Have I read this before? Nope! Last week we covered retail metrics and all the essential sales KPIs you need to forecast demand and track revenue. This week, we’re zooming in on the critical element that makes strong sales performance even possible: inventory.

At Boon, we say it often: “Know your numbers!” In both inventory planning and demand planning, that phrase isn’t just a motivational quip — it’s a core business strategy. Understanding your retail inventory KPIs gives you the clarity you need to improve cash flow, boost profitability, avoid stockouts, and scale sustainably.

Knowing Your Numbers: Understanding the KPIs That Drive Your Retail Business

If you run a product-based business, data is your friend. Tracking the right inventory metrics can feel overwhelming at first, but once you know which numbers matter most, you’ll unlock a clear path forward for smarter planning, stronger margins, and more predictable inventory flow.

Last week, we walked through the key sales KPIs every retail brand should track.
This week, we’re doing the same for inventory planning, inventory forecasting, and the metrics that are directly tied to profitability and cash flow management.

As always — there’s a lot here! That’s why we've divided this guide into two parts. If you get overwhelmed or aren’t sure where to start, our team can build a customized sales and inventory planning process for your business.

What Inventory Numbers Should I Track?

For many creative founders and product-obsessed entrepreneurs, “knowing your numbers” feels intimidating. But in retail, your numbers determine:
how much cash you have available
whether you stay in stock
how quickly you can reorder
how profitable your assortment is
how confidently you can scale
At Boon, we break KPIs into two categories, both essential for strong inventory management planning:

1. Core Inventory KPIs (Non-negotiables)

These are the numbers every brand — no matter the size — must know:

Inventory Plan
Instock %
On-Hand Inventory (OH)
Inventory Forecast
Gross Margin
Initial Markup % (IMU%)
Average Weekly Sales (AWS)
Inventory Turnover

These KPIs reveal whether your business is healthy, profitable, and operationally strong.

2. Supporting Inventory Metrics (Strategic Drivers)

These metrics help guide smarter demand planning, inventory forecasting, and cash flow decisions:

Safety Stock
Open-to-Buy (OTB)
Lead Time
MOQ (Minimum Order Quantity)
Presentation Minimum (Presmin)
Storage Costs
Unproductive Inventory (UPI)
Sales by SKU or attribute
Forecast Variance

Together, your KPIs + supporting metrics help you make informed decisions around inventory flow, receipts, buying strategies, and financial planning.

Inventory KPI Glossary: The Metrics Every Retailer Should Know

Below is a comprehensive glossary of the most common **inventory planning and forecasting** metrics used by retail brands to stay profitable and in control.
Metrics marked with **stars (⭐)** represent high-impact KPIs you should memorize.

Inventory KPIs That Measure Quantity, Value and Productivity

⭐ indicates a KPI that we recommend you know off the top of your head.

Shows how often you have the right inventory available at the right time. Crucial for avoiding stockouts and protecting revenue.
Your inventory plan is your best educated guess at the inventory you will need to support your sales for the year, and should be divvyed up by key time frames as well as each item in your assortment.
Most businesses create a plan at least once a year, far in advance of your selling period. Your inventory plan is based on sales and is often your largest financial investment.
How your inventory is pacing against your plan. Continually updated based on real sales trends and changes in demand.
A core profitability metric:
Formula:
COGS ÷ Average Inventory
High turn = fast movement and strong sales
Low turn = excess stock (and tied-up cash)
The smallest amount your manufacturer requires per order. Influences cash flow and planning.
The total inventory you currently own — one of the most essential numbers for inventory management and cash flow analysis.
Your inventory spending “checkbook.”
OTB helps avoid overbuying or underbuying by ensuring your receipts align with your sales plan and inventory goal.

OTB can be calculated by using this formula:

OTB = Beginning on Hand Inventory (BOH) - [ Sales + Markdowns + End of Month Inventory (EOH) ]
The minimum number of units needed to properly present all items available for purchase in-store
The buffer you keep to prevent stockouts — particularly important for brands with long lead times or highly volatile demand forecasts.
Inventory that isn’t selling and is tying up cash — one of the biggest risks to retail profitability.

Additional Retail Metrics - Supporting Sales & Inventory Planning

The number of days from ordering to receiving inventory. Essential for forecasting reorders and avoiding stockouts.
Impacts how inventory is allocated and how sales patterns evolve across different customer touchpoints.
Helps determine how many units must be sold to cover your costs.
Measures financial return from your inventory investments.
It’s calculated by subtracting the initial cost of the investment from its final value, dividing the new number by the cost of investment, then multiplying by 100.
Impacts margins for brands that move inventory in bulk (furniture, consumables, wholesale-heavy businesses).

