Among today’s significant environmental problems is the fallout from the “fast fashion” industry. Each year, millions of garments are bought and disposed of by consumers, leaving behind a wake of water pollution and carbon emissions. Also surprising is the amount of apparel that is manufactured and then disposed of before it even gets sold.
In addition to the by-products of fast fashion, retailers are generally challenged with inventory management issues, and recent trends have made it worse. Most notably, pandemic-related supply chain issues meant that retailers over-ordered on merchandise. And today, now that the ships and shipping containers have disgorged their merchandise, retailers are faced with a glut of product — often product that’s about to go out of style or is otherwise “perishable” — as the economy slides towards recession and consumers hesitate on purchases.
Many retailers aren’t accepting returns, and shoppers have come to expect deep markdowns because shelves and warehouses must be cleared out. The industry is unprepared for the increasing costs (and environmental footprint) associated with the increased demands on warehousing and transportation of this dead stock.
As a result, well before Black Friday and Cyber Monday, consumers have found that great deals are available, with many stumbling across non-promoted specials that illustrate retailers’ willingness to discount and lose margin or even sell at a steep loss just to clear out existing inventory.
This uneven supply and demand scenario needs correction, and merchants must find ways to solve current problems and also to better manage future retail seasons. Many are looking to improved inventory management techniques and artificial intelligence (AI), as well as leveraging areas that previously had been overlooked as levers to boost sustainability, such as marketing technology for improved results.
The Overlap of Supply Issues and Sustainability
There is significant overlap between supply chain issues — including the current inventory glut — and sustainability. Sustainability goes beyond the waste associated with product manufacturing, and spills over into the environmental footprint of shipping, warehousing and logistics/fulfillment.
When product remains unsold, it sits in warehouses, taking up space and awaiting liquidation. Energy and materials are wasted, as this inventory must be tracked, packed, loaded, boxed, and potentially moved around to make space for other products. When and if liquidated, there is significant carbon impact when these goods must be transported, and significant amounts of paper and plastic waste in the form of boxes and packing materials. Many brands still incinerate or otherwise destroy unsold inventory despite public outcry and pending or recently enacted legislation. At every point in the process of liquidating unsold products, there are significant environmental impacts and cost implications.
Turning Challenges Into Opportunities
However, opportunities exist at the intersection of supply chain issues and sustainability. Brands and retailers must develop ways to be more responsive to customer desires in order to move product, and ensure they have the right product in the first place, so they don’t end up in this situation.
Previously, marketing was one of the last departments one would think of when cooking up groups within the organization to help improve sustainability outcomes. However, the ability to increase visibility of product in a way that inspires customers is where marketing can drive significant change in inventory optimization and positively impact sustainability. In many organizations, the marketing production cycle is very lengthy, and there is no realistic way to change the products featured in editorial campaigns and inspirational photo-shoots because production happens so far in advance. Typically, marketers will decide on and produce the campaigns for a given retail season far ahead of its arrival — sometimes measured in years.
The creative production process to make a simple ad campaign is so time-consuming that it is impossible for marketing to create a beautiful and compelling campaign featuring every single product. This means that they have to select which products receive this level of treatment, and create a self-fulfilling prophecy: The ones that get the “white glove marketing love” sell better, while the rest of the “long tail” doesn’t sell as well.
Unfortunately, most retailers and brands are incapable of creating compelling marketing assets featuring every single product, let alone updating marketing assets dynamically based on what is happening with supply, such as removing and replacing product from assets when they’ve gone out of stock and featuring heavily those that need extra visibility. Those products that need the boost are the first items to be discounted and put on sale, and marketing cannot be used as a lever to spur sales.
There may be nothing inherently bad about these products; the old axiom “a dog is a dog” is only true about 15% of the time. In most cases, increasing the visibility of the product, and providing curated inspiration in the form of a marketing asset will improve the sell-through of the item long before it has to be discounted or liquidated. Therefore, marketing technology that allows for these quick, inventory-aware updates without the need for a lengthy production or re-work cycle are the key to marketing’s ability to improve sustainability outcomes.
Companies can also leverage technology in the area of inventory management to sell more goods while reducing the environmental impact of fulfillment. Again, most marketers who produce editorial content do so with such a long delay before the product is actually for sale, they have no way of knowing which warehouse each product will live in. If the brand or retailer is lucky enough to drive a multi-item purchase, the marketing campaign may inadvertently increase the likelihood of a “split shipment” where two products purchased by the consumer at the same time are coming from two different warehouses, in two different boxes, on two different carbon-spewing trucks.
Real-time composable marketing content makes it possible that products from the same location are featured in these high-value editorial campaigns and are dynamically updated as stock changes. Similarly, this dynamic approach to marketing, using inventory-awareness, allows brands to take advantage of localized purchasing trends, which may include stronger demand in one region versus another.
Marketing technology tied to inventory can also help make better decisions on what to sell in the first place. If the campaign assets are composable dynamically, then the technology knows what is in the warehouse at any given time, by definition. That intelligence allows for rich analytics that showcases to merchants and buyers what is selling well.
And it allows for a variety of campaigns, which can help the brand ascertain what styles are resonating with customers even before producing a single new product. While there is no physical way to have all products manufactured to perfectly reflect the market, or to achieve a perfect fit with demand all of the time, technology — including visibility into supply chain data — enables merchants to be much more on target, more often. Doing so means that sales can and will increase, and that companies are more likely to achieve optimized inventory levels.
In an idealized scenario, technology works in concert with marketing to support inventory optimization and more environmentally conscious stock levels. To achieve this, brands should continue to do what they’re doing on the marketing front, with human-powered creative teams that establish a creative vision, while outsourcing the large-scale production of marketing assets to automated technology solutions that can help drive sales via real-time composable content.
Merchandising teams are thus empowered to use marketing assets as a lever, instead of turning to discounts right away, or having the wrong products pile up in warehouses. This is where the intersection of marketing and AI can really make a difference — not only for retailers and brands but also for the environment.
Michelle Bacharach is chief executive officer of FindMine.
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