renewed frequently, products spend less time in your warehouses, which reduces the average storage duration. Conversely, low stock turnover leads to long storage duration. Products stay longer, which increases storage costs, the risk of depreciation, and the probability of stockouts.

The link between stock turnover and company profitability

By adopting stock management based on this indicator, you significantly improve the profitability of your brand. With precise monitoring of the stock turnover rate (by product category, by brand, etc.), you identify high-performing products and can highlight them to generate profitable margins.

As with the sell-through rate, you have visibility into the rotation speed of your products and are able to adjust orders to avoid overstocking as well as costly stockouts.

Final advantage: negotiating better purchasing conditions. An optimized order history gives you leverage with your suppliers and allows you to negotiate more advantageous purchase prices.

The sell-through rate and the stock turnover rate are two complementary tools that, when used together, provide a precise view of the effectiveness of stock management in your sports brand. While the sell-through rate constitutes a more granular analysis (by product) of your stock, the turnover rate offers a broader, more global overview of the stock.

Methods to improve stock turnover

Manage your stock flows: avoid overstocking or stockouts

As with the sell-through rate, analyze historical data, seasonal trends, and sporting events to forecast demand accurately. Implement automatic replenishment systems that trigger orders based on defined stock thresholds (minimum, maximum, critical).

Cultivate your supplier relations

By establishing solid partnerships with your partners, you can negotiate better contractual conditions, including short delivery times. The goal is to minimize the buffer stock needed to lower your storage costs by implementing a just-in-time (JIT) stock management system. Deliveries arrive just in time to meet demand.

Improve inventory and outflow practices

Depending on your item categories, find the right method to avoid product depreciation or obsolescence. A quick reminder of the basics of stock management:

• FIFO: First In, First Out
• LIFO: Last In, First Out
• FEFO: First Expired, First Out (products with an expiration date are the first to leave)

Beyond implementing an adapted system, conduct regular and precise inventories to track your stock status in real-time and identify potential discrepancies. Also, set up an efficient customer return management process to minimize the impact on your stocks, especially within an omnichannel sales framework.

By mastering the sell-through rate and the turnover rate of your stocks, you reduce your storage costs, improve your turnover, and strengthen customer satisfaction within your brand. But a successful implementation of the strategies mentioned relies on the use of stock management software adapted to the specific needs of sports retail. By equipping yourself with a high-performance digital tool, you take advantage of a proactive approach to stock management to maximize your profitability.