Retail Sale Through Rate (STR) Calculator
Total units received or on hand at start of period.
Total units sold during the specific time period.
0.00%
Ending Inventory: 0 units remaining.
How to Calculate Sale Through Rate
The Sale Through Rate (STR), also known as Sell-Through Rate, is one of the most critical Key Performance Indicators (KPIs) in retail and inventory management. It measures the efficiency of a supply chain by comparing the amount of inventory sold against the amount of inventory received within a specific period.
Understanding your STR helps retailers determine if they are overstocked (holding too much cash in inventory) or understocked (missing sales opportunities). A healthy sell-through rate indicates that your merchandise is resonating with customers and your pricing strategy is effective.
The Sale Through Rate Formula
The calculation for sell-through rate is straightforward. It is the percentage of units sold compared to the beginning inventory (or total inventory available) for that period.
Formula:
Sell-Through Rate (%) = (Units Sold / Beginning Inventory) × 100
Sell-Through Rate (%) = (Units Sold / Beginning Inventory) × 100
Example Calculation
Let's say you are a clothing retailer. You received a shipment of 500 winter jackets at the beginning of October (Beginning Inventory). By the end of October, your POS system shows that you have sold 325 of those jackets.
- Beginning Inventory: 500 units
- Units Sold: 325 units
- Calculation: (325 / 500) × 100 = 0.65 × 100
- Result: 65% Sell-Through Rate
Interpreting Your Results
What constitutes a "good" sell-through rate varies by industry, product category, and season, but here are general guidelines:
- High STR (> 80%): This often indicates strong demand. However, if the rate is too high too quickly (e.g., 95% in one week), you may have priced the item too low or purchased insufficient quantity, leading to stockouts and lost revenue.
- Average STR (40% – 80%): This is generally considered the sweet spot for many retailers, indicating a healthy balance between inventory levels and sales velocity.
- Low STR (< 40%): A low rate suggests the product is moving slowly. This could be due to pricing issues, poor product placement, low demand, or seasonality factors. This often leads to markdowns to clear the inventory.
Why Monitor Sell-Through Rate?
- Optimize Markdowns: Identifying slow movers early allows you to apply smaller discounts sooner, rather than deep discounts later.
- Improve Buying Decisions: Data on high STR items helps buyers purchase the right quantities for future seasons.
- Cash Flow Management: Increasing sell-through speeds up the conversion of inventory assets back into cash.
- Reduce Storage Costs: Slow-moving inventory occupies valuable shelf or warehouse space that could be used for better-performing products.
Strategies to Improve Sell-Through Rate
If your calculation shows a lower-than-expected rate, consider the following tactics:
- Visual Merchandising: Move the product to a high-traffic area or update the display.
- Bundling: Pair the slow-moving item with a best-seller.
- Marketing Promotions: Run a targeted email campaign highlighting the product features.
- Pricing Adjustments: Review competitor pricing to ensure you are positioned correctly in the market.