A REPORT ON

FASHION FORECASTING

(2011-12)

SUBMITTED TO...

DR. SANTOSH SONI

SUBMITTED BY:-

ANKAJ KUMAR

TEXTILE DESIGN

SEMESTER - V

Acknowledgement

I would like to acknowledge and extend my heartfelt gratitude to our faculty Ms. Santosh Soni who guided me throughout the project work. She helped me by suggesting the correct books and magazines. It would have been a tough task if she wouldn’t have helped me with my research work. I would also like to thank our library in charge Mr. Rajneesh Tamrarkar. He was the one who provided me with the necessary magazines and books for my research work.

FASHION FORECASTING

Introduction:

What is a Forecast?

•A guess about what is going to happen in the future

•An integral part of almost all business enterprises

•Logical and rational, but still a guess!

•Objective is to minimize error (as you will always be wrong!)

•Could be a complicated or simple process

•Good forecasts can lead to

–Reduced inventory costs

–Lower overall personnel costs

–Increased customer satisfaction

•The forecasting process can be based on:

– Educated guess

– Expert opinions

– Past history

Forecasting is the science of the predicting future outcomes. In business, it applies to

the future of business, product or industry. It’s extremely important for a business to do

proper forecasting before developing new products, or product lines.

Fashion forecasting

Foreseeing fashion trends and predicting those trends early enough to allow time for production to meet the consumer demand.

Activities in fashion forecasting

• Making and reporting predictions based on logic, market research, and instinct

• Coordinating information gathered from fiber, yarn, and apparel companies, and textile shows worldwide

• Analyzing the fashion press, visiting the world’s fashion centers, and observing fashion leaders

• Conducting marketing research

• Consumer research

• Surveys by telephone or mail to determine income levels, lifestyles, fashion preferences, and shopping habits

• Consumer focus groups to discuss aspects of shopping satisfaction and the pros and cons of currently offered merchandise

• In-store informal interviewing to assess what customers like and dislike and what they want but cannot find

• Market research

• Study of market conditions

• Observation of consumer lifestyles

• Study of current events, the arts, and the mood of the public

• Sales research

• Evaluation of previous records to recognize sales trends

• Rising sales identify developing trends.

• Declining sales show what fashions have passed their peak.

• Weak sales indicate fashions that are not meeting consumer demand.

• Comparison shopping

• Evaluation of currently popular designer collections

• Review of fashion publications, catalogs, websites

• Observation of “street” fashions and celebrity wardrobes

A statement about the future value of a Variable of interest such as demand.

Forecasts affect decisions and activities throughout an organization

– Accounting finance

– Human resources

– Marketing

– MIS

– Operations and Product service demand

Introduction to Forecasting: Examples

Manufacturing firms forecast demand for their product, to schedule manpower and

raw material allocation

Service organizations forecast customer arrival patterns to maintain adequate

customer service

Security analysts forecast revenues, profits, and debt ratios, to make investment

recommendations

Firms consider economic forecasts of indicators (housing starts, changes in gross

national profit) before deciding on capital investments.

Model Differences

•Qualitative – opinion-based; incorporates judgmental and subjective factors into

forecast

•Quantitative – number-based; most frequently used

–Time-Series – attempts to predict the future by using historical data over time

–Causal – incorporates factors that may influence the quantity being forecasted into the

model

Forecasting is usually carried out in order to provide an aid to design-making and in

planning in the future. Application for forecasting includes..

Inventory control or production planning – forecasting the demand for a product

enables to control the stock of raw materials and finished goods, plan the

production schedule, etc

Investment policy- forecasting financial information such as interest rates,

exchange rates, share prices.

Economic policy – forecasting economic information such as groth in the

economy, unemployment, the inflation rate, etc is vital both to government and

business in planning for the future.

Why forecast?

Forecasting is an attempt to foresee the future by examining the past.

Forecasts require judgment.

Land times require that decisions be made in advance of uncertain events.

