What Is a Week Worth?
How Reducing WOS Unlocks Profitability

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Your Inventory is Bleeding Cash. Here’s How to Stop It.

Retailers unknowingly trap millions of dollars in excess inventory. It’s not just a balance sheet issue—it’s actively draining profits, slowing growth, and limiting your ability to invest in better-margin opportunities.

What if you could free up $1M+ in working capital, just by optimizing Weeks of Supply?

The Financial Impact of Reducing WOS

Reducing WOS isn’t just about efficiency, it’s about unlocking cash flow that can be reinvested to drive profitability.

For every $10M in annual revenue, reducing WOS by just 1 week frees up $58K-$231K in working capital.

Initiatives like RFID technologies, customer discovery and analytics platforms, new stores, supply chain digitization and automation, or sustainable practices suddenly become financially possible.

These types of investments are increasingly becoming a competitive necessity, and they’re all possible when you stop overbuying and start optimizing.

Here’s a breakdown of how much capital is freed up per week of WOS reduction:

Annual Sales Revenue
Annual Inventory Costs
1-Week WOS Reduction Savings
$10M - $40M
$3M-$12M
$58K-$231K
$40M - $100M
$12M-$30M
$231K-$580K
$100M - $250M
$30M-$75M
$580K-$1.4M
$250M - $400M
$75M-$120M
$1.4M-$2.3M
*assuming inventory cost ~70% IMU before discounts

What This Means:

Even reducing WOS by a single week can unlock hundreds of thousands—or even millions—in free cash flow that can be reinvested into high-margin growth.

Calculate how much cash you could free up by reducing WOS by a single week
WOS Savings Calculator

WOS Calculator

Estimated Inventory Cost: $0

One Week WOS Savings: $0

Strategic Shift: Focus on Profitability, Not Just Revenue

Without a centralized, real-time approach to planning, millions of dollars will continue to be tied up in surplus inventory and brands will face two major risks:

🔺 Overbuying: Excess inventory & markdowns

Too much stock locks up working capital, increases storage costs, and leads to margin-eroding markdowns.

The average retailer is overbought by

~20-30% on roughly 40-50% of their inventory.

According to McKinsey, markdowns from overbuying reduce gross margins by 4-10% annually.

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🔻 Underbuying: Missed sales & lost customers

Too much stock locks up working capital, increases storage costs, and leads to margin-eroding markdowns.

Retailers are underbought by

~15-20% on 20-30% of their key items or high-velocity SKUs.

IHL Group estimates that stockouts cost global retailers over $1T annually in missed revenue.

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Carrying 10-20 weeks of supply when only 8-12 weeks are needed goes beyond the balance sheet, it’s a direct hit to profitability.

From Revenue Focus to Efficiency Mindset

Every extra week of inventory inflates holding costs, increases markdown exposure, and slows inventory turnover, driving down Gross Margin Return on Investment (GMROI).

Rather than focusing solely on revenue, brands must prioritize inventory efficiency. A retailer with a GMROI of 2.5, meaning they generate $2.50 in gross margin for every $1 spent on inventory, can unlock significant cash flow by reducing excess WOS.

By optimizing inventory planning, brands can:

  • Reduce carrying costs and markdowns
  • Improve inventory turnover, generating gross margin faster
  • Shift focus from selling more to selling more efficiently

Instead of tying up cash in slow-moving inventory, brands that optimize WOS can reinvest in:

  • High-margin, best-selling SKUs to improve sell-through
  • Customer acquisition and retention strategies to drive full-price sales
  • Growth initiatives such as expansion, product innovation, or digital transformation

Optimizing WOS isn’t just about inventory efficiency, it’s a direct path to unlocking capital, increasing GMROI, and driving long-term profitability.

Why Retail Leaders Must Prioritize Profitability Over Growth

Optimizing WOS isn’t just about inventory efficiency, it’s a direct path to unlocking capital, increasing GMROI, and driving long-term profitability.

Unlocking Capital Through Smarter Inventory Planning

A centralized inventory planning solution helps brands optimize WOS and turn inventory from a liability into an asset. And that’s where Toolio comes in. We help unify:

Merchandise Planning

Align inventory with sales forecasts
Open-to-buy management, multiplan reconciliation, scenario modeling & snapshotting, and forecast & actual reporting

Assortment Planning

Buy the right SKUs in the right quantities
Hindsighting & rationalization, item demand planning, line building, and automated PO planning

Inventory Allocation

Balance stock across stores, warehouses, and channels
Forward looking SKUs, automated allocations, advanced rulesets, and pre-allocations

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Here’s what that looks like:

Retail Sector
WOS Retail Benchmark
Optimized WOS with Toolio
Fashion & Apparel
-Footwear
-Jewelry
8-12 weeks
8-13 weeks
20-30 weeks
6-8 weeks; quickly responds to trends, minimizes markdowns
6–8 weeks; quickly responds to trends, minimizes markdowns
15–20 weeks; balances variety with inventory costs
Electronics
4-8 weeks
4-6 weeks; fast inventory rotation, avoids obsolescence
Home Goods & Furniture
10-16 weeks
10-12 weeks; balances availability with reduced storage costs
Specialty Retail
6-14 weeks
8-10 weeks; closely matches niche demand, agile replenishment
Health & Beauty
6-10 weeks
6-8 weeks; frequent replenishments, tightly controlled inventory

Sources: Enhanced Retail Solutions, NetStock, Lark, Uphance

Instead of relying on gut instinct or disconnected spreadsheets, Toolio enables brands to:

  • Predict demand more accurately with AI-driven forecasting
  • Balance inventory across channels to prevent over- or under-stocking
  • Optimize SKU count to improve efficiency without sacrificing sales

The result? Lower WOS, higher GMROI, and millions unlocked in working capital.

Case Study

How AKA Brands Unlocked $5M by Reducing WOS

Challenge: Too Many SKUs, Too Much Inventory

AKA Brands, a fast-growing fashion portfolio, struggled with fragmented inventory planning across Excel, Inventory Planner, and Airtable. This lack of transparency led to overbuying, slow turnover, and inefficient SKU management.

Reduced SKU count by

50-75%

while maintaining sales

Cut WOS by

5-10 weeks

across multiple categories

Unlocked

$5M

in cost savings & efficiency gains

The Shift: Data-Driven Inventory Decisions for Profitability

AKA Brands replaced guesswork with data-backed buying decisions, aligning inventory levels with real demand. The result? Higher profitability and a stronger bottom line.

Maggie Barclay

Stacey Schriefer

Vice President Inventory Planning

“Toolio was instrumental in showing our merchants that they could have 50-75% less SKU count and do the same amount of sales. We expect $5M in cost savings and efficiency gains.”

What’s at Stake?

Reducing WOS isn’t just an operational fix, it’s a strategic move to unlock cash flow and drive long-term profitability. Brands that rely on disconnected planning will continue tying up cash in slow-moving inventory. Those that shift from chasing revenue to maximizing profitability will build a more agile, resilient, and profitable business.

Inaction comes with a hidden price tag: lost opportunity cost. Retail has changed. The old “buy big, sell fast” approach has been replaced by precision, agility, and data-driven efficiency. Brands that succeed today are those that act proactively, not reactively.

That inertia may already be costing you millions. It’s time to modernize your planning and unlock cash flow that’s already in your system, just trapped in excess stock. The longer you wait, the more profit quietly slips through your hands.

See Toolio In Action

The best way to understand what Toolio could do for you is to see for yourself. Get started with our team today!