Syrup and Faherty CEOs on AI's power to solve age-old inventory problems

Alex Faherty, co-founder of Faherty Brand, recently featured on Fortune's AI Minute to explain how a casual conversation led him to crack a seemingly unsolvable riddle in the fashion world: Predicting inventory needs without the ability to read customers' minds.

Faherty found his game-changing answer not through magic, but through the power of AI.

Why is AI so well suited for fashion and apparel demand planning?

Seemingly simple questions like "How much product should I have available for my customers?" are incredibly challenging to answer. The fashion and apparel industry faces a host of complex variables that influence the performance of any given item. Weather, local events, and even the latest gossip all sway customer choices.

Fashion retailers also grapple with the complexity of their ever-changing product range: numerous SKUs defined by a complex mapping of styles, sizes, and colors that shift with the seasons.

Unfortunately, conventional methods often fall short. Backward-looking analyses examine limited data sets; meanwhile, busy buyers and planners are stuck manually sifting through complex spreadsheets to find signal in the noise. Creative decision-making can feel impossible under the weight of infinite Excel rows.

The result? An expensive failure, with an estimated $250 billion annual loss in revenue due to stockouts and wasted spend on unsold items within the fashion industry.

How can AI transform your inventory strategy?

Syrup's AI-powered inventory optimization is already transforming the world of demand planning for retailers like Abercrombie and Fitch, Desigual, and Faherty Brand.

“What the technology is allowing us to do is to figure out what would have been the outcome if there was better inventory, so that we can better plan demand,” Faherty notes.

And this is only the beginning of what AI can achieve for the fashion industry. Let's keep the conversation going and see what other challenges AI can help us conquer.

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No time to watch the video? Here’s the transcript:

James Theuerkauf (co-founder of Syrup):

Inventory is the most expensive part of any brand or retailer's balance sheet. In apparel and fashion alone, it's a $250 billion problem every year: both the cost of stockouts, on the one hand, and the cost of excess inventory on the other.

Alex Faherty (co-founder of Faherty Brand):

Someone said to me, "Well, there's this technology coming out with AI that's supposed to help you put the right product in the right store." I'm like, "Oh my God. That's what we need."

James:

At Syrup we help apparel and fashion brands and retailers – the likes of Abercrombie and Desigual and Faherty – to optimize their infantry. We help them get the right amount in the right locations at the right time. We're looking at:

• What's the transaction history for a product?
• What's the trend at a hyperlocalized level?
• What can we learn from certain social media?
• Is it going to be raining in the next week or not?
• Is New York Fashion Week happening?

And we use all of these data points to make a much more granular, much more sophisticated demand forecast.

Alex:

Someone coming into a store and wanting to buy what they're looking for is probably the number one piece of customer satisfaction. When someone walks into a store and they don't have it, it is so hard.

James:

You are focusing on tens of thousands of SKUs in fashion. Imagine it's a style, a color, a size, and for all of those, you are optimizing them, not just across your warehouses, but also across your physical stores. And getting that inventory right is a core driver of profitability as well as sustainability for our customers.

James:

The rise of AI over the last few years has been so fast that it's only now that we have the ability to make it work.