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SCENARIO: For the hypothetical fashion brand (Market level: Mass market and bridge fashion brands), find ideal ways to effectively forecast demand management for better inventory control and improved sales.
Solution: AI-powered inventory management solutions are limited in their ability to predict unforeseeable events such as the COVID-19 pandemic. Despite extreme consumer demand predicted for 2021 based on 2020 sales data (where businesses surged), macroeconomic issues have cooled consumer sentiment, leading to an overabundance of inventory and significant business failures thereby causing mass layoffs, especially in the fashion industry. As a result, AI can only predict up to 80% of demand even for predictable events, leaving a significant margin of error. To address this, a consumer-centric approach combining human intuition and predictive planning can be employed to gather the remaining 20% of predictive demand analytics and achieve more accurate inventory control.
The consumer-centric approach emphasizes the concept of Know Your Customer (KYC) and extends beyond traditional business practices. In e-commerce channels, brands typically enable customers to search for items across various categories and make purchases. However, with the influence of social media trends on Millennials and Gen-Z consumers, brands should incorporate social media settings within their e-commerce platforms to enhance consumer engagement. It is crucial for consumers to feel that their voices are heard. Implementing some of the following engaging settings can enhance demand forecasting:
Offering incentives (for their next purchases) to answer questions about their personal style preferences, what factors are influencing their purchase decisions, etc. This gives us an idea of the pattern of their purchases.
Involve consumers in the design process to determine which styles should be produced next.
Engaging consumers in pricing strategies, such as Telfar's implementation of live pricing for its popular tote bags.
By incorporating these practices, brands can enhance consumer engagement, achieve more precise demand forecasting, and optimize inventory management. This approach allows brands to gather data on the styles and preferences directly from their own consumer base, rather than relying on third-party sources. Consequently, brands can make informed decisions on inventory optimization by adopting made-to-order production leading to more effective management of their supply chain.
Skills Gained: Engagement strategies, Data Analysis, and enhanced Decision-making.
It is extremely important to think of new ways to effectively engage customers to interpret their preferences, and market trends to optimize inventory management and improve sales performance.
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