By  on November 10, 2004

Any woman who regularly shops specialty retailers like Gap, Abercrombie & Fitch, H&M or PacSun can tell you that clothes, just like first-run movies, don’t have the shelf life they used to. Partly inspired by the example of H&M and Zara, which are known for their ability to design, produce and deliver new styles to stores in only three weeks, American retailers are turning inventory more frequently each season, sometimes as often as every six weeks. The trend has been most striking at vertically integrated specialty stores such as Gap, which have the ability to closely control their supply chains.

“They’re looking to create variety and freshness in consumers’ eyes,” said Kathryn Cullen, principal with Kurt Salmon Associates, a retail and apparel technology consulting firm based in New York. Younger consumers expect it, she said.

Besides giving consumers a reason to shop more often, leaner inventories and faster turns can improve margins by encouraging shoppers to buy more often at full price, she said. If would-be customers hesitate, they know a desired item may be gone the next time they visit, either because of heavy demand (and no replenishment) or a conscious store policy of automatically marking down and blowing out merchandise every six weeks.

Not surprisingly, the trend has necessitated significant changes in business processes, technology and logistics — both for retailers and the manufacturers and brands that supply them.

In the past two years, many specialty retailers have cut the time goods hang in the store from the traditional three months — with four turns a year — to as little as six weeks, with as many as 12 turns a year. Some companies, like H&M, put new clothes on the sales floor every day.

“The trick is providing the right degree of the right product at the right time in the right place — and to do that plus turn fast, that’s hard,” said Marshall Fisher, professor at the Wharton School of Business. The stores he’s seen succeed at it have three things going for them:

  • Accurate forecasts.
  • Optimized inventory levels.
  • Supply chain speed or flexibility.
Fast-turn retailers do everything quicker. For example, they have to analyze their point-of-sale data daily, decide what to do with goods in the first week or two, and probably take only one markdown, said Cullen. They also have to get new product in more often, which they have accomplished in various ways. One of these is a closer relationship with suppliers. For example, this might mean committing to a particular factory and sharing more information up front.

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