FashionRetail Trends

Fashion retailers need better inventory management

2 min read

Every crisis brings opportunities, and the recent pandemic is causing many in the fashion industry to think there must be a better way to sell clothes.

After months of closed stores, many retailers are now left holding seasonal inventory that is difficult to sell at full price.  The problem is particularly acute for fashion retailers, as their trend-led merchandise has a very short shelf life.

Spending habits are also changing. These days, consumers are more likely to make purchases during the season, and not before it. And they are also increasingly conscious of their own environmental footprint as well as those of the brands they buy, which makes them more likely to purchase fewer, yet longer-lasting pieces.

If fashion retailers want to reduce their traditional dependence on clearance sales to shift slow-moving stock, they need to work with the manufacturers to realign the seasons and make their supply chains demand-driven and more responsive.

By reducing the amount of stock in warehouses and storerooms, retailers improve their cash flow and reduce the risk of being left holding large quantities of stock when the seasons change – or when a health crisis forces them to close their stores.

Of course, all mass-market fashion brands have been trying to do this for years, reducing lot sizes and making smaller, more frequent shipments to stores.

Zara, the Spanish fast fashion chain, is a master of this art and the contrast between it  and its peers is stark. It uses nearshore sourcing and can introduce new designs twice a week. By contrast, H&M, its Swedish rival, forecasts demand many months in advance and purchases high volumes of stock in offshore countries.

Modern technology can help retailers move to a more responsive and responsible business model, in which procurement, production and distribution are demand-driven rather than determined by forecasts, inventory levels are optimized, and waste and markdowns are reduced.

Visit our website to find out how the Openbravo Order Management System provides a single, global view of all available inventory, thus allowing retailers to manage, sell and fulfill merchandise intelligently across all in-store and digital touchpoints.