Forecasting is an important for all strategic and planning decisions in a supply

chain.

Forecasts of product demand , materials, labor, financing are an important inputs

to scheduling, acquiring resources, and determining resource requirements.

Most estimates obtained in quality forecasting are derived in an objective and

systematic fashion and do not depend solely on subjective guesses and hunches

of the analyst.

Need for forecasting

i. Helps in Production Planning:

The rate of producing the products must be matched with the demand which may be

fluctuating over the time period in the future. Since its time consuming to change the rate of

output of the production processes, so production manager needs medium range demand

forecasts to enable them to arrange for the production capacities to meet the monthly demands

which are varying.

ii. Helps in Financial Planning:

Sales forecasts are driving force in budgeting. Sales forecasts provide the timing of cash inflows

and also provide a basis for budging the requirements of cash outflows for purchasing materials,

payments to employees and to meet other expenses of power and utilize etc. Hence forecasting

helps finance manager to prepare budgets taking into consideration the cash inflow and cash out

flows.

iii. Helps in Economic Planning:

Forecasting helps in the study of macroeconomic variables like population, total income,

employment, savings, investment, general price-level, public revenue, public expenditure,

balance of trade, balance of payments and a host of other macro aspects at national or regional

levels. The forecasts of these variables are generally for a long period of time ranging between

one year to ten or twenty years ahead. Much would depend on the perspective of planning,

longer the perspective longer would be period of forecasting. Such forecasts are often called as

projections. These are helpful not only for planning and public policy making, they also include

likely economic environment and aid formulation of business policies as well.

IV. Helps in Workforce Scheduling:

The forecast of monthly demand may further be broken down to weekly demands and the

workforce may have to be adjusted to meet these weekly demands. Hence, forecasts are needed

to enable managers to get tuned with the workforce changes to meet the weekly production

demands.

v. Helps in Decisions Making:

The goal of the forecaster is to provide information for decision making. The purpose is to

reduce the range of uncertainty about the future. Businessmen make forecasts for the purpose of

making profits. In business forecast has to be done at every stage. A business man may dislike

statistics or statistical theories of forecasting, but he cannot do without making forecasts.

Business plans of production, sales and investment requires predictions regarding demand for the

product, price at which the product can be sold and the availability of inputs. The forecast about

demand is the most crucial. Operating budgets of various departments of a company have to be

based upon the expected sales. Efficient production schedules, minimization of operating cost

and investment in fixed assets is when accurate forecasts recording sales and availability of

inputs are available.

vi. Helps in Controlling Business Cycles

It is commonly believed that business cycles are always very harmful in their effects. Abrupt rise

and fall in the price is injurious not only to businessmen, but to all types of persons, industries,

trade and agriculture. All suffer from the painful effects of depression. Trade cycle increases the

risk of business, create unemployment, induce speculation and discourage capital formation.

These effects are not confided to one country only. Business forecasting reduces the risk

associated with business cycles. Prior knowledge of a phase of a trade cycle with its intensity and

expected period of happening may help businessmen, industrialist and economist to plan

accordingly to reduce the harmful effects of trade cycle.

How forecast helps in Decision Making?

Decision making is to choose best alternative from available alternatives to meet the

objective of a company. Implementing forecasting forces a business has to base decisions on

facts rather than hunches. Poor decision management might lead to failure of business. To

succeed in business today, companies need forecasting that can help managers and business

professionals in decision making. Almost all managerial decisions are based on forecasts. Every

decision becomes operational at some point in the future, so it should be based on forecasts of

future conditions.

Forecasts are needed throughout an organization -- and they should certainly notbe

produced by an isolated group of forecasters. Neither is forecasting ever "finished". Forecasts are

needed continually, and as time moves on, the impact of the forecasts on actual performance is

measured; original forecasts are updated; and decisions are modified, and so on. For example,

many inventory systems cater for uncertain demand. The inventory parameters in these systems

require estimates of the demand and forecast error distributions. The two stages of these systems,

forecasting and inventory control, are often examined independently. Most studies tend to look at

demand forecasting as if this were an end in itself or at stock control models as if there were no

preceding stages of computation. Nevertheless, it is important to understand the interaction

between demand forecasting and inventory control since this influences the performance of the

inventory system.

