Fashion Overproduction: Earth's Cost
The fashion industry holds at least $500 billion in excess inventory globally due to demand shifts and supply chain disruptions. The Ellen MacArthur Foundation reported over 92 million tons of textile waste annually which demands brands must change. Not just from a sustainability perspective but financially the mis-match from supply to demand is killing businesses. Digitally native consumers no longer want out of date collections and so the only way is to evolve to a digitally native supply chain. OnPoint Supply Services are focused on key areas which address the causes, consequences and costs of over production, product returns and stockouts. Learn from global brands mistakes below and avoid making the same.
Fashion Forecast Fiasco’s
ASOS
Situation
The £100 Million Inventory Write-down
Financial Impact:
Pre-tax loss: £379.3 million (FY24)
Inventory write-down: £100 million
Revenue decline: 13% year-over-year
Causes of Inventory Issues:
ASOS suffered from poor demand forecasting and over-ordering, which was exacerbated by COVID-19 disruption and slow clearance of aged stock. The company had accumulated inventory levels that more than doubled to over £1 billion due to what they described as "poor commercial practices"
Source: ASOS Annual Report 2024
Recovery Plan:
A comprehensive "new commercial model" featuring:
Test & React model bringing products from design to site within 3 weeks
50% inventory reduction program
Focus on full-price sales rather than discounting
Improved speed-to-market reducing lead times
80% of current fashion stock now less than 6 months old
Boohoo
Situation
The £160 Million Loss Without Direct Write-downs
Financial Impact:
Pre-tax loss: £159.9 million (FY24)
Revenue decline: 17% year-over-year
Inventory increased by £29.9 million due to US expansion
Causes of Inventory Issues:
Boohoo faced weak consumer demand, intense competitive pressure from Chinese fast-fashion retailers like Shein, and supply chain disruptions. While they didn't record major inventory write-downs, their inventory management issues contributed significantly to their financial struggles.
Source: Boohoo Group Annual Report 2024
Recovery Plan:
50% inventory reduction program
Tighter inventory management through "test and repeat" sourcing model
Focus on improving gross margins through better inventory control
Superdry
Situation
From 18.9 Million to 7.2 Million Units
Financial Impact:
Pre-tax loss: £148 million (FY24)
Inventory provision: £2.6 million
Inventory reduced from £112.5 million to £79.6 million
Causes of Inventory Issues:
Superdry suffered from accumulated aged stock, unseasonal weather patterns that affected sales timing, and difficulties with wholesale partners who were experiencing financial problems. The company had built up excessive inventory levels over several years, reaching a peak of 18.9 million units.
Source: Superdry Annual Report 2024
Recovery Plan:
Strategic stock reduction program targeting 7.2 million units
Improved inventory aging management
Better alignment of purchasing with demand patterns
Focus on clearing aged stock through markdown participation
River Island
Situation
Financial Impact:
Pre-tax loss: £32.2 million (FY23)
Revenue decline: 15.1% to £701.5 million
Operating loss: £34.1 million (vs £7.4 million profit in 2022)
Gross profit reduction: £46.7 million (down from £75.8 million)
Causes of Inventory Issues:
River Island faced severe supply chain disruptions, particularly the Red Sea shipping crisis, which led to stock build-ups in wrong locations and timing issues. The company also struggled with excess stock clearance costs as consumer demand weakened.
Source: River Island Strategic Report 2023
Recovery Plan:
Rescue restructuring plan approved in 2025
33 store closures to optimize retail footprint
Inventory optimization focusing on core product lines
Improved supply chain resilience planning
Marks & Spencer
Situation
Financial Impact:
International sales decline: 1.0% to £719.1 million
Adjusted operating profit decline: from £67.9 million to £47.7 million
Margin compression: from 9.1% to 6.6%
Causes of Inventory Issues:
M&S experienced overstocking issues, particularly in India, due to weaker sales forecasting and slow supply chain response. The company's international segment suffered from poor demand prediction and inadequate inventory management systems.
