Is automated merchandise management impossible for fashion items?
Close your eyes and imagine you are in a clothing store. How is this store built up? You will probably have your basics. Plain t-shirts, plain sweaters, jeans, underwear if sold in that store. Then moving on you will have the printed items. Some might have a sun printed on it to indicate the summertime for example. Followed by the ‘wow’ factor items. That one amazing faux fur and leather coat is limited edition and you just NEED it. But how can you drive your merchandise management with such dynamically consumed products?
Yes, you have just described the categorization of collections within fashion brands. In the industry, this is called the NOOS, SNOOS, and fashion items to be referred to from now on. Your imagination of the store can take you far because you have been in a few already in your lifetime. Now try to imagine the replenishment processes behind these items.
Not as easy right? This is because replenishment has so many factors to take into consideration. Things that our human brain might not even be able to comprehend. Even for machines, this is sometimes a struggle, especially for fashion items. External factors such as weather, location, or marketing activities have a great impact on consumption. Together with the short product life-cycle, the challenge of only replenishing what is necessary remains to make it uneasy for conventional systems to cope.
NOOS, SNOOS, and fashion products
Each fashion brand divided its collection into several categories. Product groups, divisions, or even in themes. In each of these categories, you will always find NOOS, SNOOS, and fashion products.
NOOS (Never out of stock) items are the basics that can be sold throughout the whole year.
This makes them attractive for large production quantities and perfect as replenishment products because the life cycle of these items is significant. All this data makes it possible to do well-thought-of and calculated replenishment suggestions. The bigger the life-cycle, the more information you have on this particular SKU.
SNOOS (Seasonal never out of stock) articles are items like hoodies or sweaters that specifically are for the colder months. The goal is to make the collections more consumer-driven by using current trends and hypes to trigger the buyer.
The cherry on top of the cake is of course the fashion products. These items are usually in store for a short period, much shorter than the SNOOS. The items are the hero or key items. That one amazing-looking jacket in the window display pulls you into the store making you think “I NEED THIS”. The difficulty with these items is the prediction that needs to be done in terms of production and placement. Misjudging consumption is a big treat and these center point pieces often use fibers that are not necessarily the cheapest. So it is important to analyze all aspects of this SKU fully.
Consumption can vary not only internationally, i.e. between the Netherlands and Germany, but even regionally. 2 stores in the same city can have different consumers because of different customer journeys within the store and different customers. This makes initial allocation and replenishment especially challenging.
Why do conventional models no longer work
Consumption must be analyzed almost daily, and sales forecasts must be calculated for each SKU (stock keeping unit) and POS (point of sale).
Classic NOOS replenishment systems do not meet the requirements for fashion item replenishment. They are too static, oriented on long product life cycles, and too maintenance-intensive, with adjustments made per product, POS, time, and other external factors.
The process of fashion item replenishment remains in manual hands and is taken over by sales and merchandise planners. Often maintained in Excel spreadsheets and due to the manual work behind it, the calculation has a high error risk. I mean, we are only human, right. Mistakes happen! A very time-consuming job and as we know, time is money. This lost time could easily be used more efficiently for jobs like collection planning and production quantity planning.
It's time for more creativity and strategy!
As explained above, fashion and seasonal products have a way different life cycle compared to the NOOS. It is shorter and can be more influenced by external factors. The shorter the life cycle of an item, the less data you have of the SKU. Conventional systems struggle to make right decisions with the little data they receive. So the question rests, how do you make consumption-driven decisions for this difficult group of SKUs?
Chainbalance uses proven fashion logics, statistical models, and trained algorithms to automate the entire merchandise flow from initial allocation to replenishment, returns, and exchanges, especially for fashion products.
With the new mover procedure in the first weeks on offer, we allow our brands to start with low allocations and instantly react to outperforming store locations. Keeping more stock in central DC will vastly increase the possibility of sending the items to the locations with the highest sales potential. By a smart end of life reduction of store replenishment quantities leftover DC stock will remain directly available for the long tail at your eCom and platform channels.
Have we made you curious about how we boost sales especially for your fashion products?
Take a look at our case study with YAYA. We look forward to getting to know you and answering your questions - here.