The fashions and trends being set by the competitors also need to be clearly understood. If a large number of people are adopting the fashions and designs created by the competition, then the organization needs to analyze what could be the pitfalls of not catering to the needs of the market.
The above mentioned steps could be termed as an Environment Scan. This helps the buyer analyze fashions, trends and the competitors and based on the fashion philosophy adopted by the management, helps him arrive at the fashion forecast for the organization.
Creating a fashion forecast includes various aspects like color, textiles, styles, consumer segmentation, sales forecasting and cultural indicators. Time lines are very important in the fashion apparel industry and by anticipating trends, aligning product development with consumer preferences, and facilitating the timely arrival of products in the market place, forecasting creates competitive advantage for companies.
The directional theories of fashion change trickle down, trickle up, a and trickle across – make prediction easier by pointing to the likely starting points for a fashion trend, the expected direction that trend will take, and how long the trend will last.
Color is a key element of the business of fashion apparel. While some organizations may develop color forecasts as a part of product developments, large companies may have departments dedicated to setting color directions for multiple lines. Professionals color organizations bring together experts to collaborate on forecasts for industries like women’s wear, men’s wear, children’s wear, residential and non-residential interiors etc.
After having determined the color for the season, the textile or fabric on which the products are to be created needs to be decided upon. Fabrics range from slick surfaces like leather and futuristic plastic to softer surfaces like cashmere, from flat weaves to heavy textures like boucle, from the solid structure of flannel to the web like open structure of crochet. Newness in fabrics comes from the introduction of new fibers, the manipulation of yarn and fabric structures, variation in pattern and prints, and innovative finishing processes. These innovations are introduced in trade.
Keeping in mind the geographical region and the consumers for whom the product is targeted, the style has to be created. This makes consumer research very important. Every forecast begins with the customer, by way of observing the customer’s adjustments to the marketplace and in the unexpected ways the customer adjusts the marketplace to her lifestyle and preferences.
A sales forecast is then created. This takes stock of the quantities in various designs, styles, sizes and colors that are estimated to sell. Manufacturing of apparel is then done. At this point in time, the buyer also needs to finalize the locations from where the products are going to sell. Persons involved in the business of fashion need to strike a balance between anticipation of future developments and improvisation in the face of change.
The survey of 32 retail companies was undertaken with a focus on their practices in four key areas:
Forecasting: supply chain speed; inventory planning; and gathering accurate; available data. They suggest that forecasting is an art and a science and retailers can significantly improve forecast accuracy simply by updating their predictions, on the basis of early sales data, tracking the accuracy of their forecasts, getting product testing right, and using a variety of forecasting approaches. The authors are an excellent predictor of overall sales, however, most retailers, despite being aware of this, unable to exploit this data. The use of this data can be immensely useful for products that have shorter life cycles and unpredictable demand.
Two examples quoted are that of Spanish fashion retailer Zara and Japan based World company, who systematically examine early sales data to estimate future demand for various products. This analysis is conducted for every product at predetermined periods in its sales cycle. Immediate reorders are done for products that are estimated to be in short supply. World Company ha achieved a gross margin return on inventory investments of more than 300%, World Company tracks and predicts forecasts accuracy by items using the Obermeyer method new products are displayed in a room at corporate headquarters just as they would be in a retail store, and about 30 store employees, who are chosen to represent the company’s target customers, estimate the likely success of each product. World has found that the products that generate greater disagreement among the employees are likely to have less accurate forecasts.