Many retailers are currently struggling with excess inventory due to poor forecasting. In May, Bloomberg reported that companies such as Walmart and Gap amongst others had amassed $45 billion worth of excess stock, and there are many factors that will have led up to this. For example in January when retailers were planning their orders, there was no war in Ukraine, interest rates were termed as “transitory” at the time and demand was still strong. Fast forward to June and everything has changed, causing these retailers to have far more product in comparison to demand.

Peak season usually begins around August time due to the summer holidays, however we expect that it might be slightly tempered due to all of the excess supply. Retailers with too much inventory are going to want to be more conservative about ordering more products going forward. When we talk about the necessity of high-tech forecasting tools and the importance of improving resiliency, this is what we mean.

Many ‘manufacturing hubs’ around the world (such as Sri Lanka, Myanmar, and Pakistan etc.) are facing both economic and political turmoil. Sri Lanka is currently dealing with huge civil unrest due to a collapsing economy overseen by President Gotabaya Rajapaksa, who recently announced his resignation after protesters stormed his living quarters. Naturally, this is likely to have an effect on its $6 billion garment industry. Currently, ports are still operating and the industry has elected to take a ‘country first’ approach, so hopefully workers remain safe and continue to earn wages.

Myanmar on the other hand, is facing a very different situation nearly 18 months after they faced a military coup, with massive labor unrest and fuel shortages causing factories to shut down with no foreseeable end in sight. Labor campaigners have also been pushing for a complete shutdown of apparel operations in protest. We can only hope for a peaceful resolution to the conflict at this stage.

Finally, Pakistan is facing a lack of affordable gas and electricity which has already forced around 400 textile mills in the Punjab region to shut down. Pakistan generates around $20 billion in textile exports every year, however soaring energy prices are making it impossible for this huge industry to keep functioning at this point.

And finally, the CEO of Gap has resigned in part due to supply chain issues. Delayed inventory arrivals as well as a general lack of inventory caused Gap to miss their sales by $162 million in the first quarter.

The once leading apparel brand is currently in the midst of a turnaround following Sonia Sygal’s resignation, with a member of Gap’s board of directors appointed to take over in the interim. We hope that this iconic but struggling brand can get back on their feet soon.