Inventory management is crucial in both bricks-and-mortar (B&M) and e-commerce fashion retail. Effective inventory management ensures that businesses have the right products in the right quantities at the right time, minimising costs, optimising sales and improving customer satisfaction. In the fashion industry, where trends change rapidly and seasonal fluctuations occur, inventory management becomes even more critical.
In B&M fashion retail, inventory management helps to prevent overstocking or understocking. Overstocking ties up capital, leads to higher carrying costs and increases the risk of products becoming outdated or obsolete. On the other hand, understocking results in missed sales opportunities and dissatisfied customers. B&M retailers employ various strategies like demand forecasting, sales data analysis and effective replenishment systems to manage their inventory efficiently.
| Matching supply with present and future demand relies heavily on vast volumes of legacy data. However, the introduction of innovative technologies is revolutionising the way the industry operates, offering a glimmer of hope for improved efficiency and sustainability. |
In e-commerce fashion retail, inventory management plays a crucial role in ensuring smooth order fulfilment, minimising stockouts and preventing overselling. E-tailers face unique challenges such as managing inventory across multiple online platforms, coordinating with third-party logistics providers and dealing with high return rates. Effective inventory management in e-commerce requires real-time visibility, centralised control and automation to keep up with the dynamic nature of online shopping.
Technology companies play a significant role in assisting both e-tailers and B&M stores with their inventory management processes. Here are some ways through which tech companies support these businesses:
Inventory management software: Tech companies offer inventory management software solutions that provide real-time visibility into stock levels, track sales data, automate reordering processes and generate reports for analysis. These software systems help businesses optimise inventory levels and reduce stockouts or overstocks.
Demand forecasting: Advanced algorithms and machine learning techniques are employed to forecast demand accurately. By analysing historical data, market trends and customer behaviour, tech companies help e-tailers and B&M retailers predict future demand, enabling them to optimise their inventory levels and plan for seasonal fluctuations.
Integration with e-commerce platforms: Tech companies develop integrations that allow seamless synchronisation between inventory management systems and e-commerce platforms. This integration ensures that inventory levels are automatically updated across all online channels, preventing overselling and improving order accuracy.
Warehouse Management Systems (WMS): Tech companies offer WMS solutions that streamline inventory operations within warehouses and distribution centres. These systems optimise picking, packing and shipping processes, reducing errors and improving overall efficiency.
RFID and barcode technologies: Tech companies provide RFID and barcode solutions that enable accurate tracking and monitoring of inventory. These technologies help businesses quickly locate products, prevent theft and improve inventory accuracy.
Data analytics: Tech companies assist e-tailers and B&M retailers in analysing sales data, identifying trends and gaining insights into customer preferences. These insights enable businesses to make data-driven decisions regarding inventory management, pricing and product assortment.
Optimising the Fashion Retail Supply Chain with Retail Tech
In the B2B fashion industry, the inefficiency of the retail system due to overproduction and wastage of existing inventory poses a significant challenge. Matching supply with present and future demand relies heavily on vast volumes of legacy data. However, the introduction of innovative technologies is revolutionising the way the industry operates, offering a glimmer of hope for improved efficiency and sustainability.
Retail tech, alongside sustainable sourcing and alternative materials, is emerging as a game-changer. By leveraging technology, fashion businesses can address core problems during the buying and merchandising phase, mitigating issues such as overbuying and overstocking. These detrimental practices perpetuate a cycle of excess inventory being sold at heavily discounted prices before eventually ending up in landfills or being incinerated.
Here’s a closer look at how this transformative journey unfolds:
- Precision in Inventory Placement
No more guesswork when it comes to dispatching inventory to various warehouses and then to retail stores. By implementing regional distribution strategies through technologies, businesses can optimise the allocation of inventory based on regional demand. This approach not only reduces shipment time but also contributes to a more sustainable lifestyle by curbing fuel consumption and minimising carbon footprints. Moreover, enhanced visibility of in-stock inventory leads to higher conversion rates on marketplaces, faster deliveries and lower return rates.
- Seamlessly Bridging Offline and Online
Maximising the utilisation of designated online inventory can be a challenge. Often, unforeseen sales patterns leave retailers and brands with excess unsold stock. However, modern retail tech solutions bridge the gap by enabling the exposure of offline inventory through online sales channels. This comprehensive approach ensures greater visibility and prevents any inventory from being left behind.
