Vector Consulting Group, which worked with NielsenIQ to conduct an industry survey, found that over 40 per cent of clothing products sold by Indian retailers during end-of-season sales (EOSS) or having discounts are the result of a discrepancy between projected inventory and actual sales.
Furthermore, according to the report that polled 100 businesses, supply chain problems cause goods to arrive at stores seven to thirty days later than expected, which reduces the window for full-price sales and forces retailers to give discounts.
Manually carrying out in-season stock adjustments, including inter-store transfers, is reactive, slow, and ineffective, according to Vector. Lead times longer than six to nine months force brands to plan collections a year ahead of time, which increases the risk of unsold stock and makes demand forecasting challenging.
Brands are compelled to plan collections well in advance, which results in forecasting errors and inventory mismatches, said P Senthilkumar, senior partner at Vector Consulting, adding that there is an excess of inventory of certain popular commodities while others are stocked out. Clothing brands face serious operational and financial difficulties as a result of these lengthy lead times. Store drops may be delayed by seven to thirty days due to supply chain delays. Errors in forecasting can cause planned inventories and actual sales to diverge.
