What does the term "turnover" refer to in a buying and merchandising context?

In the context of buying and merchandising, the term "turnover" specifically refers to the rate at which items are sold and replaced within a particular time frame. This metric is crucial for retailers as it indicates how efficiently inventory is being managed. A high turnover rate suggests that a retailer is effectively selling products and is able to restock quickly, which is essential for maintaining fresh merchandise and responding to consumer demand. It reflects the overall health of sales and inventory management within a business.

Higher turnover rates often signify strong consumer interest and can lead to increased profitability. Conversely, a low turnover rate may indicate overstocking, poor sales performance, or inefficiencies in the supply chain, which can tie up capital in unsold inventory. Understanding turnover helps businesses make informed decisions about purchasing, stock levels, and promotional strategies to optimize operations and improve financial outcomes.