For example, Increff’s O2O (Online-to-Offline) is a cutting-edge store fulfilment solution that seamlessly integrates online and offline inventory. By exposing store inventory online, it establishes an efficient omnichannel fulfilment ecosystem. The system automatically routes and splits orders to the closest store location and allows manual store hopping if the item is not available at the initial store, ensuring fulfilment from the nearest possible location.
- Optimising In-Season Inventory Distribution
Even with accurate pre-season demand forecasting, certain locations may experience higher demand for specific products during in-season, while those items may be available elsewhere. To address this, retail technology comes to the rescue. Through inter-store transfer capabilities, inventory can be seamlessly moved between different store locations. This approach optimises inventory exposure and boosts sales performance by redistributing stock from low-performing to high-performing stores.
Persistent inventory challenges in fashion retail can be solved with technology
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- Intelligent Discounting for Effective Sales
Liquidating excess inventory after the season’s end is not only financially burdensome for retailers and brands but also contributes to environmental pollution through landfill waste. However, with the aid of a markdown optimisation tool, businesses can strategically offer appropriate discounts at the right time to maintain high sales momentum. By leveraging advanced data-driven algorithms, this tool analyses vast amounts of data to determine each product’s optimal discount price, maximising sell-through and minimising sales loss due to ineffective pricing strategies.
Demand Forecasting is a proven way to minimise inventories
In today’s fashion landscape, consumers are increasingly drawn to current trends while also seeking diverse and sustainable offerings from brands and retailers. This disruption has prompted fashion retailers to strive for a delicate balance between supply and demand, producing only those products that will resonate with consumers. Thanks to advancements in AI/ML and the influence of social media, the concept of predicting future consumer fashion preferences has become a viable solution.
However, it’s essential to acknowledge that the fashion industry has been grappling with inventory issues and overstocking for some time now. The first obstacle in finding and implementing solutions for inventory woes lies in the complex nature of supply chain management. Mass-market retail and fast fashion often involve low-cost goods sourced from various offshore countries, resulting in large quantities of stock and an intricate supply chain. Any disruption in this chain, such as a global pandemic, can throw retailers and wholesalers off schedule.
Another significant issue stems from overbuying and overproduction. Brands and retailers frequently purchase excessive inventory despite the rapidly changing trends and consumer preferences. This practice leads to substantial amount of excess stock that eventually goes out of style.
Moreover, many brands heavily rely on past sales data to make future decisions, making it challenging to accurately gauge product demand. For example, if a product sells out in one season, it creates unreliable sales data for the following year.
While discussions on these challenges have been ongoing, progress has been picking pace and precise trend forecasting to tackle inventory concerns is no more a complex task. In this dynamic landscape, technology and digitalisation play a crucial role in helping retailers and manufacturers adapt to fluctuating minimum order quantities (MOQs). The pandemic has highlighted the need for digital transformation, including bricks-and-mortar stores, online showrooms, pre-season purchasing, on-demand manufacturing, RFID tracking, drop shipping marketplaces and mobile shopping applications. Amongst these advancements, trend forecasting holds significant potential.
By leveraging AI-based trend forecasting, fashion brands and retailers can gain insights into evolving consumer behaviour and demand volatility. This knowledge allows them to adapt collection planning, mitigate excess inventory and optimise supply chains and sales. Digital transformation, including trend forecasting, empowers the industry to navigate these challenges and better prepare for the future.
Moreover, AI-forecasting tools can help retailers meet competitive pricing as well. Ganesh Subramanian, Founder, Stylumia, opines, “Why match a product’s price if the competitor’s demand is low? Conversely, high demand might necessitate a different course of action. The challenge lies in accessing this private demand data. If we could accurately match products while also understanding competitor demand, it would revolutionise decision-making in retail.”
Ganesh further elaborated that the competitive pricing strategy can be simplified into a straightforward framework for decision making. This framework consists of four quadrants, defined by two axes: competitive intensity and price sensitivity. However, a critical question arises: how can one gauge the competitive intensity of a product or similar products without understanding demand? Most existing solutions capture readily available competition data, providing insights into supply intensity but leaving demand intensity unaddressed.
