Retail Analytics to Manage Inventory in Uncertain Times


The following article is based around the talk spoken by AJ Mak, CEO/Founder of Chain of Demand for their first in a series called Combating Coronavirus, in collaboration with The Mills Fabrica on March 26, 2020. The full webinar can be viewed below. 



The COVID-19 outbreak has disrupted the world and in that, supply chains have been shaken. As the pandemic continues to create panic across the globe, the uncertainty the virus has brought to businesses can’t be imagined. From online to offline, people all over the world are faced with uneasy decisions on how to move forward. 


Current challenges faced by the coronavirus

As China progressively recovers from the effects of the pandemic, supply outweighs demand as the market reports a swift decline in the number of purchases from retailers in recent times. This plays a huge part in the rest of the world, as roughly 20% of US retailers’ supply chains are integrated with China. 


It appears that the landscape has been changing day by day, as demand markets around the world attempt to scramble to keep up. Just one month ago, the main challenge for everyone was the fact that China was under lockdown, crippling the global supply chain




As residents and factory workers were left unable to return back to their factories after going home for the Chinese New Year break, this hindered the suppliers of China. With so many factories unable to produce raw materials for other countries, it led to a big disturbance, felt by millions.


While China’s supply chain is steadily recovering, with some factories operating at around 80% capacity. Despite this recovery, the next challenge is the issue of supply and demand, as consumer demand for discretionary goods has plummeted.


Major cancellations and losses

While exporters are appealing to these brands not to cancel their orders, big retailers such as Primark, have canceled orders worth about $1.5 billion USD. 


These cancellations have affected more than the buyers, but the suppliers themselves, as countries like Cambodia continue to appeal to buyers to uphold their ends of the terms of the contract.


Moreover, due to the shortage of materials and mass closures of stores/factories caused by the outbreak, millions of workers along the supply chain lie in the risk of losing their jobs, especially in countries like Bangladesh, Vietnam, and Cambodia. 




With major apparel brands delaying and canceling orders as the COVID-19 pandemic causes store closures around the globe, payments are not made for products until they are shipped. This has millions of factory owners and workers at risk of bankruptcy, as the lockdown enforced by the government has restricted shipments of orders. For example, in Bangladesh alone, an estimated $100 million USD in orders had been canceled, leaving roughly 80 percent of factories unable to pay more than a month worth of wages.


Using retail analytics to minimize markdowns and save costs

With the help of the right retail analytics, retailers can be sure to solve some of the most pressing issues that have been shared across companies of all sizes, both enterprise, and SMB. These problems continue to be the need to:


  • Minimize cost 
  • Manage inventory 
  • Optimize prices
  • Preserve cash flow 


Not only does this give retailers and brands the ability to optimize the cost of inventory, but it also helps to minimize their upfront capital. With the right retail analytics solutions like Chain of Demand’s pre-season model, retailers can expect to predict down to color and size six months before season starts, with an average accuracy of about 75%.




Furthermore, with the right in-season model in place, retailers are able to minimize the cost of excess inventory. Our AI system allows sales predictions to be updated on a weekly basis once goods have begun to sell by size and color, at an accuracy of up to 85%. 


With every update, there are new suggested actions on which product needs to be restocked and reallocated to other stores. When you have goods that are projected to not sell well, knowing earlier can help move the goods earlier, and minimize the situation where you are stuck with unwanted goods.


Looking at a broad set of relevant data sources 

While most retailers and brands rely on historical sales data and  Excel spreadsheets, using AI allows you to integrate more rich data sources. Some of the diverse sources that our retail analytics dives into are as follows:  


  • Our Data  – Proprietary brand index, market trends data
  • External dataunemployment rates (significant to US more than ever), temperature, coronavirus data
  • Internal data – sales data, product data, marketing data


With data from customers accounting for 30% of what’s used and the remaining 70% collected and synthesized from our side, Chain of Demand has recently incorporated more relevant Coronavirus data to take into account the recent changes. With a team of data scientists that have previous experience tracking past pandemics, our models are reflective of the current market situation.




Upon engaging with several brands, the two major metrics requested to improve across have continued to remain: minimizing markdowns and improving sell-through. Thus far, our solution has helped show markdown reductions by 25% and improved sell-through rates by over 22%. 


Ultimately, with an AI solution being 168X faster and 30% more accurate in predictions compared to the industry standard, now is a time – more than ever before – for companies to look to technology to help them more forward. With cash flow being the number one priority for many companies, retail technology can help reduce costs and give retailers a fighting chance to increase margins. This is why it’s important to note how AI can be used during an economic recession.


Key takeaways

While the COVID-19 outbreak has disrupted the industry in the last quarter, none of these required changes are new. This has been happening for some time, and it’s about that time for retail to reinvent itself. Digital will take a predominant part in retail activity in the upcoming years and with that being the case, this is an opportunity to try new models and rethink how things are done. 


In the end, the coronavirus outbreak has just been a wake-up call for retailers to realize that its time for a change. For the fashion industry, it’s long overdue for a change in the way to operate. So rather than seeing this as a time for panic, it helps as more of a turning point for the good of the industry. As Chain of Demand’s CEO and Founder, AJ Mak comments,


Nobody knows what’s going to happen in the next few months. The best thing to do is to get relevant data you possibly can and make better decisions. It’s also important to share the data with the supply chain – your whole value chain. It’s through data transparency, can all suppliers and brands and everything in between work to find a solution to fight this unified war.


Next steps for retailers and brands

Everyone can agree that meetings for B2B topics have slowed down since the outbreak. People are focused on tightening up rather than investing. For this reason, Chain of Demand has prepared three simple steps that retailers and brands can take to make the most of their analytics in the fastest way possible.

  • Free feasibility study – You can identify areas to save costs and improve cash flow in just a few simple clicks. Input your data, submit your email, and receive an overview report on the health of your inventory. 
  • Direct integration to online sales platforms – Our newest product allows for a direct connection to your online sales channels. This can easily plugin to your shop backend, whether it’s through Shopify or any other e-commerce platform.
  • Tailored data – C-suites can now receive customized coronavirus data to help make key decisions.


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