How to set a sales plan

Everything downstream is derived from this number

The merchandise plan is a chain of derivations, and sales is the top of it. Planned sales set the closing stock each period should hold, via a cover target on the weeks ahead. Planned closing stock sets the receipts each period needs, through the open-to-buy identity. Planned receipts become dated deliveries in the receipt-flow plan, and the whole structure reconciles weekly in the WSSI. Nobody plans intake — intake is what the sales plan and the stock targets jointly require. Which means an error in the sales plan is never contained in the sales line: it is faithfully propagated into stock, receipts, and cover by the same arithmetic that makes the plan useful.

This is also why the sales plan deserves the argument. It is the one place where ambition, capacity, and history confront each other before money is committed — after this point, the numbers stop being debated and start being executed. The method below is designed to force that confrontation: two independent builds, a reconciliation that has to be earned line by line, and a phasing that has to be decided rather than inherited.

Seven steps, in order

The first four steps produce a defensible season number. The last three turn it into something a team can trade against and keep honest once the season starts.

1. 1

   Fix the season total top-down: last year, restated, times a growth view

   Start from last year’s actuals for the same season — but restated, not raw. Align the retail weeks to this year’s calendar, move any holiday that shifts, and strip the things that will not repeat: a one-off event, a stretch lost to a late delivery, weeks where stock-outs capped what could have sold. Then apply a growth view you can defend from the business you now have — channel mix, price architecture, door count — rather than a percentage chosen to please. The output is a season total and a first-cut phasing by month.

2. 2

   Build the bottom-up: categories, doors, and channels that add to something

   Independently, build the plan from the units that actually trade: by category and channel, and by door where doors matter. Each line carries its own basis — run-rate for continuity product, a like-for-like analogue for new ranges, ramp-up assumptions for new doors. The bottom-up build is slower and more honest than the top-down; it is where range changes, capacity limits, and door maturity live, and its total is allowed to disagree with the top-down. That disagreement is the point of building both.

3. 3

   Reconcile the two builds — the gap is the finding

   Do not close the gap by scaling every bottom-up line until the totals match. Trace it to specific categories and doors: either the top-down carries ambition no line can name — in which case the growth view needs a mechanism or a haircut — or the bottom-up is sandbagged, and the line owners need to defend their basis. What survives reconciliation becomes the single sales plan, and every downstream figure derives from it.

4. 4

   Split comp from non-comp

   Plan the doors and channels that traded last year separately from the ones that did not. Comp growth is a demand claim — the same assets asked to sell more, testable against history. Non-comp is an investment outcome — new doors on ramp-up curves with no history of their own, planned by analogy. Blending the two lets opening volume hide a weakening core, and it hides the ramp-up assumptions that most need watching.

5. 5

   Phase the total across the season, then into weeks

   A season total cannot be traded against. Spread it by month on the season’s real shape — last year’s phasing, restated for calendar shifts and corrected for known distortions — and then break the trading months into weeks where the WSSI needs them. Phasing is a decision, not an inheritance: every distortion copied from last year’s shape becomes this year’s plan.

6. 6

   Plan at the level you can act on

   Set the planning grain by the decisions the plan has to drive — category by channel for most brands, door groups where allocation is the live decision — and go no finer. Detail below the actionable level is not accuracy; it is noise that must then be maintained, reforecast, and explained. A plan you can act on at every line beats a plan that impresses at a grain nobody trades at.

7. 7

   Hand it downstream and set the re-plan cadence

   The finished sales plan sets stock targets, which set receipts through the open-to-buy identity, which set intake phasing and the forward cover the season will hold. Before trading starts, agree when the plan is reforecast and what may change: in-season, the phasing and the forward view move on a set cadence, while the season total moves only as a deliberate, owned decision — never as a side effect of one bad week.

Top-down, bottom-up, and the gap between them

The two builds exist because each one is blind somewhere. The top-down sees the whole business — the growth the company is committing to, the channel mix shifting under it, the margin the season has to deliver — but it cannot see whether any specific category can produce that growth. The bottom-up sees the parts — this category’s run-rate, that door’s ramp-up, the range that is genuinely new — but summed naively it tends toward one of two failure shapes: sandbagged, when line owners plan what they are confident of beating, or inflated, when every line assumes it wins the same customer.