Objectives of forecasting:

Forecasting has few objectives. Some of the few important objectives of forecasting are as

follows:

1. To estimate the amount of error in forecast by using probability theory.

2. To assist in managerial decision making in uncertainties.

3. To acquaint businessmen and economists is about the future probable circumstances.

4. To clarify the differences of actual data of the future by comparing it with preforecasted

data by using theory of probable error.

5. To provide basis for determination of future policy.

6. To indicate the probability of happenings in the future.

7. The forecast provides a warning system of critical functions to be monitored regularly

because they might drastically affect the performance of the plan.

Requirement of a good forecast:A good forecast should satisfy the following criteria:

Time frame

Pattern of data

Cost of forecasting or economy

Accuracy availability of data

Durability

Plausibility or Ease of operation and understanding

Flexibility

Types of forecast:

The types of forecasts is follows as..

1. Demand forecast

Objective of demand forecasting

Short run forecasting

Short run forecasting is usually a period not exceeding one year.

Objective…

To evolve a suitable production policy

To plan purchase pf raw materials

To arrange for shortterm financial requirements

To determine appropriate price policy

To fix sales targets

Long run forecasting

Long run forecasting is generally for a period exceeding three years.

Objectives….

To plan the establishment of a new unit or expansion of an existing unit

To plan long term financial requirements

To plan manpower requirements

2. Environmental forecastsEnvironmental forecasting is attempting to predict the nature and intensity of the micro environmental and macro environmental forces that are likely to affect a firm’s decision making and have an impact upon its performance in a given period. It concerned with the social, political and economical environment of the state or the country.Techniques of environmental forecasting…a. Brainstormingb. Delphic. Checklistsd. Forecasting of issues in locatione. Simple extrapolationf. Fitting curves of a known characteristic

g. Analogiesh. Substitution curvesi. Monitoringj. Value profilesk. Cross relationship between factorsl. Trend impact analysism. Cross impact analysisn. scenarios

3. Technological forecastIt is forecasting the future characteristics of useful technological machine, procedures or techniques.

TIMING OF FORECASTS:

Forecasts are classified according to period, time and use. The three divisions of forecast are

short range forecast, medium range forecast and long range forecast.

1 .Short range forecast:

It is typically less than 3 months but has a time span of upto 1 year. It is used in planning,

purchasing for job schedules, job assignments, work force levels, product levels.

2. Medium range forecast:

It is typically 3 months to 1 year but has a time span from one to three years. It is used for

sales planning, production planning, cash budgeting and so on.

3. Long range forecast:

This has a time span of three or more years. It is used for designing and installing new plants,

facility location, capital expenditures, research and development, etc. There are long term

forecasts as well as short term forecasts. Operation managers need long range forecasts to make

strategic-decisions about products, processes and facilities. They also need short term forecasts

to assist them in making decisions about production issues that span, only the next few weeks.

Forecasting forms an integral part of planning and decision making, production smanagers must

be clear about the horizon of forecasts-month or year.

Multiplicative Seasonal Method:

What happens when the patterns you are trying to predict display seasonal effects? What is

seasonality? It can range from true variation between seasons, to

variation between months, weeks, days in the week and even variation during a single day

or hour.

