time8 min read

How to Overcome 5 Great Challenges in the Fashion Industry Once and for All?

time8 min read

To an outsider, fashion retail looks and acts like any other retail business. They may wonder what the difference is between selling lumber, kid’s toys, or exclusive t-shirts? Conceptually, there is no difference because, like all businesses, it’s about selling products to customers. In reality, the difference is not just substantial, it’s enormous. Any experienced fashion merchant will say that challenges in the fashion industry are unique and require unique approaches to overcome. The global pandemic, rapidly changing business environment, and overall economic instability, add another level of complexity.

Becoming an experienced, successful fashion retail merchant can take years and cost millions in trial and error. We want to accelerate this process by making you aware of the most common challenges and strategies to solve them immediately, in less than 10 minutes. We have leveraged our 12 years of retail experience, analyzed modern technological and industrial trends, reviewed the world’s best practices, and generated a list of 5 great challenges and effective solutions in the fashion industry.

Make yourself comfortable, a journey that will change your fashion business forever is about to begin.

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List of Common Challenges in the Fashion Industry


Unmanageable Inventory

Volume, Variety, and “Deadstock”

Inventory management is a painstaking process for almost all retail businesses. With an increasing number of channels, the supply chain crisis and the trend towards omnichannel strategies, inventory is becoming a top priority for optimization to unlock growth. Issues with data accuracy, visibility, and reporting could negatively impact efficiency and long-term success.

In fashion retail, the process is complicated by the nature of the business. To provide accurate information, inventory management software solutions must support specific scenarios unique to the fashion industry.

First, the software should support working with and processing large amounts of inventory quickly. Different combinations of sizes, styles, collections and suppliers combine to create nearly infinite lists of stock that must be managed. Second, it’s critical to identify and process “deadstock”, defects, thefts, and items on hold. Over time, they may become an impactful number affecting future forecasting.

Read also: 3 Powerful Technologies to Drive Sustainability in the Fashion Industry

Implement IMS or POS system

The unique nature of fashion dictates that the optimal way to address the inventory management mess is through customized software. This software could be implemented as a separate Inventory Management System (IMS) or as a Point of Sale (POS) system that includes inventory management functionality. Off-the-shelf solutions are not an option for several reasons:

  1. Any vendor wants to implement software rapidly and at a low cost. This means no prior business analysis, consulting, or integration. As a result, numerous, non-applicable features, missing data, and overall unreliability occur.
  2. While looking for a SaaS solution, you’ll see that almost every IMS or POS vendor ensures that their software is capable of eCommerce integration. While true, 99% of these integrations are limited in functionality and reporting. As a result, it becomes challenging to address the whole channel, creating lost revenue.
  3. If your business runs specific software or hardware, it’s unlikely that an off-the-shelf software will work properly due to compatibility with only a limited number of technologies.
  4. Finally, lack of reporting and support, hidden fees, and no control over the process make off-the-shelf technologies a risky proposition. What’s the value of investing in a solution with these issues?

Customized software, in turn, makes the above issues disappear. Custom software adds value. By developing software using modern technologies, it can be maintained by any team for decades into the future, it can be upgraded with any feature needed and scaled to meet any size requirement.

Product Catalog Complexity

Different types of content

To sell more online, you need to have more items on the website. To have more items on the website, you need to create and upload rich product content for each item. To do it quickly, you need to invest in a content team. While this seems to be the only reliable option, you will still face the challenge of human error, supplier data inconsistency, and higher costs.

Fashion requires visual content. Buyers want to buy a skirt, for example, after reviewing dozens of photos from different angles, fitting videos, a poetic description, and precise characteristics. Suppliers may provide data in many different formats, or not at all, requiring the content manager to enrich the details to make everything look appropriate. Then the team step-by-step manually uploads the content to the website based on data coming from tons of different spreadsheets, pdfs, docs, photos, and numbers. Does this sound familiar?

Implement PIM system

As we mentioned above, the solution seems to be straightforward. Add more people to the process and drive more content as a result. Unfortunately, this approach has limitations. To truly optimize content management, you should implement a Product Information Management (PIM) System.

A Product Information Management System is a single repository in which you collect, manage and enrich product data, create a catalog, and upload it directly to an eCommerce website or other software solutions like POS.

Custom-integrated PIM allows the automation of data collection from suppliers and accelerates basic enrichment. PIM supports processing 10 times more content with the same team. It’s not magic. It’s automation.

