What Is Stock Turn in Retail?
Stock turn (inventory turnover) measures how many times you sell through your entire inventory in a year. Learn what a healthy rate looks like and how to improve it.
Key Takeaways
- Stock turn = cost of goods sold divided by average inventory value
- Higher stock turn means less capital tied up in inventory and less risk of obsolescence
- UK fashion retail averages 4-6x stock turns per year; grocery 20-30x
- Improving stock turn frees up working capital that can be redeployed into growth
What stock turn is
Stock turn (also called inventory turnover) measures how many times a business sells through and replaces its entire inventory in a year. It is calculated as cost of goods sold divided by average inventory value. A retailer with £500,000 COGS and average inventory of £100,000 has a stock turn of 5x — meaning they sell through their entire inventory approximately every 10.4 weeks. Higher stock turn generally means more efficient use of capital and lower markdown risk.
Industry benchmarks
Stock turn varies dramatically by retail category. Grocery and convenience: 20-30x — perishable products that sell and are replenished continuously. Fashion: 4-6x — seasonal buying cycles mean inventory is replaced less frequently. Electronics: 5-8x. Furniture and home: 3-5x. Jewellery and luxury: 1-2x — high-value, slow-moving inventory is normal in this category. Benchmarking should always be against your specific category — not a general retail average. Your stock turn trend over time is as important as the absolute number.
What low stock turn costs you
Low stock turn has three costs. Working capital cost: inventory sitting unsold ties up cash that could be used elsewhere. A business with £200,000 of slow-moving inventory is effectively making a zero-interest loan to that inventory — that capital could be funding growth. Markdown risk: the longer inventory sits, the higher the probability it will need to be discounted to sell. Storage cost: warehouse space, handling, and insurance costs accumulate daily on unsold inventory. Improving stock turn from 4x to 5x on a £500,000 inventory base frees up £100,000 of working capital.
How to improve stock turn
Improve stock turn through better buying (buy quantities closer to expected demand rather than over-buying to chase volume discounts), better trading (monitor sell-through weekly and take action on slow-movers early rather than waiting), better product range management (reduce the number of SKUs and concentrate inventory on your best-sellers), and better supplier relationships (negotiate shorter lead times that allow more frequent, smaller orders rather than large seasonal buys). Each of these requires data — a strong inventory management system that provides real-time sell-through information by SKU.
Stock turn and gross margin together
Stock turn in isolation can be misleading. A retailer who achieves high stock turn by heavily discounting has generated the turns but at the cost of gross margin. The metric that combines both is GMROI — Gross Margin Return on Inventory Investment. GMROI = Gross Margin % × Stock Turn. A business with 50% gross margin and 4x stock turn has a GMROI of 2.0 — for every £1 invested in inventory, it generates £2.00 of gross margin. GMROI allows comparison of the efficiency of different product categories or ranges even when their margin profiles and turn rates differ.