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Key Takeaways:

  • Despite sharing seasonal milestones and other analogous processes, the consumer electronics industry and the fashion industry have different outcomes where excess inventory is concerned.
  • In the build-up to the holiday season, fashion brands and retailers will be looking to avoid a repeat of 2022, where many of the world’s biggest retailers were left with historic volumes of excess stock. But beyond this short-term challenge, a fundamental disconnect between forecasting, market demand, and the mechanics of production persists.
  • To borrow best practices from consumer technology, fashion needs to focus on consolidating products, optimising supply chains, and building confidence in what it brings to market.

It’s the first of September, a crucial month in both the fashion and tech calendars. It also marks the beginning of brands and retailers’ pursuit to make the most of back-to-school shopping, Labor Day (for those in the US), Halloween, Black Friday, and the Christmas holiday purchasing period.

image: apple.

On the technology side, it’s Apple in the spotlight as, just like every September, the company hosts its ‘special event’ where they announce the latest iterations of their most popular consumer products (the iPhone) and other products or updates they have in the works. This year is no different. Apple recently sent out the invites to its press event to be held on the 12th of September, live from Apple Park in Cupertino, California. The theme: ‘Wonderlust’ – a play on the term ‘Wanderlust.’ Apple’s event invitations are notorious for their easter eggs, with this year’s containing a disintegrating grey, blue, gold, and black – perhaps teasing the colour options that the iPhone 15 Pro lineup will come in. Apple-enthusiasts worldwide can tune in at 10:00 Pacific Time via Apple’s dedicated events page and the Apple TV app.

As for high fashion, September has historically been the most important month for the industry because of the major fashion weeks taking place to showcase fall/winter trends and highstreet designers release their lookbooks, all usually with more accessories and articles of clothing for the fall and winter months compared to spring and summer.

The parallels are clear: both the consumer tech and fashion industries use this period (as well as other seasonal milestones) to build enthusiasm, gauge demand, and plan production and inventory allocation strategies for one of the busiest times of the year.

Amidst all the excitement and newness, it’s easy to forget that September is a time when brands and retailers have to come up with their best strategies to avoid post-January clearance sales, while ensuring shelves aren’t left empty. Retailers will be seeking redemption after last year’s inventory challenges – where there was a shift from scarcity to surplus and businesses were caught off guard by an unexpected surge in inventory, resulting from the gradual normalisation of global supply chains post-pandemic.

But throw in the current capricious retail climate, and finding the perfect balance is much easier said than done – and as a result, fashion often finds itself with a glut of unsold seasonal inventory (which is then marked down or quietly disposed of) in a way that the consumer electronic sector doesn’t.

Note that, while fashion is constantly making headlines for creating far more product than the market actually needs, we rarely see the same happening when it comes to Apple products. When comparing the fashion and technology industry in terms of forecasting, there are so many analogues between the business models and the structure of their calendars, but the major discrepancy between the two is that fashion ends up with much more inventory on their books.

In both cases, there are seasonal calendars for a product category, and what is being sold are products that people don’t need. Like fashion, newness in consumer electronics often comes from new colours, new capabilities, and new innovations – not from necessity. Could it be that Apple, known for their outstanding marketing, is just that much better at creating demand, or better at forecasting, or has a superior handle on their supply chain dynamics? Or is it just a case of shorter development cycles and greater verticalisation and supply chain control enabling Apple to be that much more nimble than anyone in fashion?

One explanation is Apple CEO Tim Cook’s attitude towards inventory: “Inventory is fundamentally evil. You kind of want to manage it like you’re in the dairy business. If it gets past its freshness date, you have a problem.”

This is a philosophy that many in fashion would say they share, but not one that many brands and retailers effectively practise, as the disconnect between forecasting, actual demand, and supply in apparel and footwear demonstrates.

Cook, an industrial engineer with 12 years at IBM under his belt, joined Apple in 1998 to assist Steve Jobs in taking Apple from bankruptcy back to profitability. Less than a year after Cook joined, Apple was reporting profits. Some of Cook’s strategies include focusing on non-seasonal products with life-cycles that exceed 12 months; reducing the number of storage locations, and leaving only one central warehouse in California; minimising the number of key suppliers involved in manufacturing, shipping and storage; and shrinking the number of stock keeping units (SKUs) to predict the demand more accurately to ensure speedy Apple inventory turnover.

While an exact figure was hard to find, one source reports that Apple’s manufacturing cycle is a mere 2 months. And, according to the New York Times, around half of all iPhones now are made in a manufacturing facility – “iPhone city” – in the central Chinese city of Zhengzhou. But Apple’s relationship with China is a controversial one, and the company is facing mounting political, strategic, and investor demands to significantly reduce its manufacturing dependency on China – something that could undoubtedly shake up the status quo. India and Vietnam are rumoured to be the next best options for manufacturing, based on Apple’s supplier list, but it’s worth noting that – unlike fashion – relocating electronics manufacturing is a much more time-intensive task, and one that hinges on the presence of specialist capabilities.

Alongside a lightning-fast supply chain, another reason why Apple seems to be the superlative when it comes to inventory management is due to its marketing. They say it best themselves: “Powerful technology is always in fashion. Fashion trends come and go. The ease and convenience of [Apple products] don’t.” Apple’s reputation is one of timelessness, despite the new products year on year that are being released, possibly linked to its distinction in innovation, quality, design, and customer service. It’s also one of the most distinctive brands in the world. On the flip side, not many fashion brands or retailers can tick each one off of that same list – with the notable exception of the luxury industry, which is perhaps the closest point of comparison between fashion and consumer electronics.

Nevertheless, so far, a few big names have proved that they can muster a comeback when it comes to better inventory management. Looking at the US market, Abercrombie and Hollister are doing well as is Macys, while others, such as Target, are still scrambling slightly. The good news – a recession is looking less likely, and so there should be some extensive consumer spending over the next few months – something that brands on the upswing are depending on.

Despite the predicted soft landing, it would still be in brand and retailers’ best interest to think about a parachute. For now, that doesn’t seem to be happening and the fashion industry is caught in a loop of consistent missteps. Forecasting is futile in the age of the perpetually picky and impulsive consumer, so to avoid overstock or empty shelves, what’s needed is agility in supply chains, localised assortments, and on-demand production. The bottom line? Retail’s unpredictability needs dexterity, diversity, digitalisation, and agility in the supply chain to an extent that few brands have really got their hands around, leaning instead on a tendency to leverage social media to pique interest and create hype.

So when it comes to managing annual calendars without the excess bloat and inventory that have come to characterise fashion, the industry is advised to take a page from Apple’s book – their Macbook, at least – in focusing on consolidating their products, optimising their supply chains, and building supreme confidence in what they bring to market, at both a quality and quantity level.

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