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Never Ending Flow of Returns

One size doesn’t fit all

Returns are a headache across retail. It’s challenging to establish a process for both standard scenarios and individual, unique cases. Return merchandise policy, reverse logistics, and refunds are the variables that create a perfect flow to keep customers satisfied and returning to buy in the future. The pandemic played a role in the impact of returns. In 2021, eCommerce returns in the US rose about 35% and hit their record (McKinsey, 2021).

The fashion business is impossible without returns. Customers often struggle to find the right fit. McKinsey reports that 65% of returns in fashion retail are due to poor fit or style. For 79% of shoppers that return goods, if the issue isn’t fit-related, it is due to dissatisfaction over quality, according to Yopto. Finally, it’s common that the apparel doesn’t meet the customers’ expectations on color.


Inform, support, and optimize

Due to the complexity of these challenges, a one-stop solution couldn’t be implemented. The solution needs the flexibility to combine different approaches that result in lower returns, a higher satisfaction rate, and fewer losses.

First, provide comprehensive product details. Add more photos, give size sheets, make videos and educational content, use 3d models and write clear descriptions. The goal is to help your customer understand exactly what they’re buying.

Second, invest in the customer support team. Customer support is the first and the most important touchpoint with the customer. Everything about their work should be of high quality. CRM or Customer Relationships Management software can help you establish customer-focused processes.

More details on which CRM to choose: Top 9 the most popular CRM for eCommerce

Rising Prices

Continuous negative trend

From 2020 the world is in the midst of a crisis in the supply chain industry. This has resulted in delivery shortages, shipping delays, and increased product costs. Global labor shortages, the pandemic, rising inflation, and the war in Ukraine are driving a negative supply chain trend.

According to the U.S. Bureau of Labor Statistics, prices for apparel rose around 6% in 2021 compared to 2020. This is the largest percent change since 1981! This could be a huge challenge for fast fashion retailers whose only competitive advantage is price.

Read also: TOP 5 Biggest Retail Trends to Skyrocket Sales in 2022

Rethink marketing and budgeting

To overcome rising prices, fashion retailers need to find ways to cut costs. The challenge is to reduce costs without impacting the customer, efficiency, or profitability. You have 2 main areas on which to work:

  • Marketing costs. Try to audit and optimize the performance of each marketing channel. Analyze main Key Performance Indicators to determine which activities are providing value and which are not. Then, optimize the marketing strategy based on findings. Try to focus your attention on existing customers. Consider lifetime value (LTV), average order value (AOV), and customer acquisition cost (CAC). Approaches like social selling, email, and content marketing could become very handy to improve these numbers.
  • Maintenance costs. While optimizing budgets, it’s important to consider the Total Cost of Ownership (TCO) rather than point spending. Calculate how much you spend on transactional fees, eCommerce platform license fees, other software maintenance, and so on. By determining the true costs, you will be able to determine what you could implement to optimize or reduce this spend.

The Desire for Customization

Easy to plan, hard to implement

Some luxury fashion brands want to differentiate the shopping experience by offering customization options of some goods for their customers. Even though it seems easy at first, it’s a challenge to achieve.


From the negotiation with suppliers or factories to fulfillment, delivery, and pricing strategy, each step in this process is complicated. In addition, software implementation of customizations is even more challenging. Not every eCommerce platform supports customization, and almost none offer it off-the-shelf.

Start with custom OMS

To deliver product customization, you need to implement technologies that will work simultaneously. First, it’s important to integrate an appropriate, custom Order Management System (OMS) with all the necessary functionality built-in. This functionality should be unique for your products and have a resilient back-end, so your data on order will integrate with the rest of the ecosystem.

Then you need to automate the process of transferring order info to a supplier, so you won’t spend too much time and resources negotiating stock and shipping dates. This flow can be achieved by the implementation of both CRM and PIM software.

In Summation

Fashion retail is a challenging but exciting and profitable industry. Exciting because of fastly changing trends, a wide acceptance of modern marketing channels, and a broad target audience. This creates an almost infinite space for experiment and optimization. Profitable because no matter the situation, people always need clothes, so by choosing the right strategy, you’ll always have customers.

The right strategy is impossible without understanding and addressing industry-specific challenges. By overcoming each issue step-by-step, your business becomes agile enough to benefit as customer needs change and resilient enough to stand out from any attacks.

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