This is especially the case in the fashion industry, where demand uncertainty, lack of visibility into historical data and seasonal trends typically coexist.
The effect of poor demand forecasting is stock-outs (too little inventory), overstocks (too much inventory), item obsolescence, damagingly poor customer experience, rush orders, inefficient resource utilization from replenishment to staff — all of which builds to a cacophony of disruption that bullwhips through the retailer’s organization.
This environment puts pressure on the retailer’s operations and marketing teams. These teams find themselves constantly in reactionary mode trying to put out the inventory fire-of-the-day as they are constantly confronted with too little or too much merchandise. The effect is compounded with the number of locations, the seasonal nature of the apparel industry, and the requirement to sell through the existing inventory to make way for next season’s apparel.