Overproduction could potentially decrease through use of fashion forecasting tech

A new study by OC&C Strategy Consultants has found that more accurate forecasting data could “significantly improve margins and efficiency”, ultimately reducing waste.

The report, made in collaboration with trend forecasting firm WGSN, looked into how the use of such technology could serve in tackling overproduction in the apparel industry.

Ultimately, the duo’s research highlighted two key findings, including that buying more in line with customer demand could increase contribution margins by one to three percentage points per product category.

Additionally, a reduction in overproduction was found to be five to 15 percent by product category, representing a three percent reduction in carbon emissions.

The report noted that the use of technologies such as artificial intelligence (AI) could allow brands to refine their collections in keeping with consumer demand, while also enabling them to operate more efficiently.

Speaking on the state of the industry, OC&C’s Mairi Fairley said in the report: “We speak and work with fashion brands that are under significant pressure as the complexity of business models continues to increase, cost inflation rises, and there is a need to operate more sustainably.

“Evolving planning and buying to be more demand-led is a practical first step, enabling significant margins to be gained, and unnecessary waste and CO2 emissions to be reduced.”

Disruption of operating models shift industry

Next to the areas in which overproduction could be managed, OC&C’s research also highlighted ways the fashion industry’s operating models had been disrupted.

For one, the firm noted that the industry’s trend landscape had become increasingly more complex, driven by consumers that engage and transact across multiple physical and digital platforms, changing the way in which demand is determined.

This further linked into the evidence that planning needed to be in real-time, in consideration of shortened, more frequent buying windows, while still allowing better management of waste.

Meanwhile, shorter supply chains were also emphasised, with the report stating that brands needed to enable greater flexibility and efficiency across channels and markets. This sentiment further applied to the use of tech, which OC&C said could also push efficiency in operations.

Finally, the introduction of new operating models, such as rental and resale, have further contributed to a shift. According to the report, for example, resale represented seven percent of market value, showing that brands need to consider this sector in their own models.