The M1 Category is best understood as a department (some POS systems also use the term “group”). This is the top level of our hierarchy, and it contains parent classes that are in a similar category.

The M1 Parent Class is what a customer comes in for and it represents a standalone profit center. This is the level at which we plan our open-to-buy.

Types of Classes and Their Purpose:

1. Open to Buy (OTB) Class 🔹 Core Inventory Planning Class

• Purpose: The main class type used for inventory and OTB forecasting.
• Reports on:
  ✅ Data is captured and recorded
  ✅ Forecasted sales
  ✅ Forecasted markdowns
  ✅ Forecasted inventory

💡 This is your primary tool for managing purchasing and sales expectations.

2. Planned No Open to Buy (PNOTB) Class 🔹 For Non-Owned Merchandise & Services

• Purpose: Tracks items the retailer does not own, such as trunk show merchandise, special orders, and paid services.
• Reports on:
  ✅ Data is captured and recorded
  ✅ Forecasted sales
  ✅ Forecasted markdowns
  ❌Forecasted inventory
  
  

💡 Useful for tracking revenue streams that don’t require inventory investment.

3. No Open to Buy (NOTB) Class 🔹 For Tracking Infrequent Activity

• Purpose: Captures data for classes with low or irregular sales activity but does not provide forecasts.
• Reports on:
  ✅ Data is captured and recorded
  ❌ Forecasted sales
  ❌ Forecasted markdowns
  ❌ Forecasted inventory

💡 Use this for categories you want to monitor but don’t actively plan for.

4. Distressed (D) Class 🔹 For Liquidation & Clearance

• Purpose: Tracks merchandise that is being liquidated or is obsolete (e.g., old stock, discontinued items).
• Reports on:
  ✅ Data is captured and recorded
  ❌ Forecasted sales
  ❌ Forecasted markdowns
  ❌ Forecasted inventory

💡 Keeps liquidation items separate from core planning.

5. History (H) Class 🔹 For Reference Data on Split or Closed Classes

• Purpose: Maintains historical data when a class is split or discontinued.
• Reports on:
  ✅ Data is captured and recorded
  ❌ Forecasted sales
  ❌ Forecasted markdowns
  ❌ Forecasted inventory

💡 Helpful for tracking trends over time, even if the class is no longer active.

M1 Child (C) Class

A child class is typically a subclass which lives underneath a OTB or a PNOTB class.  The intent is to gain a deeper understanding of the subclass behavior with the intent of growing into an OTB or PNOTB class at a later date.

• Purpose: Tracks detailed subcategories that may grow into full OTB or PNOTB classes.
• Reports on:
  ✅ Data is captured and recorded at the child level
  ❌ Forecasted sales
  ❌ Forecasted markdowns
  ❌ No inventory forecasts

💡 Great for identifying emerging trends within a broader category.

*Vendors, styles, colors, and sizes/SKUs don't usually make good parent or child classes. There are exceptions, but these sub-categories are not often standalone profit centers, or crucial contributors to that profit center’s overall success. Pink Polo shirts, for instance, are unlikely to be of fundamental importance to a casual shirt class’s success or failure.