The reconciliation is where the plan is actually made, and it is diagnostic work rather than arithmetic. A gap between the builds is a specific claim hiding somewhere: a category the top-down assumes will grow that no line owner recognises, a door whose ramp-up assumption does the work of three, an event in the growth view with no phasing to receive it. The discipline is to name each piece of the gap and settle it on its merits — adjust the growth view, or adjust the line, and record which. What must not happen is the shortcut: scaling every bottom-up line by a uniform factor until the totals agree, which converts a visible disagreement into an invisible one and distributes ambition to owners who never accepted it.

The reconciled plan then needs one more property: a single owner for the total, and named owners for the lines. A sales plan whose total everyone shares and no one owns will be re-litigated every trading meeting — the pre-season argument, deferred to the weeks with the least room to act on its outcome.

Two lines, because they are two different claims

Comparable sales are the sales from doors and channels that traded in both periods being compared; non-comp is everything without a like-for-like history — new doors before they have a full prior year to be measured against, doors materially disrupted by a remodel or long closure while the disruption lasts, a channel launched mid-year. Closed doors leave the base in both years, so their absence does not read as decline. The base is a membership list, and the plan should state who is in it.

The reason to plan the two separately is that they fail differently and are fixed differently. Comp growth is a demand claim with history to test it against; non-comp is an investment outcome riding on ramp-up assumptions that have no history at all. When a blended number misses, the first question — was it the core or the openings? — cannot be answered from the plan. When the lines are separate, a comp miss points at the growth view and the trading calendar, while a non-comp miss points at a specific door’s ramp-up curve, and each can be reforecast without disturbing the other. Blended plans also age badly: opening volume can cover a decelerating core for as long as openings continue, and the plan is the instrument that should have surfaced it.

Phasing the plan across a six-month season

The same illustrative six-month season used in the receipt-flow and markdown-plan guides, in thousands of retail dollars. Last year the season took 1,400; the reconciled plan is 1,500 — growth of a little over 7%. The middle row shows what mechanical phasing would produce: last year’s shape, scaled to the new total. The plan row deliberately departs from it.

Three departures carry reasons, which is the test every departure has to pass. Month one is planned at 180 against a mechanical 165, because last year’s opening month was depressed by a floor set that arrived late — a distortion, not demand — and the restated shape corrects it. Month four is planned at 340 against 360, because last year’s peak included a one-off event that is not on this year’s calendar. Month six is planned at 180 against 150, because the exit month carries the season’s planned clearance — the markdown plan for this same illustrative season books 70 of its 145 there, and clearance sells units. The balancing comes out of the surrounding months, so the season still sums to 1,500 — a phasing change moves weight; it never mints sales.

The percent-of-season row is the shape in one line, and it is what survives into next year’s planning as the starting shape — which is exactly why the distortions have to be corrected now. A shape carried forward uncorrected is not a phasing; it is last year’s accidents, compounding.

What the sales plan feeds

The handoff runs through the stock identity. A cover target on the phased sales ahead sets the planned closing stock for each period — the EOP that becomes the next period’s BOP. With planned sales and planned markdowns in place, receipts fall out of the open-to-buy identity: planned receipts = planned sales + planned markdowns + planned EOP − planned BOP. Those receipts become dated deliveries in the receipt-flow plan, land as intake, and the whole structure reconciles weekly in the WSSI.

The sales plan is also the denominator of the season’s most-used control: forward cover divides stock by the planned forward sales, so every cover figure — and every markdown and replenishment trigger reading it — is only as honest as the phased sales beneath it. A stale sales plan does not merely mis-state sales; it silently corrupts every trigger built on cover. That is the practical reason the plan has to be reforecast on a cadence rather than admired: the downstream controls read it every week, whether or not anyone has updated it.

When to re-plan in-season

Two questions, agreed pre-season: on what cadence is the plan reforecast, and what is a reforecast allowed to change. A common working answer is monthly, aligned to the open-to-buy cycle, with a defined trigger for exceptional events — because that is the cadence at which a changed sales view can still move receipts. Weekly, the WSSI reads actuals against the plan and trades within it; monthly, the forward phasing is re-solved from what the season has learned.

The distinction to defend is between the forward view and the season total. Reforecasting the forward phasing is routine hygiene; moving the season total is a decision with an owner — because the total reprices everything downstream at once: receipts, intake commitments, the markdown budget, the margin the season is promising. One bad week is information to hold; a consistent story across several weeks at the same lines is a trend to re-plan. The read-out of which is which comes from the weekly grid — see how to read a WSSI — where a phasing miss and a level miss look different: a phasing miss self-corrects across adjacent weeks, while a level miss repeats.

