4 Questions to Ask Yourself When Planning Your 2025 Inventory

With it being the start of the year, many small business owners and retailers are planning their inventory for 2025. Whether you’re running a boutique, an online shop, or a local retail store, your inventory strategy can make or break your year.

If you’ve been putting off your spreadsheeting and budgeting until now, join the club! I often didn't get around to intensive inventory planning until after the crazy holiday season.

But here’s the good news—planning your inventory doesn’t need to be overwhelming. Pulling together your annual sales reports and looking for trends is always a great first step, but to really set yourself up for success, it’s critical to dig deeper into your data and ask smart, guiding questions.

While every business will have different goals, here are four key questions that can help you craft an intentional and effective inventory strategy for 2025.

1. Where Could Margins Be Improved?

Your profit margins are one of the most important factors to consider when planning your inventory.

Ask yourself this: Are there areas where you can improve your margins next year?

• Evaluate your suppliers: Are your current manufacturers and distributors giving you competitive rates? It might be time to shop around or renegotiate contracts.
• Bring production in-house: For certain products, handling manufacturing internally could save on outsourcing costs and give you more control over quality.
• Reimagine product materials: Switching to more cost-effective (but high-quality) materials may allow you to reduce production costs without sacrificing value.

By focusing on improving profit margins for key products, you not only pad your bottom line but also create more space for investing in unique or experimental SKUs.

2. Which SKUs Need More Units?

There’s no worse feeling than repeatedly selling out of a customer-favorite product and realizing you could’ve sold even more if you had the inventory. While sellouts can create buzz, they can also result in lost revenue and frustrated customers.

Here's two ways to approach quantity increases:

• Review your sales for the year and identify products that consistently sold out.
• Dig deeper into metrics like sales velocity—how quickly was inventory moving?

And don’t just stop at top sellers.

• Can you estimate lost revenue from sellouts?
• Are seasonal items worth stocking in greater quantities next year?
• Are there complementary items you can introduce alongside these bestsellers?

Prioritizing these high-performance SKUs ensures you’re meeting demand and maximizing sales, keeping customers satisfied and loyal.

3. Which Categories Grew and Could Expand?

Over time, your product mix will naturally evolve. Some categories may plateau, while others will show clear signs of growth. Identifying those growth areas gives you valuable clues on where to focus efforts in 2025.

Here’s how to spot and capitalize on growth trends:

• Analyze category performance: Did certain categories show consistent increases in sales or higher average order values?
• Consider customer feedback: Have customers been asking for more SKUs in a specific category?
• Curate new additions intentionally: For growing categories, expand your selection with complementary products that align with your brand’s vision. For example, if your handmade soap collection has been flying off the shelves, consider expanding into related products like bath salts or aromatherapy candles.

4. Which Products Could Use Complementary Items?

Increasing basket size (the number of items each customer purchases) is a smart way to boost revenue without necessarily increasing foot traffic or web visitors. One way to do this is by offering complementary products that enhance the customer’s experience.

Ask yourself:

• Do existing products have natural pairings? A planner might pair nicely with a set of high-quality pens, while a coffee mug is the perfect companion for specialty beans.
• Are there bundles you could introduce? Bundling complementary items can provide extra value for your customers and increase your average order value.
• How can you lean on merchandising? Packaging complementary products together on displays or online product pages makes purchasing decisions easier for your customers.

These cross-selling opportunities create a win-win for both you and your customers—they get more value, while your business enjoys higher revenue per transaction.

Take Control of Your 2025 Buying Strategy

Crafting a strong inventory strategy might seem like a daunting task, but asking the right questions goes a long way in creating a roadmap for success.

By focusing on margins, stocking the right SKUs, expanding growing categories, and offering complementary products, you’re setting yourself up to make smart, data-driven decisions.

At the end of the day, what works best for your business will depend on your unique goals, challenges, and values. Remember, the choices you make now lay the foundation for a successful year.