To deal with seasonal effects in forecasting two tasks must be completed:

1. A forecast for the entire period (i.e. year) must be made using whatever forecasting

technique is appropriate. This forecast will be developed using whatever

2. The forecast must be adjust to reflect the seasonal effects in each period (i.e. month or

quarter) The multiplicative seasonal method adjusts a given forecast by multiplying the

forecast by a seasonal factor

Step 1: calculate the average demand per period for each year (y) of past data by dividing total

demand for the year by the number of periods in the year

Step 2: divide the actual demand  for each period (t) by the average demand per period

(calculated in Step 1) to get a seasonal factor fy,t for each period; repeat for each year of data

Step 3: calculate the average seasonal factors for each period by summing all the seasonal

factors fy,t for that period and dividing by the number of seasonal factors

Step 4: determine the forecast for a given period in a future year by multiplying the average

seasonal factors by the forecasted demand in that future year

Fashion forecasting 2011-12

To cope with the ever-changing world, the marketing segmentation and targeting techniques are

rapidly evolving from traditional, static, demographic-based criteria towards dynamic, mood,

lifestyle and psycho graphic influences. Fashion forecasting is the prediction of mood, behavior

and buying habits of the consumer. It is no longer a question of identifying your customers by

age, geography or income, but looking into how and why they buy, based on their mood, beliefs

and the occasion.

Fashion is a style that is popular in the present or a set of trends that have been accepted by aide

audience. But fashion itself is far from simple. Fashion is a complex phenomenon from

psychological, sociological, cultural or commercial point of view. Fashion trends are the styling

ideas that major collections have in common. They indicate the direction in which the fashion is

moving. Fashion forecasters look for styles they think are prophetic, ideas that capture the mood

of the times and signal a new fashion trend.

The fashion system has spread across all other sectors, from cosmetics to cars via politics and

sports. All sectors observe fashion as an endless source of inspiration. Gilles Lipovetsky points

out that the more the fashion society develops, the less importance will be given to the

affordability of clothes! To hold on to its role as a pioneer and enhance its brand image, fashion

has to continue to innovate.

Forecasting the future demand for particular styles, fabrics and colors is an important aspect of

the fashion industry. Textile specialists work two years ahead to determine the general guidelines

for each fashion season. Fashion forecasting is an important activity to ensure that the process of

observation related to short and long term planning can be based on sound and rational decision-

making and not hype. Forecasting can bridge the gap between ambiguous, conflicting signs and

the action taken by the design team. "Fashion forecasting combines theories of fashion changes

with the process of organizing and analyzing the information and synthesizing the data into

actionable forecasts." (Brannon 2000) Forecasting is a creative process that can be understood,

practiced and applied. Forecasting provides a way for executives to expand their thinking about

changes, through anticipating the future, and projecting the likely outcomes. (Lave back and

Cleary 1981)

Long term forecasting (over 2 years ahead) is used by executives for corporate planning

purposes. It is also used for marketing managers to position products in the marketplace in

relationship to competition.

Short term forecasting is used by product developers, merchandisers and production managers to

give style direction and shape collections. For short term forecasting most apparel companies

subscribe to one or more services, whose job is to scan the market and report on the

developments in color, textiles and style directions.

Forecasters reflect the earliest views on trends some eighteen months in advance of the season.

At this stage, color is a crucial consideration of yarn mills. It is also the focus of discussion

among others who are interested in very early trend decision-making. Fashion forecasters

combine the views emerging about color and fabric from the early yarn and fabric trade shows

with their socio-economic and cultural analysis. Major trends in lifestyles, attitude and culture in

particular music, sport, cinema and television are used to predict changing consumer demands.

Fashion forecasting involves the following activities such as studying market conditions, noting

the life style of the people, researching sales statistics, evaluating popular designer collections,

surveying fashion publications, observing street fashions etc.

The drivers of fashion change

Social and cultural changes are major determinants of emerging fashions. However, they are

themselves affected by the other drivers of change that include globalization of world markets

and accessibility of more sophisticated communications technologies. The latter has provided

people with faster and wider access to more ideas and influences from other cultures and

societies, driving demand for wider choice in fashion products.

The Fashion Forecasting Processa) Trend forecasting businessesb) French companies based in Paris have traditionally dominated fashion forecasting.