“This is where Stylumia’s demand sensing engine comes into play. It not only captures the supply of competition but also gauges the demand of the market at the SKU level. This unique capability allows you to leverage the framework to its fullest potential, enabling strategic actions that are informed by both supply and demand dynamics,” asserted Ganesh.
Another demand forecasting company BluePi has secured an Indian patent for a System and Method for Forecasting Demand for retail organisations in India. BluePi’s proprietary methodology of Demand Planning would add a minimum of 5 percent to any organisation’s bottom line by finding the right amount of inventory to carry to ensure both stock-outs and excess inventory are minimised. Its supply chain solutions are driven by AI algorithms perfected for different retail formats like multi-format, grocery, apparel among others.
Consulting firms like Protiviti have also embarked on a journey to scale up the ideas of demand forecasting and clearly believe initial demand forecasting can ease the life of Indian retailers and save huge bucks down the financial stream.
Leveraging software solutions for seamlessly integrating e-commerce and inventory management in fashion brands
One of the most significant challenges faced by the traditional fashion brands is effectively managing their inventories while keeping up with the ever-evolving demands of the digital consumer. To address these complexities, modern fashion brands are turning to software solutions that seamlessly integrate e-commerce platforms and provide comprehensive inventory management capabilities.
Vinculum – an omnichannel software provider – is helping D2C brands like Chumbak to integrate inventory management suite onto its e-commerce platform. Similarly, Unicommerce is assisting brands like Iconic Fashion in their endeavours of seamlessly managing online inventories.
One of the primary benefits of integrating an e-commerce suite with inventory management software is gaining real-time visibility into stock levels. This synchronisation ensures that fashion brands have an accurate picture of their inventory across all sales channels, be it bricks-and-mortar stores or online platforms. With real-time data, brands can make informed decisions about restocking, inventory allocation and promotions, preventing stockouts and overstocking scenarios that can lead to profit loss.
Integrating e-commerce with inventory management software also streamlines the order fulfilment process.
Imagine a scenario here – a customer places an order online.How will it be processed? The software gets the order signal and it automatically updates the inventory count in real-time. This ensures that customers can only purchase available products, reducing the chances of having to cancel orders due to out-of-stock items. The system also facilitates quick and accurate order processing, allowing fashion brands to provide a seamless shopping experience to their customers.
RFID keeps brands and retailers ahead of the game
The consumers have high expectations when it comes to purchasing products. They desire the freedom to buy what they want, whenever and wherever they please, according to their preferences. Meeting this ever-evolving and unpredictable demand across various channels has become a crucial strategic focus for retailers in today’s market.
| Few Indian tech companies helping the fashion retailers and e-tailers in inventory management
There are several Indian tech companies that provide inventory management solutions and support for e-tailers in India. Zoho Inventory: Zoho Inventory offers a comprehensive inventory management software solution that helps e-tailers streamline their operations, track stock levels, automate reordering and integrate with various e-commerce platforms. Unicommerce: Unicommerce is a leading e-commerce enablement technology platform in India. Its inventory management software provides centralised control over inventory, order processing and fulfilment across multiple sales channels, including online marketplaces. Browntape: Browntape offers a multi-channel inventory management and order fulfilment software for e-commerce businesses. It helps e-tailers manage their inventory, sales and shipping processes across various platforms, enabling efficient operations and reducing errors. Primaseller: Primaseller provides an inventory management and order fulfilment software solution for e-commerce businesses. Its platform integrates with multiple online marketplaces, enables real-time inventory tracking and offers features like demand forecasting and automated reordering. Vinculum Solutions: Vinculum Solutions offers a cloud-based inventory management software platform called Vin eRetail. It provides real-time inventory visibility, order management and integration with e-commerce channels, helping e-tailers optimise their inventory operations. EasyEcom: EasyEcom offers a comprehensive inventory management software solution for e-commerce businesses. Its platform provides features like demand forecasting, automated replenishment, multi-channel integration and warehouse management. |
In response to these changing dynamics, apparel brands and retailers have taken the lead in incorporating RFID and digital identities into their products. This move aims to optimise the consumer experience and increase conversion rates. According to Auburn University, apparel retailers typically have an inventory accuracy rate of 65 per cent without RFID. However, with the adoption of RFID technology, this rate improves significantly to reach up to 99 per cent. The primary goals from the brand and retailer perspective are to enhance inventory accuracy and brand security, ultimately leading to a more satisfying omnichannel shopping experience. By prioritising convenience and utility, these measures seek to maximise customer satisfaction.
