Retail Inventory KPIs: Stock Turn, Sell-Through and Stockouts
Retail inventory KPIs with formulas: stock turn, days of stock, sell-through rate, stockout rate, GMROI and shrinkage, plus a worked rand example for a store.
· 4 min read · Summarix team
Retail inventory KPIs answer two questions: is my stock selling fast enough, and do I have the right stock when customers want it? Stock turn, days of stock and sell-through cover the first; stockout rate and in-stock rate cover the second; GMROI tells you whether the money tied up in stock is earning its keep. Here are the formulas and a worked example.
The key inventory KPIs
| KPI | Formula |
|---|---|
| Stock turn (inventory turnover) | Cost of goods sold ÷ average inventory at cost |
| Days of stock (days of inventory) | Average inventory at cost ÷ cost of goods sold × days in period |
| Sell-through rate | Units sold ÷ units received (or available) × 100 |
| Stockout rate | SKUs (or SKU-days) out of stock ÷ total SKUs (or SKU-days) × 100 |
| In-stock rate | 100% − stockout rate |
| GMROI | Gross margin ÷ average inventory at cost |
| Shrinkage rate | (Book stock value − counted stock value) ÷ sales × 100 |
| Dead stock share | Value of stock with no sales in X days ÷ total stock value × 100 |
Average inventory is usually (opening stock + closing stock) ÷ 2. If stock swings a lot during the year, use the average of monthly closing values instead.
Worked example: a homeware store
Say your homeware store had annual sales of R3.6 million, cost of goods sold of R2.16 million (so gross margin is R1.44 million) and average stock at cost of R540,000.
- Stock turn: R2,160,000 ÷ R540,000 = 4 times a year
- Days of stock: 540,000 ÷ 2,160,000 × 365 = about 91 days
- GMROI: R1,440,000 ÷ R540,000 = 2.67, meaning each R1 of stock earns R2.67 of gross margin a year
Now a single range. You bought 400 units of a summer cushion line for the season and sold 260 in the first eight weeks. Sell-through is 260 ÷ 400 = 65%. If your plan needs 80% sold before markdowns start, you know now, not at season end, that you will either need to promote the line or accept a markdown on the remaining 140 units.
And the value of improvement: if better ordering cut average stock to R450,000 with the same sales, stock turn rises to 4.8, days of stock fall to about 76, and R90,000 of cash is released from the shelves. Our guide to financial KPIs for owners shows how that flows through to the cash conversion cycle.
Stockouts: the cost you don’t see
A stockout does not show up in your accounts; the sale simply never happens. Measure it in SKU-days: if you track 500 SKUs over 30 days, that is 15,000 SKU-days. If items were out of stock for a combined 600 SKU-days, the stockout rate is 600 ÷ 15,000 = 4%. Focus on your best sellers first. A 4% stockout rate across slow lines matters much less than a few days out of stock on your top 20 products.
To estimate lost sales, multiply each best seller’s average daily sales by its days out of stock. A product selling 12 units a day at R250 that was out for 5 days cost roughly R15,000 in lost revenue, and possibly a customer or two.
Break it down by category and SKU
Store-level averages hide the problems. A healthy overall stock turn of 4 can combine kitchen essentials turning 10 times a year with decor turning once. Use ABC analysis: rank SKUs by sales or margin contribution, then set tighter ordering and stock-count routines for the A items that drive most of the revenue. Our guide to finding trends in sales data covers seasonality, which matters a lot for ordering.
Upload your stock and sales exports and Summarix calculates stock turn, sell-through and slow movers, then writes up what to act on.
Free plan: 5 AI reports a month, no card needed.
A monthly inventory review
- Stock turn, days of stock and GMROI by category, vs last month and last year.
- Sell-through on current season or new ranges against plan.
- Top 20 SKUs: in-stock rate and any stockout days.
- Dead stock list: items with no sales in 90 days and their value.
- Shrinkage from the latest count, by category or store.
If you sell online as well, your Shopify or WooCommerce data can feed the same review; see Shopify sales reports. Summarix can combine a stock export and a sales export, compute the KPIs with its own code and highlight categories that moved.
Conclusion
Good inventory management is a balance between cash tied up and sales lost. Stock turn, days of stock and GMROI tell you whether stock is working hard enough; sell-through and stockout rate tell you whether you are buying the right things. Review them monthly by category, and you will free cash and lose fewer sales at the same time.
Frequently asked questions
How do you calculate stock turn?
Divide cost of goods sold for a period by the average inventory value at cost for the same period. The result is how many times you sold through your stock.
What is a good sell-through rate?
It depends on the product and season. Set a target for each range, such as a percentage sold before markdowns, and track progress against it weekly.
What is GMROI in retail?
Gross margin return on inventory investment: gross margin divided by average inventory at cost. It shows how much gross margin each rand of stock earns.
How do you measure stockouts?
Count the SKU-days that items were out of stock and divide by the total SKU-days tracked. Focus on best sellers, where stockouts cost the most.