How can Apparel Industry reduce Dead Stock

We articulated wastage pain point for FMCG industry in our last blog. This challenge takes a different form when it comes to fashion industry — dead stock.

Dead stock refers to unsold inventory that remains in warehouses/stores after the season has ended or after the product has lost its market appeal due to change in trends.

This is a significant issue for retailers and manufacturers, as it can lead to increased storage costs and waste leading to higher working capital. Not to forget the environmental damages due to huge landfills.

Causes of Dead Stock

1. Overproduction
2. Low Forecasting Accuracies
3. Seasonality
4. Supply Chain delays or disruptions

Impact of Dead Stock

1. Financial Losses: Tied-up capital and reduced profits due to inventory wastage.
2. Storage Costs: Expenses related to storing unsold inventory in warehouses.
3. Environmental Impact: Increased waste from unsold items, contributing to the environmental footprint of the fashion industry.

Strategies to Mitigate Dead Stock:

• Pre Season Planning
• In Season Planning

Pre Season Planning

It refers to creating a plan 6–12 prior to the beginning of the season. Pre season planning has 3 components-

1. Merchandise Financial Planning: Strategic allocation of financial resources for inventory purchasing and assortment planning based on demand forecasting & financial goals
2. Assortment Planning: Determine the optimal mix of products to offer customers across different locations, channels and seasons
3. Size/Pack Optimization: Determine the optimal pack sizes or configurations in which products should be shipped from distribution centers to various channels

In Season Planning

It refers to creating action plan & optimizing inventory just before and during the season to adapt to any current factors and trends-

1. Initial Allocation: Pre-allocating inventory to specific stores, channels, or regions before the selling season begins
2. Replenishment: Restocking inventory during the selling season based on actual sales data and demand trends
3. Exit Strategy/ Markdown: Reduction in selling price of fashion merchandise to stimulate sales and clear excess inventory using markdown optimization

Unified Demand Signal Plan by TrueGradient :

Need assistance with pre-season and in-season planning? TrueGradient helps apparel brands optimize their inventory & reduce waste using state of the art machine learning algorithms.

Click for demo today or email us at info@truegradient.ai

https://truegradient.ai/product