Forecasting Intermittent Sales in Fashion Retail: A Two-Stage Machine Learning Approach

Intermittent sales patterns, prevalent in fast-fashion retail, pose a critical challenge for conventional forecasting methods. This study empirically compares one-stage and two-stage machine learning (ML) frameworks with classical benchmarks (Croston, SBA). The two-stage approach uses a Random Forest classifier for demand occurrence, followed by regression models (RF, GBM, XGBoost, LightGBM) for magnitude. Models are evaluated using weekly sales data from an Iraqi fashion retailer, incorporating rich exogenous features like product attributes, pricing, weather, and special events across 64 unique attribute-defined product group time series. Performance is assessed via a fixed 13-week holdout and rolling-origin cross-validation, with LSTM and Temporal Fusion Transformer (TFT) serving as deep learning benchmarks. Empirical findings show that machine learning configurations achieve superior WRMSSE accuracy, with two-stage models often outperforming one-stage counterparts, and both significantly surpassing classical and deep learning baselines. The Two-Stage XGBoost yielded the lowest WRMSSE, establishing the feature-engineered two-stage framework as the strongest overall for this intermittent retail setting. Furthermore, a detailed SHAP analysis elucidated the distinct feature contributions to demand occurrence versus demand magnitude, providing actionable insights for inventory management. This rigorous benchmarking analysis offers practical implications for inventory planning and demand management in volatile markets, highlighting the effectiveness of explicit demand occurrence modeling.