Going Viral: How Fashion Brands Can Rely on Demand Sensing in the TikTok Era
Apparel organizations that fail to plan might as well plan to fail, particularly in the TikTok and Instagram era.
The power of social media has never been more apparent to fashion brands, which, because of influencers, sell out of much-wanted items faster than they can make them — inadvertently sending shoppers elsewhere.
For instance, after going viral on TikTok in 2021, Gap’s dark brown logo hoodie (#gaphoodie), Aeropostale’s crop tops (#tinytops) and lululemon’s mid-rise skort (#lululemon) quickly became stock-outs when Gen Z-Y2K-fashion enthusiasts scooped these coveted items up quickly.
In the age of #fashionTikTok and influencer-induced viral purchases, apparel brands must have the ability to correctly forecast and nimbly adjust their supply chains against sharp market fluctuations. Doing so through demand sensing, a methodology and technology for improving near-future forecasts using detailed short-term demand data, will help them meet both service goals and customer expectations — or face Gen Z’s wrath of buying like items elsewhere.
Below are reasons why demand sensing is critical to success as styles hit the 2022 runway — or, rather, the TikTok “for you page.”
Why Conventional Supply Chains Can’t Keep Up
Consider how typical organizations with a traditional supply chain react to peaks in demand: An influencer posts a video wearing a skirt on TikTok creating near-instantaneous excitement and young girls’ and teens’ “need” for that product.
- The brand’s demand forecast looks backward at historical sales.
- When sales reports show the apparel sold out unexpectedly, the company goes into firefighting mode.
- After adjusting its forecast to reflect new demand, the brand discovers it lacks the materials and/or production capacity to create more of this coveted skirt.
- The company orders new materials and pays for costly expedited shipments, but the customer won’t wait and purchases from a rival apparel brand.
- The brand ends up with a surplus and monetary loss when an item’s virality dies down.
In this situation, which happens often in today’s social media landscape, apparel brands simply can’t anticipate demand adequately. Therefore, they cannot successfully demand plan — i.e., forecast demand by analyzing historical data points to anticipate what’s likely to happen in the future — and sales opportunities are lost.
However, to better accommodate highly fluctuating consumer behavior, respond to spontaneous product demand and identify new opportunities, companies would be wise to modernize their supply chain, particularly with solutions that enable agile demand sensing capabilities in addition to planning strategies.
Future-Facing Digital Solution Adapts to Market Fluctuations
Savvy fashion brands often take a hurry-up-and-wait stance. They book materials and factory capacity to produce their apparel, then wait until the last minute to determine what they will make based on latest demand sensing. They ask, “What should I make? Where is the demand?” and “Where do the products need to go?”
For example, say a brand’s demand forecast predicts it will need 500,000 units of a particular style and color of a T-shirt in the United States. During production, however, its supply chain monitoring solution shows demand is instead spiking in the U.K. and Germany — and not so much in the U.S.
In such a scenario, the company could wait until the last minute to determine distribution — and could also find it more cost effective to ship directly to the consumer through its e-commerce channel.
Traditional retailers can look to their fast-fashion counterparts as an example here. Instead of producing many units of one thing based primarily on past sales, fast-fashion leaders often purposefully make limited production runs so once an item sells out, it’s gone, enabling them to sell most items at full price. After sensing what’s hot, they can then create new (sometimes very similar) designs and get them back into stores in one week to two weeks vs. up to six months. Demand sensing allows them to remain more nimble and on the pulse of what consumers are looking for.
An apparel brand must demand plan to set its initial production parameters. Using that read-and-react capability of demand sensing is how to fine-tune the plan.
Proactive Sensing Capability is Crucial for Success
The bottom line is, particularly with today’s TikTok- and Instagram-loving Gen-Z shoppers, solely looking back at historical data doesn’t always work in the fashion industry. With the rise and fall of viral trends, brands need to not only demand plan but also stay nimble with demand sensing strategies.
A modern, digital supply chain demand sensing solution enables apparel companies to quickly pivot production and distribution to overcome business challenges and position themselves for maximum sell-through.
Without a doubt, influencers have heavy sway on today’s fashion-conscious consumers’ purchasing decisions. Therefore, to keep up with demand, the most successful apparel brands rely on their updated digital supply chain solution as it can be the determining factor between demand sensing failure and success.
To get the like, follow and share from Gen Z, consider adding viral-proofing strategies to your supply chain mix this year.
Mark Burstein is the executive vice president, industry principal at Logility, a provider of AI-based supply chain planning solutions.
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Mark Burstein is the EVP, Industry Principal, Logility, the supply chain leader entrusted by the world's leading brands to deliver a digital, sustainable supply chain that powers the resilient enterprise.