Have you ever walked into a multi-brand fashion store, liked a particular design, only to find that your size is sold out, while there is enough and more quantity of the other sizes? This isn’t just bad luck. There is a structural issue in the way apparel companies manage manufacturing, distribution to third-party channels and inventory management.
To start, apparel brands typically design ‘size sets’ that mirror population usage patterns. For example, a t-shirt pack might include 1 XS, 2 S, 3 M, 3 L, 2 XL, and 1 XXL. For efficiency, factories produce all sizes in a single run, reducing setup time and maximising machine utilisation. They also package and send the design in these predesignated “size sets “to the third-party channels that they sell through.
However, footfalls in the stores and customers’ buying behaviour doesn’t always replicate the same pattern. As the season progresses, the channel partners sell out of ‘fast runners’ like M or L, while ‘odd sizes’ such as XS or XXL accumulate on the shelves. Replenishment doesn’t happen at the size level. So, to protect their top line, channel partners are forced to buy more full-size sets. Stocks of ‘odd sizes’ of popular designs pile up, while the distributor or retail partner doesn’t order for some other design even after discovering that the fast-moving sizes are stocked out. Over time, this ineffective inventory management practice, ties up working capital, inflates inventories, and drives reliance on deep discounts to clear stock.
On the flip side, fearing excess inventory, some channel partners often don’t order slow-moving designs even if the popular sizes are stocked out. Their hesitation to take on a broader range restricts their assortment to proven bestsellers. Consequently, consumers see hot-selling products dominate for longer periods of time, with fewer fresh styles from the brand. Their margins erode, while competitors are catching up with newer styles. Thus, poor inventory management not only limits visibility of new collections but also weakens brand competitiveness. What started as a strategy to improve production efficiency for manufacturers ends up creating inefficiencies, financial strain, and missed opportunities across the supply chain.
This raises a fundamental dilemma for companies: should they continue prioritising factory efficiency with full-size sets, or should they accept higher setup times to produce based on actual demand, thereby improving size availability and reducing retailers’ inventory burden?
The answer lies in recognising that the market, not the manufacturer, determines the true size mix. Every design, store, and season may have unique sales patterns, and inventory practices must adapt accordingly.
A practical solution is a two-step approach:
- Initial launch: Ship full-size sets in a lower quantity to estimate the sales trend and not pump all the produced inventory to the channel partners.
- Frequent and faster replenishment: Restock frequently only based on real consumption data, focusing on fast-moving sizes while avoiding replenishment of slow sellers.
To make this work, fashion companies should maintain buffer stock at warehouses as a safeguard against sudden demand shifts, while providing manufacturing with real-time sales visibility. They should also build an inventory management system where real-time stock of the channel is visible leading them to enable replenishment faster to such channels. This enables the manufacturing team to adjust production intelligently, ensuring frequent reorders and higher inventory turnover, which benefits both sides.
The payoff is significant. The continuous availability of popular sizes prevents lost sales, while reduced excess inventory lowers discounting and clears working capital. Vector Consulting’s clients that adopted size-level replenishment saw stockouts fall from 25%–30% to under 5%, with sales growing nearly 25% alongside reduced end-of-season markdowns.
By breaking free from the rigidity of fixed size-set production and embracing demand-driven inventory management, companies alike can create a win-win scenario—boosting efficiency, profitability, and customer satisfaction. Authored by – Muralikrishna B, Associate Partner, Vector Consulting Group and Tapan Mandavkar, Lead - Secondary Research, Vector Consulting Group
Disclaimer: No Business Standard Journalist was involved in creation of this content