Data: Size matters – is a lack of availability punishing fashion retailers?

We’ve all been there. After hours of browsing for that perfect dress, you’ve finally found the one. But you click buy, or worse still, trek to a shop to snap up the fabulous frock, only to find out it’s out of stock.

Not only are out-of-stocks frustrating for shoppers, but retailers are also missing out on sales.

Just last year, Joules flagged that stock availability issues during its Christmas peak hampered sales and took its toll on full-year profits. Despite traffic to its website growing 8% over the period, the retailer’s festive sales fell 4.5%, compared to an 11.7% jump the previous year.

At a time when fashion retailers need to grab every sale they can get, is a lack of product availability heaping more pain on the industry?

Retail Week has teamed up with Newton, an operational transformation consultancy that specialises in retail, to find out how the UK’s top fashion retailers fare in terms of size availability in womenswear, and the results are startling.

The scale of UK fashion retailers’ availability problem

Using data from Newton’s analytics platform, we looked at 10 of the UK’s top womenswear retailer’s websites, covering almost 350,000 SKUs, and found that many retailers are failing to give shoppers what they want. Across all 10 retailers, an average of 29% of products sold were out of stock at a size level.

At one supermarket fashion giant, more than two-thirds (67%) of all products were unavailable. However, at the other end of the scale, just 4% of SKUs at fast-fashion retailer Zara were out of stock.

This comes at a time where having the right products in stock online is more vital than ever before.

Former M&S style director Belinda Earl, now a non-executive director at global retail giant Woolworths Holdings, says: “Retail is competitive and customers are demanding. With more people currently buying online, a lack of size availability is arguably more visible and more frustrating for customers, and more damaging to brands. 

“If a customer cannot add an item to their basket because their size is unavailable, then as well as a lost sale, this could be a lost customer. All retailers are fighting for a share of the customer’s purse, and being able to buy the right size has never been more critical."

River Island director of merchandising, menswear and branch merchandising, Paul Sprackling agrees: “Size availability is one of the key factors in driving customer conversion.

"As customers shift to shopping online, particularly during lockdown, it is vital that we are delivering River Island products to all of our customers by offering a full range of sizes, including plus and petite on womenswear and big and tall on menswear.” 

Drilling down into where out-of-stock items are found highlights a significant difference in availability across certain sizes, with women size 18 and above less likely to find products in stock.

How to get it right?

There are ways to get availability right.

Look at M&S. Last year, the retailer put its 7.8% sales decline in clothing and homewares down to “poor availability on the most popular sizes”. However, just a year later M&S ranks as one of the top three retailers for stock availability in Retail Week and Newton’s analysis.

M&S planning lead Harriet Robison says: “We know that good availability across our sizes is extremely important for our customers both online and in-store.”

Strong availability is a key element of M&S’ 'Never the Same Again' programme, which it introduced earlier this year to accelerate its transformation to emerge stronger from the pandemic. 

Robinson says simplifying its range is a key focus. Its current autumn/winter collection has 20% fewer product options as it has removed duplicate and slow-selling lines.

“This focus on winning lines enables us to protect our most popular product areas so customers can feel more confident we’ll have what they want, in the size they want,” she says.

Robinson adds that its improved availability is also down to “buying with confidence”. It is backing both its bestsellers, particularly in ‘hero’ areas like knitwear, coats and denim, and areas that have grown in popularity such as its activewear range Goodmove.

But what makes M&S’ buyers so confident? Data is, of course, crucial and “at the heart” of its decision making, according to Robinson.

Her womenswear team studies both sales history and market share opportunity data to help make decisions.

It is a similar story at River Island, which uses several data-measuring platforms to build customer insight on its product offer. 

The fashion retailer also uses AI, which processes customer demand data to allocate and replenish stock.

River Island director of merchandising Paul Sprackling says this added understanding of demand patterns has helped it overcome lost sales.

“Previously our teams would have simply looked at sales and not taken into consideration missed sales potential. By taking both into consideration, we are now looking at what the true customer demand has been to forecast future sales,” he says.

AI also analyses where there is an opportunity to grow River Island’s range to allow it to develop new ranges in line with the trends its customers want to shop.

Hansen warns that AI is not a silver bullet that can solve all availability issues: “Unfortunately the algorithms are often poorly understood so the slightest error leads to a lack of trust and poor adoption. Manual workarounds based on gut feel quickly creep back in.

“We’ve found that the highest level of accuracy comes from a hybrid approach, combining data science with the experience and understanding merchandisers have of their customers and products. 

“We use an algorithm to look at historical data to accurately model size ratios by product and channel adjusting for lost sales. In one large retailer recently, this was worth over £10m of profit.”

For new lines, Newton matches product characteristics to recommend products that merchandisers can use as a reference point. 

Wickes says: “By presenting the mechanics of the algorithm transparently to the merchandiser, they can make adjustments to the reference product selection and adjust for other factors such as targeting new customer segments. Merchandisers should be empowered to use the data to guide their decisions rather than feeling controlled by the computer.”

Getting stock levels wrong, be it too many or too few items, is costly for fashion retailers but finding the right balance is a tough task that requires a mix of art and science. 

As much as machines can help retailers make sense of all the data at their disposal – from previous demand patterns to lost sales in past seasons and market growth potential – do not underestimate the knowledge and instinct of buyers and merchandisers. 

By getting the blend of art and science right, fashion retailers can capitalise on every ounce of demand to come through these challenging times.