The no-stock horizon of brands and how it revolutionises the supply chain

Some have pursued it for almost 100 years and have made it one of their creative and product offerings distinctive features. France has turned it into law, bypassing the “antigaspillage” decree. Brands are translating it into a new rule. And suppliers are being forced to adapt to the no-stock philosophy that aims to reduce unsold items and warehouses to a minimum


Exclusivity. The strategy undertaken by Hermès since 1929, when Lola Prusac designed the brand’s first women’s fashion collection, is proving to be doubly correct almost a century later. The fact that it has always been and still is commercially successful is an identifying trait of the French Maison, but in recent months its production in such a way as not to suffer the weight of unsold goods has received an indirect and significant endorsement. Last January, the “antigaspillage” law for fashion came into force in France (but many other countries seem to want to comply), forbidding unsold products to be dumped. This opens up substantial questions for the supply chain. The wave is therefore pushing towards a no-stock horizon.

No-stock horizon

Brands have not only taken steps to reduce stock in the warehouse, but they are also changing their mentality and moving more and more towards the concept ‘I produce after I order’. Another input involves the creative process. For years, designers first drew and then started searching for materials to realise the design. Now, however (although not for all seasonal collections), they design the product taking into account stock. Indeed, it is the materials in stock that trigger inspiration. But that’s not all.

The reaction of brands to the no-stock provocation

For example, the Kering group has invested in artificial intelligence to manage its stock better. LVMH has said it will try to understand its customers better to anticipate their purchasing intentions. But if all that doesn’t work, other solutions are already being planned. In other words: sell products at a cost price to its employees or donate them to charities. So: no discounted sales or promotions: luxury doesn’t like them and shuns them because they do enormous damage to the brand’s image. 

The supply chain adapts

In light of all this, the production chain has to adapt. In general, there are more frequent controls and stricter regulations on the Maisons. Inventories of subcontractors have changed from six-monthly to monthly, if not weekly. Quantities produced and shipped must exactly match those ordered (tolerance is 2-5%). Stock is recovered and used for limited editions or special projects.

The virtue of Hermès

In this context, going back to the first lines, the most virtuous brand is Hermès, which has eliminated the problem of unsold items at the root. Its strategy of producing less quantity than demand by creating long waiting lists and raising the level of desirability of the brand was already working in 1929. As said, it works even better today. (mv)

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