Keeping Pace With Fickle Fashionistas

The fashion industry faces an overproduction problem. Collectively, brands generate 150 billion garments a year, according to an MIT study. Of that amount, between 15 billion and 45 billion pieces go unsold, according to trend forecaster WGSN.

The challenge of narrowing the gap between what consumers want and what is produced is never greater than on Black Friday—the day after Thanksgiving that has expanded into a retail event lasting most of November. Sales in this period can make or break brands’ annual revenues. Nearly half of purchases over the 2023 Thanksgiving weekend were clothing and accessories with a record 200.4 million consumers shopping the sales event, surpassing the previous year’s record of 196.7 million, according to National Retail Federation polling. 

Like many fashion brands, online retailer SHEIN, a shopping app beloved by Gen Z that’s known for a wide variety of items at affordable price points, anticipates high consumer interest leading up to Black Friday. To accurately match demand and quickly scale up production when items become best sellers, the company utilizes a “test-and-scale” production model.  

During a previous Black Friday sales season, SHEIN was seeing consumer sales traffic spike for a particular matching set featuring a pullover top and sweatpants. Inspired by streetwear but sleek enough to present a polished look, the set quickly sold out its initial run of 100 pieces.

These small initial runs are what set SHEIN apart from many competitors. As consumer demand kept growing in the weeks leading up to Black Friday, the company reordered the set eight more times, with average batch sizes of between 350 and 400 pieces. 

Not only did its “test-and-scale” production cycle that can be compressed to as little as 10 days enable SHEIN to quickly adjust to this unanticipated demand, it also meant that there were far fewer extra items in other styles sitting around unsold in its suppliers’ warehouses. 

This agility means that underperforming products never go into full-scale production, enabling the company to keep low unsold inventory rates, says Peter Pernot-Day, Head of Strategic Communications, US and UK at SHEIN.

Because small-batch testing creates a wait-and-see gap of downtime for manufacturers, SHEIN uses its digital supplier portal to assign each manufacturer a mix of full runs and test-and-learn batches, so suppliers stay busy making clothes that are very likely to be sold. 

“We want to remain agile, but we want our suppliers to do so as well, in their own business,” says Pernot-Day. “That’s the best use case for harnessing consumer data: helping your business run more efficiently and passing that on to suppliers as well.”