You might be thinking —”wait..I thought cost and price were covered last week?” You’re right! However, in an effort to avoid overwhelm we limited our list last week. We’ve included just a few additional metrics that are key for important analyzing your business’ sales and inventory together.

Cost & Margin KPIs (Crucial for Both Sales & Inventory Planning)

⭐ indicates a KPI that we recommend you know off the top of your head.

Total cost to produce a product, including raw materials and labor.
Formula:
Starting Inventory + Purchases – Ending Inventory = COGS

To make COGS work in practice you need a clear and consistent approach to valuing your inventory and accounting for your costs.
Revenue minus COGS, measured in dollars or percentage.
Formula:
(IMU% = (Original Price – Cost) ÷ Original Price)
A key metric for pricing strategy and profitability.
How much it costs to purchase the materials used to produce an item.
What the customer pays for your product.
The total expense required to create or manufacture a finished product — includes labor and factory costs.
All transportation costs required to move inventory:
- from vendor → warehouse
- from warehouse → customer or store
Costs associated with storing your inventory, whether in a 3PL, warehouse, or physical retail space.

Why Can’t I Just Track Sales and Ignore Inventory?

Because inventory is your cash.
Your inventory represents:
your largest investment
your revenue potential
your ability to fulfill demand
your operational flexibility

Sales and inventory go hand-in-hand, and you must optimize both to succeed. Without tracking your inventory KPIs, you risk:

❌ running out of stock
❌ tying up cash in unproductive inventory
❌ overspending on receipts
❌ missing reorder opportunities
❌ inaccurate demand forecasting
❌ stunted growth

Even though the concepts of demand planning and inventory forecasting aren’t overly complicated, compiling accurate data, building usable tools, and interpreting trends correctly is complex.

For startups and early-stage brands especially, understanding these KPIs is the difference between scaling confidently and burning cash unknowingly.

Pro Tip:

Analyze sales and inventory in both units and dollars for the clearest picture of inventory productivity, promotional impact, and cash flow implications.

How Often Should I Track My Retail KPIs?

Your tracking cadence depends on the size and complexity of your business:

Best practices

Weekly KPI tracking
Monthly reforecasting
Quarterly sales and inventory planning reviews

For brands with complex assortments or multi-component products (ex: bras, footwear, skincare kits), tracking KPIs even more frequently can prevent costly mistakes.

Regardless of cadence, consistent alignment with your internal teams ensures:

➡️ fewer surprises
➡️ faster decision-making
➡️ stronger cash flow
➡️ more confident buying decisions

Feeling Overwhelmed? Here’s Where to Start.

You’re not alone — this is a LOT of information. Thankfully, the Boon team has **over 200 years of combined experience** across retail, planning, and inventory management.
If you feel unsure about:
which numbers matter
how to build a demand plan
how to interpret your sales data
how to forecast your inventory
what tools to use
how to improve cash flow
We can help.

Your Next Best Steps

Option 1 — Book a Free 30-Minute Discovery Call

Let us assess your metrics, tools, and current retail planning process — and determine whether you need a quick fix or a full overhaul.

Option 2 — Use Our Sales + Inventory Planning Toolkit

Perfect for startups and solopreneurs who want a DIY but expert-approved planning system.
Includes tools for:

demand planning
open-to-buy
reorder management
cash flow forecasting

Ideal for validating 2024 plans and establishing smarter processes.

Option 3 — Work With Boon as Your Planning Partner

We help founders:

avoid costly inventory mistakes
understand the numbers that matter
improve profitability
forecast demand with confidence
reclaim 20–50 hours a week

We become your strategic planning arm — so you can focus on the creative and operational work you actually want to do.

Why Brands Choose Boon

Founders often juggle everything — marketing, production, hiring, cash flow, inventory, and operations. When demand planning becomes an afterthought, the cost can be enormous.

We're here to solve that.

Boon brings deep industry expertise across multiple retail sectors, powerful analytical tools, and fully customized processes to help brands:

understand their key retail KPIs
build smarter demand and inventory plans
improve cash flow and profitability
scale sustainably
avoid costly inventory missteps

We’ve saved clients over 50 hours per week in planning and reporting — and helped them build the foundations for long-term growth.

Don’t waste your time deciphering complex spreadsheets or building processes from scratch. Focus on what you do best — and let us handle the planning.

👉 Get in touch today and take control of your inventory, profitability, and growth.

Retail Inventory KPIs: The Metrics Every Brand Must Track to Improve Cash Flow & Profitability - Part 2

Knowing Your Numbers: Understanding the KPIs That Drive Your Retail Business