• Advertise
  • Contact Us
  • About Us
  • Supplier Directory
  • SCB YouTube
  • Login
  • Subscribe
  • Logout
  • My Profile
  • LOGISTICS
    • Air Cargo
    • All Logistics
    • Express/Small Shipments
    • Facility Location Planning
    • Freight Forwarding/Customs Brokerage
    • Global Gateways
    • Global Logistics
    • Last Mile Delivery
    • Logistics Outsourcing
    • LTL/Truckload Services
    • Ocean Transportation
    • Rail & Intermodal
    • Reverse Logistics
    • Service Parts Management
    • Transportation & Distribution
  • TECHNOLOGY
    • All Technology
    • Artificial Intelligence
    • Cloud & On-Demand Systems
    • Data Management (Big Data/IoT/Blockchain)
    • ERP & Enterprise Systems
    • Forecasting & Demand Planning
    • Global Trade Management
    • Inventory Planning/ Optimization
    • Product Lifecycle Management
    • Sales & Operations Planning
    • SC Finance & Revenue Management
    • SC Planning & Optimization
    • Sourcing/Procurement/SRM
    • Supply Chain Visibility
    • Transportation Management
  • GENERAL SCM
    • Business Strategy Alignment
    • Education & Professional Development
    • Global Supply Chain Management
    • Global Trade & Economics
    • HR & Labor Management
    • Quality & Metrics
    • Regulation & Compliance
    • SC Security & Risk Mgmt
    • Supply Chains in Crisis
    • Sustainability & Corporate Social Responsibility
  • WAREHOUSING
    • All Warehouse Services
    • Conveyors & Sortation
    • Lift Trucks & AGVs
    • Order Fulfillment
    • Packaging
    • RFID, Barcode, Mobility & Voice
    • Robotics
    • Warehouse Management Systems
  • INDUSTRIES
    • Aerospace & Defense
    • Apparel
    • Automotive
    • Chemicals & Energy
    • Consumer Packaged Goods
    • E-Commerce/Omni-Channel
    • Food & Beverage
    • Healthcare
    • High-Tech/Electronics
    • Industrial Manufacturing
    • Pharmaceutical/Biotech
    • Retail
  • THINK TANK
  • WEBINARS
    • On-Demand Webinars
    • Upcoming Webinars
    • Webinar Library
  • PODCASTS
  • VIDEOS
  • WHITEPAPERS
Home » Blogs » Think Tank » AI Could Solve the Footwear Industry's Soaring Return Rate

Think Tank
Think Tank RSS FeedRSS

AI Could Solve the Footwear Industry's Soaring Return Rate

shoes
A runner stops to tie their shoelace. Photo: Canva.
December 6, 2021
Yogesh Kulkarni, SCB Contributor

Christmas is coming, and retailers are already struggling to meet demand due to the lasting impact of the pandemic on supply chains. As we near the end of the year, when holiday sales and shopping reign supreme, companies need to implement proactive strategies that maximize inventory, or else face margin-crushing supply challenges. Artificial intelligence may offer a solution.

The footwear segment of retail presents unique challenges to inventory management, due to issues of sizing variability and return patterns. AI can transform how footwear companies resolve these challenges by helping them manage inventory, forecast market demand and monitor profit margins.

If forecasting were a puzzle, sales forecasting would make up the edge pieces and return forecasting would make up the center. You can’t have a comprehensive picture of retail forecasting without both sales and returns data. Unfortunately, most forecasting systems anticipate sales and neglect returns, likely because returns analysis is far more complex.

For footwear companies especially, where return rates were as high as 40% before the pandemic, sales forecasting alone presents an extremely limited picture of a company’s overall activity. Since the 2020 lockdowns, online sales and returns have only increased.

Some footwear companies are realizing a specific trend in consumer behavior: Customers are buying three pairs of shoes in different sizes so they can try them on at home and return the two that didn’t fit. This is a huge profit killer, because footwear retailers often can't resell what’s been returned from an online purchase as easily as they can a store purchase, where shoe fittings happen in a more controlled environment. Returns may also be due to differences in colors or styles if, for instance, the buyer doesn’t think the shoe looks the same in person as it did online.

To navigate this trend, stores have started to resell “open-box” shoes at a discounted price. While this strategy has helped to stanch hemorrhaging profits, returns and discounts must all be factored into a highly complex math equation, making it nearly impossible to understand the larger inventory picture.

This is where AI can change the game. All retailers need accurate forecasts based on available data to predict and plan for the performance of each retail channel, whether it be online, in-store or a blended buy online, pickup in store (BOPIS) sale. This is an incredible wealth of data to manage, but AI can simplify the process by providing and interpreting inventory insights down to the store, SKU, size, color and style. Only with this degree of detailed information will footwear companies be able to make accurate predictions about sales and returns, and plan inventory accordingly.

Determining Size Optimization With AI

Size optimization is a critical component of the footwear industry, but many retailers don’t have the tools necessary to make informed decisions. A single style of shoe can come in as many as 15 sizes, sometimes more. And when customers purchase more sizes than they will ultimately keep, predictions become more all the more complicated.

AI can pull critical data from multiple sources, not just historic sales, to help retailers determine which sizes to stock more or less of. AI-generated forecasts are then further improved with machine learning, which gets smarter over time thanks to new data and updated information. The best AI forecasting systems give more accurate predictions, because they’re constantly learning from the result of each forecast and adjusting accordingly for even further accuracy. Ideally, for a retailer this would result in automated, “no touch” demand forecasting, giving human planners more time to focus on the exceptions.