Although number of larger ones is still based in Paris, many with satellite offices around the world, number of new niche forecasters has emerged offering their own specialties of product and services.

Some better-known trend forecasters include:

. Sacha Pacha

. Peclers Trend Union

. Line Creative Partners

. Au Studio Promostyl

. Promostyl

b)  Consumer research

Manufacturers and retailers may ask consumers directly about their buying preferences.

Consumer reactions are compiled and tabulated to find preferences for certain garments or

accessories, colors or sizes and so on ,or products to fit specific consumer tastes.

Surveys, by telephone or mail are conducted by publication and market research companies for

manufacturers and retailers. These surveys include questions about income, life-style, fashion

preference and shopping habits. Customers are usually selected by the market research firm to

meet with manufacturers or retailers. In-store informal interview can help researchers obtain

information by simply asking customers what they would like to buy, what styles they like that

are currently available and what merchandise they want, but cannot find. Because of their close

contact with their customers, owners of small stores can often do this most effectively.

The apparel supply chain has one purpose, i.e. to provide an appealing and desirable product to

satisfy customer needs, wants or aspirations. When successful, the connection results in a sale,

because this connection is the purpose of the process. Every forecast begins with the customer,

by observing the customer's adjustments to the marketplace and in the unexpected ways the

customer adjusts the marketplace to his lifestyle and preferences.Consumer research figures are important in decisions about product development, brandMarketing and retailing.

c)  Colour Forecasting

Stimulating sales is the driving force behind color forecasting. Color grabs the customers

‘attention, makes an emotional connection and leads them to the product. Even when the basic

product stays the same, changing the color gives a sense of something new. Color consultants

help companies decide on the right color story to sell the product. Some consultants specialize in

advising on color. Others develop color forecasts as part of their overall product development

function. Some large companies have departments dedicated to setting color directions for

multiple lines. Professional color organizations bring together experts to collaborate on forecasts

for industries like women's wear, men's wear, children's wear and residential and non-residential

interiors.

d) Textile Development

Frequently, the development of a completely new product is the result of a particular functional

need, but often it is driven by the benefits offered by a new fabric. Specialist forecasters make

the point that the technology is changing the range of product, as through the ranges of benefits

that designers can build into garment product through the textiles used in construction.Fabrics range from slick surfaces like leather and futuristic plastic to softer surfaces likeCashmere, from flat weaves to heavy textures like boucle and from the solid structure of flannel to the web-like open structure of crochet. Clothing has been called "the second skin" in recognition of its intimate connection with a person's physical and psychological comfort (Horn,1975). So it is not surprising that news about which fabrics are "in" or "out" plays such prominent role in forecasting fashion. Newness in fabrics comes from the introduction of new fibers, the manipulation of yarn and fabric structures, variation in pattern and prints and innovative finishing processes. These innovations are introduced in trade shows and exhibitions held in the fashion capitals of the world.

e) The Range of shows

The fashion shows: The word here is its widest possible interpretation to refer to the range

unorganized textile and fashion garment trade shows, operating over the 16 months preceding

season. Trade shows, whether yarn, fabric or product have a basic function, which is to sell

products.

Visitors vary according to the nature of the show. A yarn show will attract a range of people

including fabric manufacturers, some retail buyers and designers. The fabric show performs a

more balanced role with great emphasis on then sales of the fabric, but with more retail designers

and buyers attending, as the product on the show has a greater relevance to garment design.

Garment design shows are much more diverse, ranging from the products trade shows through to

the high profile Ready -to-wear Designer shows like London Fashion week and then the

exclusive Couture shows.

Continuing this sequence, specialist product trade shows are held after the fabric shows. These

shows are segmented according to broad sector like men's wear or women's wear, and by

specialist product categories, like sportswear or lingerie. These shows are a good indicator of

color, fabric, styling and new products.

f) Sales Forecasting

Forecasting is relatively easy, straightforward and accurate for products with long lifetime and

steady sales. However, the fashion apparel business is one of the most volatile, because it creates

products that are new, highly seasonal or have short lifetimes. In such situations forecasts

become increasingly inaccurate. Errors in sales forecasting result in two kinds of losses:

. Markdowns, when retailers have unwanted goods remaining at the end of a selling period, such

goods then must be sold, even at a loss.