There are several fashion companies that have implemented RFID technology to improve their inventory visibility. Zara − the Spanish fashion retailer −was one of the first companies in the industry to adopt RFID technology. The brand uses RFID tags to track inventory levels in real-time, reducing out-of-stocks and increasing efficiency. RFID also allows Zara to quickly and accurately track the location of each item, making it easier to respond to changes in customer demand.
| The consumers have high expectations when it comes to purchasing products. They desire the freedom to buy what they want, whenever and wherever they please, according to their preferences. Meeting this ever-evolving and unpredictable demand across various channels has become a crucial strategic focus for retailers in today’s market. |
Levi Strauss & Co also uses RFID to track the location of products throughout its supply chain, reducing the risk of lost or stolen items. RFID also helps it manage inventory levels and keep track of the product history, allowing Levi’s to make informed decisions about production and distribution.
Ralph Lauren uses RFID technology to improve the in-store shopping experience. Customers can quickly and easily find the products across inventories in different sections they are looking for and RFID-enabled fitting rooms allow staff to instantly access product information and suggest additional items to complete the look.
H&M uses RFID to improve its supply chain management and inventory control. RFID helps H&M track the movement of goods from the manufacturer to the store, providing real-time information about stock levels and enabling them to respond quickly to changes in demand.
| One of the most significant challenges faced by the traditional fashion brands is effectively managing their inventories while keeping up with the ever-evolving demands of the digital consumer. To address these complexities, modern fashion brands are turning to software solutions that seamlessly integrate e-commerce platforms and provide comprehensive inventory management capabilities. |
Tommy Hilfiger has implemented RFID to improve its supply chain management and inventory control. RFID tags are placed on clothing items to track their movement through the supply chain and monitor stock levels in real-time. This helps the company reduce the risk of overstocking or stock shortages and make informed decisions about production and distribution.
As much as brands and retailers are getting into RFID deployment, the problem of overstocking is seriously being talked about. Uwe Henning, Senior Director (Market Development) at Avery Dennison, commented, “Global organisations are overproducing and exacerbating the supply chain crisis – estimating that on an average, 8 per cent of their stock perishes or is discarded annually, which is approximately US $ 163 billion worth of inventory.”
Uwe further corroborated that, with the implementation of Avery Dennison digital ID technologies, brands and retailers have the capability to offer consumers a seamless, convenient and transparent shopping and brand experience. By integrating RFID technology, supply chains in the retail industry can significantly optimise, guarantee brand authenticity and enrich customer engagement through a top-tier consumer experience.
The proposed vision for deploying these touchless solutions covers the entire supply chain, from the factory to the end consumer. The first crucial step involves RFID tagging of all items at the source, establishing a robust foundation that extends from the factory to distribution centres and stores. This approach aims to maximise inventory accuracy throughout the entire supply chain.
The second step focuses on streamlining supply chain operations and capitalising on omnichannel business opportunities driven by emerging consumer delivery trends, such as buy online and pick up in-store, ship from store, curbside pickup and same-day delivery. Simultaneously, it ensures that in-store shoppers can easily find the exact products they seek.
The third step involves exploring other applications made possible by touchless technologies that go beyond inventory accuracy optimisation. This includes implementing touchless POS checkout systems, improving loss visibility and enhancing the consumer experience through interactive elements like EPC-enabled QR codes or NFC tags, which bring products to life and enable richer consumer interactions.
Target has been working with Avery Dennison for over six years now as part of its deployment of RFID technology to more than 1,600 stores to help maximise inventory availability and deliver an enhanced guest experience. This deployment is the largest of its kind. Target is leveraging Avery Dennison’s broad UHF RFID portfolio for a variety of category and performance needs, including apparel and a number of home products. In addition, Avery Dennison RFID tags have been seamlessly integrated with current trim products to optimise the branding of the garments being tagged.
