What allocation is
In retail, allocation is the process of distributing inventory from distribution centers, and sometimes straight from vendors, to stores and channels. Where the assortment plan says which products each store cluster carries, allocation says how many units of each product each store receives, in which sizes, and when.
It happens in three moments:
- Initial allocation: the first delivery of a new product, before or at launch, usually with part of the buy held back in the distribution center.
- In-season allocation: follow-up deliveries from the held-back stock, sent to the stores where the product is actually selling.
- Transfers: moving stock between stores, or back to a warehouse, to fix imbalances that allocation could not prevent.
In fashion and footwear, allocation is mostly about sizes. A store can hold plenty of a style in total and still lose sales because its core sizes are gone. A size run is broken when key sizes are missing. Customers who need those sizes walk away, and the sizes that remain usually end up marked down.
How allocators work today
An allocator typically looks after a set of categories across a few hundred stores. For a new product they set store grades (A, B and C stores by sales volume, for example), decide how much to send up front and how much to hold back, choose size curves and packs, and release the allocation. In season they watch sell-through and stock by store, send follow-up allocations and arrange transfers.
The tools are the allocation module of the merchandising system plus spreadsheets for the exceptions. Size curves are often set at category level from historical sales, and prepacks (cartons with a fixed mix of sizes) are bought from vendors in one or two configurations. Packs keep handling costs down, but they force the same size mix on stores whose customers differ.
Reporting adds delay. Store-level stock by size is usually reviewed in a weekly report, so a broken size run is often found after the best stores have already sold through their core sizes. By then the sale is lost, and the fix is a transfer that arrives late or a markdown on the sizes left behind.
Initial allocation: how much to send and how much to hold back
The first decision for a new product is how much of the buy to send at launch. Send too much and stock sits in stores where the product does not sell, to be transferred or marked down later. Send too little and the best stores run out in the first weeks, before the warehouse can react. Most allocators send an opening quantity and hold the rest back in the distribution center, then release it as sales come in.
The opening quantity usually covers the presentation minimum (enough to show a full size run on the floor) plus a few weeks of expected sales, with more for stores graded A and less for C stores. The hold-back is larger for new and untested products and smaller for proven repeats, where the forecast is more reliable. A product with a short selling window, such as a holiday style, may be sent almost in full, because there is no time to react.
Store grades are a blunt tool. Two stores with the same volume can sell very different sizes, colors and price points. Allocating by store and by size, from each store’s own sales and the product’s early results, gets closer to what each store will sell, at the cost of more calculation than a person can do by hand across hundreds of stores.
Size curves and packs: a worked example
A size curve is the share of a style’s sales that each size takes. It is built from sales history, ideally for the same type of product in the same cluster, and corrected for periods when a size was out of stock (otherwise a size that sold out early looks less popular than it is).
| Size | 6 | 6.5 | 7 | 7.5 | 8 | 8.5 | 9 |
|---|---|---|---|---|---|---|---|
| Share of sales | 8% | 12% | 18% | 20% | 18% | 14% | 10% |
| Pairs in a 12-pair pack | 1 | 2 | 2 | 2 | 2 | 2 | 1 |
Twelve pairs cannot match the curve exactly. Size 7.5 takes 20% of sales but gets 2 pairs in 12 (17%), while size 6.5 takes 12% and also gets 2 pairs. A store that receives only this pack will break size 7.5 first and sit on 6.5. Across a few hundred stores with different customers, those small mismatches add up to the broken runs and end-of-season markdowns allocators spend their week chasing.
Need-based allocation: a worked example
Most in-season allocation is need-based: each store gets what it needs to reach a target level of cover, given what it already holds and what is on the way.
Target stock = forecast weekly sales × target weeks of coverStore need = target stock − (on hand + in transit)
| Store | Forecast weekly sales | Target stock | On hand + in transit | Need | Packs sent |
|---|---|---|---|---|---|
| A | 10 | 40 | 24 | 16 | 1 |
| B | 4 | 16 | 5 | 11 | 1 |
| C | 2 | 8 | 12 | −4 | 0 |
Store A needs 16 pairs but packs come in 12s, so it gets one pack and ends just under its target. Store B needs 11 and gets 12. Store C holds 4 pairs more than it needs, so it gets nothing, and if store A is short in its core sizes, a transfer of those sizes from store C may beat waiting for the next delivery. Real allocation adds constraints to this arithmetic: the stock available in the warehouse, minimum presentation quantities, store capacity and the size curve of each store.
Measures allocators watch
- Weeks of cover: stock divided by the forecast weekly sales, by store and size.
- Sell-through: units sold as a share of units received, by store.
- Size integrity: the share of stores that still hold every core size of a style.
- Stock-to-sales: the store’s share of stock against its share of sales, to spot over- and under-allocated stores.
Definitions of these and related terms are in the retail planning glossary. Allocation also works closely with replenishment, which keeps continuing products in stock by reordering them as they sell.
How OODARIS runs allocation
In OODARIS, allocation is one of the ten capabilities the Agentic OS covers: packs, size curves and transfers, store by store. It is part of how OODARIS applies agentic AI to retail planning. On the agent roster, the allocation agent is the Inventory Optimizer, which works alongside the Replenishment Director.
- WatchesStock, sell-through and weeks of cover by store, warehouse and size.
- ProposesTransfers and safety-stock changes before a size run breaks.
- Approved byAllocation. The allocator approves each transfer and order.
- Writes backApproved transfer orders, to your ERP or warehouse system.
It plans across stores and warehouses at SKU and size level, sets safety stock from demand variance, and respects vendor lead times and minimum order quantities. It works with ERP and order management, warehouse management and supplier EDI feeds.
With OODARIS, breaks are caught door by door, and each one arrives with a pack change, a transfer plan and its commercial impact. What is written back is transfer orders and pack changes, to your ERP. The inputs come from the other decisions: the approved range by cluster, which allocation plans from, and the Demand Intelligence Agent’s approved forecast, which the plan, buy and allocation agents use.
By default, the person who owns the decision approves each change before anything is written back. Teams can also keep OODARIS read-only, or let it act on its own inside limits the decision’s owner sets; how it works describes the four levels. Allocation is one of the five capabilities available to new clients today.
Frequently asked questions
What is the difference between allocation and replenishment?
Allocation distributes a limited quantity of a product, often a seasonal one, across stores and sizes. Replenishment reorders continuing products as they sell, to keep them in stock.
What is a size curve?
A size curve is the share of a style’s sales that each size takes, built from sales history for similar products and stores. Allocators use it to decide how many units of each size to send and which packs to buy.
What is a broken size run?
A size run is broken when a store is missing key sizes of a style while it still holds others. Customers who need the missing sizes leave without buying, and the remaining sizes are often marked down at the end of the season.
What is the difference between push and pull allocation?
Push allocation sends stock to stores from a central plan, usually at launch, based on store grades and forecasts. Pull allocation sends stock in response to what each store actually sells, usually in season from held-back warehouse stock.
Does the allocation agent move stock on its own?
Not by default. The Inventory Optimizer proposes transfers and safety-stock changes, and the allocator approves each transfer and order before the approved transfer orders are written back to your ERP or warehouse system.