What Is Sell-Through Rate in Retail?
Sell-through rate measures how much of your inventory has been sold in a period. The key metric for managing stock health and markdown risk.
Key Takeaways
- Sell-through rate = units sold divided by opening inventory (or units received), expressed as a percentage
- A high sell-through rate means strong demand; a low rate signals slow-moving stock and markdown risk
- Set sell-through triggers: at 8 weeks in, if sell-through is below X%, initiate a markdown
- Track sell-through weekly by category, supplier, and buyer to identify problems early
What sell-through rate is
Sell-through rate measures the proportion of inventory that has been sold over a defined period, expressed as a percentage. It is calculated as units sold divided by opening inventory (or units received into the period), multiplied by 100. A product that received 100 units and sold 67 in the first 8 weeks has a sell-through rate of 67%. It is the primary metric for monitoring stock health and identifying slow-moving inventory before it becomes a markdown problem.
What a good sell-through rate looks like
The appropriate sell-through benchmark depends on the category and the time period. For fashion retail, the industry target is typically 75-80% sell-through at full price before the end of the season — leaving some residual stock for end-of-season sales. By 4 weeks in, a target might be 30-40% sell-through. By 8 weeks, 55-65%. Products significantly below these benchmarks at these checkpoints are candidates for markdown to prevent further stock build-up and maximise the total revenue recovered from the inventory investment.
Sell-through triggers and markdown management
The most effective sell-through management uses pre-agreed triggers — if a product's sell-through is below a defined threshold at a defined checkpoint, a markdown is initiated automatically or proposed to a buying team. This removes the emotional attachment that often delays markdowns past the optimal point (the earlier a markdown is taken, the more units are sold before the season ends and full markdown depth is not needed). A common trigger: if sell-through is below 40% at week 6, initiate a 20% markdown. If below 30% at week 8, go to 30% markdown.
Tracking sell-through by dimension
Aggregate sell-through figures hide important information. Track sell-through by: category (which product types are selling well and which are slow?), supplier (which suppliers' products consistently sell through, and which do not?), colour or size (colour and size range issues are invisible at aggregate level), and buyer (who is making the buying decisions that produce the best sell-through?). These dimensions reveal patterns that drive better future buying decisions.
Sell-through and the open-to-buy budget
Open-to-buy (OTB) is the amount of additional inventory a retailer is budgeted to purchase in a period. High sell-through rates generate OTB — room to bring in more stock. Low sell-through rates consume OTB — stock is not moving, so buying new merchandise would create an overstocked position. Managing OTB against sell-through creates a self-correcting buying rhythm: successful categories generate the budget to chase winners, while slow categories restrict further investment until existing stock moves.