. Lost sales on more popular items because of stock outs (merchandise not available in stock at

the time when consumers request it). Companies have been slow to recognize the changing

market environment and adapt forecasting practices to decrease the uncertainty about product

demand. Sales forecasting impacts every apparel executive's work life, whether they help

develop the analysis, read and act on the reports or merely react to the result of over- or under-

estimating sales. For this reason, apparel executives need a basic understanding of the traditional

approaches to sales forecasting and the leading-edge technologies making real-time marketing a

reality in the apparel industry.

Eventually, a manufacturer and retailer researches his own sales record. Rising sales statistics

show what fashion trends are developing and declining sales show what styles have passed their

peak.

While attention is showered on the most exciting and extreme runway fashions, the mechanisms

of fashion change work in the background to create patterns familiar to the most experienced

fashion watchers. When an innovation arrives on the scene, individuals consider it for adoption.

The cumulative effect of those decisions can be tracked in sales and visually on the street. In

fashion terms, the innovation may be the invention of a new fiber or a new finish.

g) Cultural Indicators

In the apparel field, companies need an early warning system so that specific product categories

can be fine-tuned to trends within a market segment. While timing is important, an agile and

responsive company will be able to capitalize on trends whenever they are spotted; sometimes

just as a glimmer far in the future and sometimes as a phenomenon in the building stage. Waning

trends are another signal. When some avocation, interest or lifestyle loses cultural power, it is a

good time to survey the information landscape for the next big thing.

h)  Final Stage of fore casting

The 'Fashion look' for the season is therefore the result of a process of development that

combines the evolved views of textiles and product trade show, forecasters, designers buyers and

ready to wear shows. Like collage, the final picture emerges after various layers have come

together. Even though these shows have an impact on some last minute high street fashion buys,

their major impact is mainly on reflecting the final views on trends close to the season. Crucially,

the media coverage of the shows is another important dimension in the trend development

process, as it highlights fashion trends that fashion editors believe will be strong for the

forthcoming season. Such 'authoritative' coverage of the media, focusing attention on aspects of

fashion, including the 'must-have' looks, colors and products influences the consumers

‘acceptance of hot trends for a season.

The Future of Forecasting

For apparel executives, hitting the target requires a balancing act between anticipation of future

developments and improvisation in the face of change.

The marketplace locks into one pattern, holds it briefly and then cascades into a new

configuration with the slightest jar to the equilibrium. In the marketplace, those shifts may

correlate with: Changes in taste or lifestyles.

Immigration.

Technological developments.

Shifts in the prices of raw materials.

Thus Fashion forecasting is used within the fashion/textile industry as a means of directing

companies into new ideas of color/fabric/theme/mood and yarn developments for different

product types and levels. Knowledge of trends and future market requirements is increasingly

important to the industry. While there is no definitive fashion story, accessing the right color

palette, researching fabric and styling trends to suit a particular niche and customer profile is

essential. The degree and quality of information available to designers and its interpretation,

given an effective marketing strategy, effectively dictates their success.

References…

Carlin International Here and There Trend Union Promostyl http://www.trendstop.com/contents?

feature_id=25&page=details&gender=w http://weconnectfashion.com/fido/getarticle.fcn?

&type=trends&SearchString=handbag&id=737870PW0000067&start=1&tr=10

www.findarticles.comwww.encyclopedia.co.uk/define/forecastingwww.dictionary.reference.com/browse/forecastwww.eurofound.europa.eu/eirowww.ieor.verkeley.edu.oliver/book.htmlEn.wikipedia.org/wiki/technology forecastinghttp://en.wikipedia.org/wiki/Technology_forecasting