What does the term 'turn rate' signify in merchandising?

The term 'turn rate' in merchandising refers to the number of times average inventory is sold and replaced over a specific period, typically a year. This metric is essential as it helps retailers evaluate how effectively they are managing their inventory. A higher turn rate indicates that products are selling quickly, which can reduce holding costs and minimize the risk of markdowns on unsold merchandise.

Monitoring the turn rate enables businesses to make informed decisions regarding purchasing, pricing, and promotions to optimize their inventory levels. For instance, a retailer with a strong turn rate may be able to negotiate better terms from suppliers due to consistent sales and lower carrying costs. Therefore, understanding and analyzing turn rate is critical for retailers seeking to enhance their overall sales performance and inventory management.