Six ways a sales plan fails

• ✓The sales plan is the root: stock targets, receipts, intake, and forward cover are all derived from it, so an error here is executed faithfully everywhere downstream.
• ✓Build it twice — top-down from a restated last year times a defensible growth view, bottom-up from category, channel, and door lines with their own bases — and reconcile by locating the gap, never by scaling it away.
• ✓Keep comp and non-comp on separate lines: one is a demand claim testable against history, the other an investment outcome riding on ramp-up assumptions.
• ✓Phase on last year’s shape restated and deliberately amended — every departure from the inherited shape carries a stated reason, and the season still sums to its total.
• ✓Plan at the grain you can act on — category by channel for most brands — and no finer; detail below the decision level is noise with a maintenance cost.
• ✓Agree the re-plan cadence pre-season: forward phasing moves routinely, the season total moves only as an owned decision — never as the side effect of one bad week.

• How to set open-to-buy — the identity the sales plan feeds first →
• How to plan receipt flow — turning receipts into dated deliveries →
• How to build a markdown plan — the other line phased inside the sales plan →
• What is a WSSI? — the weekly grid the phased plan trades in →
• Comparable sales — the comp base, defined →
• Intake — the flow the sales plan requires →
• Forward cover — the control that reads the sales plan weekly →
• Aligning top-down and bottom-up planning on RetailNorthstar — the platform-side view →

Frequently asked questions

What is a sales plan in retail?

A sales plan is the pre-season statement of what a business intends to sell, by period, at the level it manages — typically category by channel, phased across the months and weeks of a season. It is the root of the merchandise plan: planned sales set the stock targets, the stock targets set receipts through open-to-buy, and receipts set intake phasing and forward cover. Every downstream inventory number is derived from it, which is why it is built and argued first.

What is the difference between top-down and bottom-up sales planning?

Top-down starts from the total: last year’s season restated onto this year’s calendar, times a growth view, giving a season number and a first-cut phasing. Bottom-up starts from the parts: category, channel, and door lines, each planned on its own basis — run-rate, analogue, or ramp-up curve — and summed. Top-down is fast and captures the ambition the business is committing to; bottom-up is slower and captures what the range and the doors can actually carry. A sales plan needs both, built independently, because each one catches what the other misses.

How do you reconcile a top-down and a bottom-up plan?

By locating the gap, not by distributing it. When the two builds disagree, trace the difference to specific categories, channels, or doors and settle each piece on its merits: the top-down may be carrying growth no line can produce, or a bottom-up line may be planned soft against its own history. Scaling every line by a common factor to force agreement destroys the information both builds contain — the reconciled plan should be one both the number’s owner and the line owners can defend.

What are comp sales, and why are they planned separately?

Comparable (comp) sales are the sales from doors and channels that were trading in both periods being compared, so growth reflects the existing business rather than the addition of new locations. Planners keep comp and non-comp on separate lines because they are different kinds of claim: comp growth says the same assets will sell more and can be tested against history; non-comp says a new door will follow an assumed ramp-up curve, which has no history at all. Blended, each error can hide behind the other.

How do you phase a sales plan across a season?

Start from last year’s weekly or monthly shape, restated onto this year’s calendar — holidays moved, one-off events stripped, known distortions such as a late floor set corrected — and then amend it deliberately for what this year changes: the events planned, the intake timing intended, the clearance the exit will carry. The season total is spread across that shape, by month first and into weeks where the WSSI trades. What matters is that every difference from last year’s shape has a stated reason; an inherited distortion is a planned error.

How does the sales plan feed open-to-buy?

Through the stock identity. Planned sales and planned markdowns, together with a target end-of-period stock (usually set as forward cover on the sales ahead), determine the receipts each period needs: planned receipts = planned sales + planned markdowns + planned EOP − planned BOP. Change the sales plan and the receipt requirement moves with it — which is the point. A sales plan that is not connected to OTB is a hope; the OTB is what turns it into a buying constraint.

When should you re-plan sales in-season?

On a pre-agreed cadence — commonly monthly, aligned to the OTB cycle — plus a defined trigger for exceptional events, rather than whenever a week disappoints. A reforecast should move the forward phasing and the forward view first; the season total should change only as a deliberate decision with an owner, because every downstream number — receipts, intake, cover, markdown budget — reprices when it does. One bad week is information; three consecutive weeks telling the same story at the same lines is usually a trend worth re-planning.