Supply chain delays have thrown a wrench in replenishment planning. Most merchandisers predict which and how many products they’ll sell early in the season, and make a long-term plan based on this forecast. Without detailed, real-time forecasting, especially in the face of supply chain volatility, these early predictions can be a guessing game at best.

AI provides detailed insights into sales, and can help retailers optimize their pre-season allocation strategy. Companies can then determine buying trends and patterns, analyze inventory and incorporate actual sales and returns to make more accurate in-season predictions.

With AI, retailers can get this information in real-time so they can act promptly, instead of waiting or making moves based on outdated information. With insights into week-by-week sales, retailers can take a more proactive approach to replenishment. They’ll be able to determine what to restock, what may sell out and the rate of returns on a given product. In this way, retail replenishment is transformed, and margins expand for better profits.

A Store-By-Store Approach

To thrive and grow in this post-pandemic shopping environment, footwear retailers need to take a store-by-store approach when determining a forecasting, allocation and replenishment strategy. Retailers can’t simply rely on last year’s data, regional data or overarching predictions; they need to incorporate granular levels of insights that generate data-driven and usable recommendations. Slight differences in demographics can significantly impact which sizes and styles will be more popular than others in a given region at a given time.

This may sound daunting for footwear retailers with multiple stores across the country or world, but AI makes the process attainable by automating the data collection and modeling. Retailers can spend more time making accurate forecasts and taking steps based on reliable data, instead of making predictions from educated guesses.

Many industries, from retail to fashion to food, have taken reactive approaches to inventory retail strategies for far too long. We have the technology and tools to make accurate forecasts and maximize profits in times of extreme market volatility. It’s time for retailers to invest in a scientific methodology and AI-powered, omnichannel-focused strategies that make forecasting, allocation and replenishment more accurate and more effective. AI makes this possible, and it gets smarter every day.

Yogesh Kulkarni is co-chief executive officer of antuit.ai, part of Zebra Technologies.

Apparel E-Commerce/Omni-Channel Retail

RELATED CONTENT

RELATED VIDEOS

Subscribe to our Daily Newsletter!

Timely, incisive articles delivered directly to your inbox.

Popular Stories

  • A PERSON HOLDS UP A TABLET COMPUTER IN A WAREHOUSE, SUPER-IMPOSED BY A GRAPHIC SHOWING A COMPLEX WEB OF SUPPLY CHAIN ELEMENTS

    Three Post-Pandemic Actions for Repairing Global Supply Chains

    Data Management (Big Data/IoT/Blockchain)
  • A MAN IN A SUIT SHAKES HANDS WITH A WOMAN IN A HARD HAT, NEXT TO A STACK OF CONTAINERS

    Three Procurement Technology Evolutions for 2023

    Sourcing/Procurement/SRM
  • DOCUMENTS BEARING THE INSIGNIA OF US CUSTOMS AND BORDER PROTECTION LIE ON A TABLE

    New CBP Regs Call for Greater Diligence by Brokers in Reporting Security Breaches

    Freight Forwarding/Customs Brokerage
  • The blank stare of a child's eye who is standing behind what appears to be a wooden frame

    The Alarming Continued Rise of Modern Slavery in Supply Chains: How Procurement Can Help Reverse the Trend

    Sourcing/Procurement/SRM
  • A GROUP OF WORKERS RANGED IN AN OFFICE, OF DIVERSE RACE, GENDER, AGE AND PHYSICAL ABILITY

    Podcast | The Supply Chain Workforce of the Future Is Already Here

    HR & Labor Management

Digital Edition

Scb nov 2022 sm

2022 Supply Chain Innovator of the Year

VIEW THE LATEST ISSUE

Case Studies

  • New Revenue for Cloud-Based TMS that Embeds Orderful’s Modern EDI Platform

  • Convenience Store Client Maximizes Profit and Improves Customer Service

  • A Digitally Native Footwear Brand Finds Rapid Fulfillment

  • Expanding Apparel Brand Scales Seamlessly with E-Commerce Technology

  • How a Global LSP Scaled its Security Program and Won More Business

Visit Our Sponsors

Orderful Yang Ming Alithya
Barcoding Blue Yonder BNSF Logistics
CoEnterprise Data Capture Deposco
E2open GAINSystems Generix
Geodis GEP GreyOrange
Here Honeywell Intelligrated IFM
Infor Inmar Keelvar
Kinaxis Korber Lean Solutions Group 2H
Liberty SBF Locus Robotics Logility
LogistiVIEW Lucas Systems MCA Connect
MPO Nvidia Old Dominion
OpenText ORTEC Overhaul
Parsyl PMMI QIMA
Redwood Logistics Ryder E-commerce by Whiplash Saddle Creek Logistics
Schneider Dedicated Setlog Holding AG Ship4WD
Shipwell Tecsys TGW Systems
Thomson Reuters Tive Trailer Bridge
Vecna Robotics Verity
Verusen
  • More From SCB
    • Featured Content
    • Video Library
    • Think Tank Blog
    • SupplyChainBrain Podcast
    • Whitepapers
    • On-Demand Webinars
    • Upcoming Webinars
  • Digital Offerings
    • Digital Issue
    • Subscribe
    • Manage Your Subscription
    • Newsletters
  • Resources
    • Events Calendar
    • SCB's Great Supply Chain Partners
    • Supplier Directory
    • Case Study Showcase
    • Supply Chain Innovation Awards
    • 100 Great Partners Form
  • SCB Corporate
    • Advertise on SCB.COM
    • About Us
    • Privacy Policy
    • Contact Us
    • Data Sharing Opt-Out

All content copyright ©2023 Keller International Publishing Corp All rights reserved. No reproduction, transmission or display is permitted without the written permissions of Keller International Publishing Corp

Design, CMS, Hosting & Web Development :: ePublishing