Real Time Is The Future THE OLD MODEL OF BULK ADVANCE BUYING NEEDS TO MAKE WAY FOR AN AGILE AND ADJUSTABLE ONE. KAT E N I S H I M U RA
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he fashion industry has been flying blind when it comes to inventory “for a very, very long time.” That’s according to Ahmed Zaidi, co-founder of omnichannel management platform Stealth and the recently launched collaborative planning system Hyran Technologies. The fashion and supply chain researcher said brands have been banking on an outdated blend of historical sell-through data and trend predictions to pinpoint the products they believe shoppers will want. But in an era where influences and lifestyles are constantly shifting, the old formula for forecasting is feeling decidedly stale. The consumer was once driven by newspaper ads and glossy magazines, but today, social media anoints new tastemakers daily. Rapidly shifting trends are matched by constant changes in consumer desire. Despite these new consumption habits, brands are still laser focused on driving down costs, “and not on mitigating uncertainty and the risk of not being able to sell their inventory once the product arrives,” Zaidi said. These challenges have become all too real in a post-pandemic retail landscape. With some categories, like food, companies can predict the frequency of consumer transactions with some certainty based on their previous behavior. “You’re going to buy milk
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at a fairly frequent, consistent basis, and very rarely are you going to deviate from that,” Zaidi explained. But discretionary spending on goods like apparel sees much more volatility. Consumers will put such purchases on the back burner when they start to feel financially strained or when they experience lifestyle changes. “Whether they buy a T-shirt or not is completely unknowable, because it’s an emotive, impulsive decision,” he said. “Building a forecasting model around impulsive decisions is a disaster.” Stakeholders are aware that the forecasting methods they’ve been employing for decades are faulty, but in the absence of alternatives, they’ve stuck to the same M.O. “One of the things that I’ve been hearing from industry veterans more recently is that forecasting doesn’t work, and it’s never worked,” Zaidi said. “We’ve just created so many buffers around our forecasts that it looks like the system works.” At the end of a season that may have started off with favorable margins, many companies are recording record low EBITDA, an indicator that “there’s a lot of inefficiency there.” Margin-busting discounts and promotions have become essential to moving product off store shelves. While the sector has come to recognize that traditional inventory planning methods are falling short, Zaidi said its current under-