Challenges and Uniqueness of the Fashion Industry

When a customer walks into a fashion apparel store or a jewellery store, what is the first and foremost factor he /she would consider while deciding to consider buying a product or not to buy it?

Quality – Definitely a factor but may not be the first and foremost factor. Design – Definitely a factor but may not be the first and foremost factor. Trust/Brand – again not a foremost factor

What is it that they look for?

Is this a trend now a days? Is this in vogue now a days? Is this a fashion now a days?

The emotional satisfaction that they are wearing some thing which is in fashion / trend is all the more important than any other factor and obviously for customers this is the first and foremost important factor for consideration to buy or not to buy.

They look for appreciation from others that they are wearing something trendy is very much important as much they don’t want someone to comment “hey you are wearing something which is obsolete/outdated”.

So, fashion business poses challenges which are unique and different from other industries. Let us understand them in a succinct manner. Some of the challenges in the fashion business include risk of product obsolescence, short product life cycle, longer lead times and fast fashion and sustainability issues

Risk of product obsolescence:

The challenges in the fashion industry have roots in the nature of fashion and its elements. Fashion is all about acceptance. What majority accepts becomes fashion and what is not accepted becomes obsolete. What is in vogue is what is in fashion. Fashion brands, retailers, designers etc may design, develop and manufacture new garments, clothing etc and bring them to market and stores. The new range of products introduced in the market may be accepted and purchased by the customers or may not be liked and not purchased customers (either some of them or many of them or all of them). This is the risk of product obsolescence inherent in fashion industry. Successful management of fashion business needs to hedge this risk of product obsolescence and reduce the risk of product obsolescence.

Short product life cycle

The only thing constant with fashion is change. Fashions change with season and with time. As fashions change the manufacturers and retailers need to keep changing their fashion product assortment (Product mix) offer in tune with the changing fashions. The fashion industry is on a constant preparedness to introduce new merchandise assortments at least once in a season, while fast fashion brands like ZARA thrive to bring product mix to market once in every six weeks. This puts fashion industry a highly challenging trajectory. They need to introduce new merchandise product mix in every season in a year and these have to be different from what they have introduced in the same season last year.

Longer lead times

The lead times to manufacture products and bring them to market are much longer, especially in apparel market. The supply chain to manufacture a specific product mix designed and developed may involve sourcing specific fabrics, involving specific yarns and fibres. The supply chain may involve from fibre to yarn to fabric to processing (Printing, Dyeing, bleaching etc.) and finally garment manufacturing. The lead times vary anything from 2-3 months to a maximum of 24 months at the maximum.

Handling above three challenges crucial for the success in the fashion industry. How does industry handle this? Since lead times are longer you cannot wait to see what would become popular or fashion in vogue and then manufacture accordingly as by that time fashion would change and what you manufacture would have already become out of fashion or obsolete.

One of the ways to handle this risk is to predict what would become fashions in the coming seasons in the coming years. If it can be predicted with reasonable accuracy then the risk of product obsolescence can be reduced significantly.

Fashion Forecasting

As the names goes fashion forecasting involves predicting the fashion or trends ahead of the time. Fashion forecasting process involves multi million dollars research and the finding are published two years in advance of the season for which forecast is being made. Promostyle, WGSN, Fashion Snoops are some of the leading fashion forecasting agencies. Fashion forecasting is done in terms of fashion design elements that are Silhouette – Styles, Colours, fabrics and accessories. Predictions are made in terms of fashion design elements that would be in vogue. Fashion forecasting is made separately for category wise, menswear, women’s wear etc and also predictions are made for specific season and year, which is spring /summer- SS 2026 and autumn/winter AW2026.

The fashion industry incorporates fashion forecasting predictions in designing and developing new fashion products for upcoming seasons and successfully reducing the risk of product obsolescence and enhancing the probability of product acceptance by customers. This making the fashion forecasting commercially significant justifying huge investment in the research involved and the value of fashion forecast purchase/subscription.

Though fashion forecasting helps in reducing the risk and enhances acceptability of new fashion products designed thus, it does not hundred percent eliminate the risk. Some percent of the merchandise still becomes obsolete because of non-acceptance. So, some percent of merchandise which becomes obsolete due to non-acceptance does not sell or may sell very less. Since products are already made and money is invested the merchandise stock, there is need to get back as much money as possible. This requires proper handling and planning of sales, stocks, purchases and mark downs. This is done by merchandising function.

Merchandising in Apparel business:

In fashion-apparel business, merchandising function plays a very crucial and elaborate role. At a broad level merchandising involves planning, buying and selling functions. Merchandise which has become obsolete and thus not selling may need the mark down of prices (reduction), to encourage customers to buy obsolete products. Mark downs should be deep enough to attract customers to buy the obsolete products. That is the reason why we see deep discounts (mark downs) in the fashion business, up to 70% or so. Thus, there will be loss of revenue due to mark downs inevitable to some extent or the other. This is also considered as a business expense and is incorporated in the mark-up while fixing the prices. Handling of mark downs, short life cycles, customer tastes and preferences and need to follow the thumb rule what is purchased by retailer must be sold make merchandising a very crucial function in fashion business.

Merchandise planning involves following major elements such as Planning of sales: How much is expected to sell – season and month wise?, Planning of Stocks: How stock is required to support the planned sales?, Planning of Purchases: How much merchandise needs to be purchased, given planned sales and planned stocks?

Planning of mark downs: In spite of following fashion forecast and consumer research some merchandise still becomes obsolete and need to marked down, resulting in loss of revenue. This loss of revenue needs to be managed in a planned manner. Fashion forecasting & Merchandising Practices help manage the first three challenges of the fashion business.

Fast Fashion & Sustainability Issues:

Fast fashion brands sell affordable clothing in fast changing cycles, which ultimately generates huge amounts of used and discarded clothing going into landfills. The supply chain fashion clothing involves intensive polluting processes like printing, dyeing etc. Sustainable practices like recycle, reuse and reduce is being encouraged as part of circular economy.

Future Directions:

Digitisation: Digital factories with IOT, RFID with real time monitoring and control. Non-Fungible Token (NFT)s and Digital Ids to battle counterfeit products. 3D prototyping and printing

Personalisation: Virtual fitting technologies. Fit Tech. Convergence of machine learning, computer vision, AI, AR Mirrors and body scanners facilitating personalised fitting.