Ten years ago I spent some time in women's undergarments*, as Director of Forecasting at Sara Lee Intimate Apparel (now Hanesbrands).  Sure, it sounds glamorous -- product posters on our office walls, quarterly runway shows of new products, and partying with the full-figured Playtex models (some of whom were fuller than I figured).  All my former colleagues were jealous I got the job. But believe this, it was difficult and stressful for me and my department.

Whenever things got too intense, my boss Cecil Moore used to cheer us up with this reminder:

Our products don't kill anybody. Sure, they may cause some discomfort and chaffing, or even minor disfigurement when an underwire pokes through. But hey -- they don't kill anybody.

Fine encouragement like that gave us the will to persevere.

Forecasting Fashion Colors

In the apparel business, products can be crudely classified as either "basic" or "fashion." Basic items, like black dress socks or white briefs for men, tend to have reasonably well-behaved and repetitive sales patterns over their lifecycle -- which is expected to be years.  There is little if any technological change in the products, they look and function the same year after year, and may be promoted at the same times every year reinforcing the repetitive pattern.  We can often forecast these items reasonably well, and manage their supply chains without a lot of grief.

Fashion products, on the other hand, are designed to reflect (or define) current tastes. There is no expectation of an ongoing product lifecycle -- they are meant to be built and sold within a single season.  If the item proves popular and sells out, there may be no ability to replenish the supply.  And if too many of the items are made, they get marked-down at season end for closeout sales, moved to alternative sales channels, or simply donated or destroyed.

Often a fashion item is just a basic item in a different color.  Instead of only white, black, and beige (the standard basics in women's intimates), we might offer ten or more additional "fashion" colors throughout the year, and therein lies the problem.

You can imagine the forecasting challenge -- trying to figure out the popularity of each color months in advance.  And you can imagine the financial risk in each offering -- make too few and we lose sales/annoy customers, make too many and we are stuck with excess (and perhaps unsellable) inventory.

A sure way to significantly improve profitability would be to have highly accurate forecasts of fashion colors, but can it be done?  We'll explore this a little deeper next time...

-----------------------

*Probably more time than Rudy Giuliani, but less time than J. Edgar Hoover.