Assessing fast fashion overstock through time-to-peak-sales

Abstract

Product overstock is widely recognized as a principal contributor to diminished profitability and adverse environmental impacts in the fast fashion industry. While considerable attention has been directed toward optimizing the stock-in process, including the adoption of on-demand manufacturing and inventory optimization strategies, solutions for preventing overstock during the stock-out process have largely relied on end-of-season clearance. This reactive approach frequently yields suboptimal outcomes, thereby underscoring the urgent need for a proactive strategy that empowers managers to implement timely, strategic interventions to mitigate overstock problems. This study introduces time-to-peak-sales as an early warning system for the fast fashion industry, offering a viable method for the early detection of product overstock and establishing criteria for prioritizing unsold inventory that demands immediate managerial attention. Drawing on the product life cycle framework and the distinctive practices inherent in fast fashion, we define time-to-peak sales as the number of weeks required for a product to reach its peak sales, positing that it is positively associated with product overstock. Utilizing data from multiple brands across two distinct datasets, we conduct a comprehensive exploration of fast fashion overstock through comparative analyses, model-free descriptive statistics, and regression analyses. Our findings consistently underscore that time-to-peak-sales is a pivotal metric in inventory management, firmly anchored within the product life cycle framework.