Source: M&S Annual Report 2024
Recovery Plan:
New forecasting and ordering system rollout (50% complete)
Stock level reduction initiatives in international markets
Improved planning platform with real-time ordering capabilities
Channel-specific ranging and capacity-linked production planning by 2027
Returns Ruin Retail
The UK fashion industry faces a critical returns crisis, with apparel returns costing £7 billion in 2022 alone; Source: British Fashion Council. Online fashion returns are projected to reach £27 billion across non-food retail in 2024, with fashion items experiencing return rates of 24.4% for online purchases. Source: Retail Economics. The environmental impact is equally staggering, generating 750,000 tonnes of CO2 emissions annually from discarded apparel.
Key UK brands have implemented various strategies to combat escalating return costs. ASOS now charges £3.95 for returns under £40 and bans customers with 70%+ return rates, while H&M and Zara charge £1.99 and £1.95 respectively for online returns.
PrettyLittleThing briefly introduced a £1.99 return fee before reversing the policy. Despite 79% of fashion retailers now charging return fees, rates remain stubbornly high.
Contributing Factors
Bracketing - (27% deliberately over-order sizes/colors)
Wardrobing - (15.6% buy for short-term use)
Staging - (14.5% purchase for social media content)
Alarmingly, 75% of returned clothes = 23 million garments end up in UK landfills annually, creating 7kg of fashion waste per person of the UK population.
Only 25% of unsold returned clothing is recycled, with the remainder incinerated or landfilled. Source: Bleckmann.
Addressing product return challenges
Retailers can take proactive steps to mitigate these problems. We suggest three key areas to focus on:
Product Representation
Enhancements in product descriptions, size calculators, 360-degree views and diverse models can help consumers select the right products on their first attempt, thereby reducing return rates.
Technology
Innovations like virtual reality dressing rooms may allow consumers to shop with increased confidence. Additionally, automation, digitalization, and the use of artificial intelligence can streamline the returns process, improving logistics and reselling efficiency.
Consumer Education
Raising awareness about the environmental and financial impacts of returns can motivate consumers to make more thoughtful purchasing choices. Ultimately, tackling overconsumption seems crucial to resolving some of these issues.
Eight reasons to drive change:
Increased Operational Costs
Loss of Inventory Value
Impact on Cash Flow
Customer Acquisition Costs
Consumer Behavior Alteration
Sustainability Costs
Increased Discounting
Effects on Brand Reputation
Providing the option to customise a garment inherently makes the garment more unique and often the consumer takes more care in selecting. A customised garment can be perceived as a much higher personal value and deter the consumer from returning altogether. Addressing the challenges posed by garment returns will have a positive impact on customer experience, sustainability and your bottom line.
Stop Stockout
What is Stockout?
Stockouts cost the global retail industry nearly $1 trillion annually, with over 50% of fashion retailers experiencing lost revenue due to inventory shortages. In the UK fashion sector, stockouts create a paradoxical situation where brands simultaneously struggle with excess inventory worth $70-140 billion while losing sales from out-of-stock items.
The primary causes include supply chain disruptions, inaccurate demand forecasting, and the fashion industry's unique challenges of volatile micro-trends that can fluctuate 300% in search volume within 12 months.
UK fashion retailers face severe consequences: when stockouts occur three times, 70% of customers abandon the online store permanently. Out-of-stock sizes rank as shoppers' top complaint, causing up to 20% average profit loss through inaccurate size purchasing. Customer behavior research shows unexpected stockouts actually increase brand loyalty as consumers seek same-brand alternatives, while expected shortages drive brand switching.
Leading UK brands like ASOS, Next, and M&S have implemented sophisticated inventory management systems, with Zara's rapid-response model demonstrating how 15-day production cycles can minimize stockouts while maintaining fashion relevance.
Have you experienced the consequences of stockouts?
Lost Sales Opportunities
Brand Loyalty Erosion
Higher Marketing Costs
Reduced Production Efficiency
Reputation Damage
Negative Impact on Seasonal Sales
Supply Chain Disruptions
Inventory Write-Offs
Opportunity Cost
By effectively managing inventory and demand forecasting, apparel and fashion brands can minimize the negative financial impacts of stockout situations.
Our Services
Are designed to alleviate these issues and concerns, enabling you to prioritise your core business objectives. We specialise in a comprehensive approach that covers all elements of the supply chain, from sourcing high-quality fabric and ready-made garments to implementing advanced technologies that facilitate an on-demand supply chain.
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