The State of Fashion: Technology — Download the Special Edition

ByLance T. Lee

May 3, 2022

Technology has already revolutionized the way global fashion companies do business. The Covid-19 pandemic has further reinforced the central role technology plays in the industry, accelerating consumer adoption of e-commerce and further integrating digital tools into daily workflows and decision-making. Although the focus has so far been largely on customer-facing technologies, brands now have the opportunity, born out of the need in today’s unstable operating environment, to extend the reach and the depth of technological applications in the industry. Fashion brands and retailers are leaning into technology not only to become more resilient to supply chain and other disruptions, but also to become more accountable and transparent as the world seeks sustainable solutions.

Against this backdrop, we expect fashion companies to increase their investments in technology, from 1.6-1.8% of sales in 2021 to between 3-3.5% by 2030. Investors , meanwhile, will inject capital into companies whose technologies aim to make fashion. players who are more agile and more environmentally and socially responsible. Fashion players who fail to adopt these technologies will face existential challenges, while their tech-savvy counterparts should see measurable benefits in terms of bottom line.

The impact of technology is evident in key business areas, such as creating exceptional customer experience and engagement; help address sustainability issues; and upgrading internal processes and operations. This applies to fashion players across all value segments, although solutions may unfold differently for luxury and mass brands to meet varying customer needs and strategic priorities.

This report identifies business opportunities where fashion leaders should focus their technology resources and investments, based on interviews with executives and other experts, analysis of public and private companies, information on market and consumer research. By focusing on these opportunities, the report aims to help executives look beyond the hype and buzzwords to explore how technologies can alleviate real problems and have a tangible impact on business results. .

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When it comes to hype, there’s no shortage when it comes to the metaverse – the interconnected virtual ecosystem that overlaps or provides an alternative to physical reality. But it’s hard — and potentially unwise — for fashion brands to ignore the fact that in 2021 global spending on virtual goods reached around $110 billion, more than double the total in 2015. be worth at least $135 billion by 2024. While many experiments in the metaverse at this point are largely marketing exercises, innovative fashion brands over the next five years could generate up to 5% of their income from activities in the metaverse. Virtual skins in digital worlds will be a big driver of this revenue stream, while NFTs can help solve industry problems and build customer loyalty.

As businesses look to digital opportunities, they will turn to hyper-personalization of experiences to increase customer loyalty. Shoppers have learned to expect curated, personalized service in other industries thanks to players like Netflix and Spotify, which leverage AI to deliver experiences specific to individual customer tastes and needs. But the fashion industry has been largely ill-equipped to move beyond basic customer segmentation due to technology and talent restrictions. Brands that invest in AI modeling and big data to create personalized and personalized shopping experiences can see their customer acquisition rates and sales increase accordingly.

Along the same lines, leaders need to leverage technology in their physical stores to improve the omnichannel customer experience. As brands and retailers adopt and adapt in-store technologies, they will bridge the gap between online and offline channels. For example, in-store mobile apps for store associates can provide a seamless way to serve customers, while in-store customer apps engage customers and result in more time spent in-store. Meanwhile, beyond the shop floor, robotics and inventory optimization software, among other tools, can help brands and retailers set up micro-fulfillment centers, integrating physical stores into as digital nodes in their distribution and delivery networks. Micro-fulfilment technologies can increase efficiency and reduce fulfillment costs by up to 90%, while improving customer satisfaction through faster delivery times.

Behind the scenes, the technology is expected to impact internal processes along the entire value chain, from demand forecasting to transportation operations. While many parts of fashion business value chains are already digitized, a challenge for many players is that digitization has occurred in silos, creating bottlenecks and other inefficiencies as it unfolds. is about sharing data and knowledge across functions. As a result, fashion executives believe that integrating digital processes across their organizations will be among their top five areas for digitization by 2025. Benefits of such integration include increased speed to market and premium selling rates, as well as lower manufacturing costs.

Digital supply chain connectivity is important in another key area for fashion: sustainability. Traceability software – which helps brands identify, monitor and manage products throughout the lifecycle and in different parts of a supply chain – is essential for industry sustainability efforts, while seeking to respond to demands from regulators, investors and customers for greater transparency around the brand environment. and social impact. These traceability efforts cannot work in isolation, given the enormity and urgency of the sustainability challenge. Brands should consider joining forces with each other, start-ups and industry bodies to establish a common data standard and share data and knowledge through software platforms, open registries and Big Data technologies. .

For decision makers in all value segments and at all stages of the technology adoption curve, this report translates each of these opportunities into clear, actionable steps for brands and retailers looking to be part of the technology acceleration. of fashion.

To date, few brands or retailers have embraced the technology with a truly competitive mindset. Today, fashion and technology go hand in hand to enable businesses to expand into new markets, increase customer loyalty, and enable data-driven strategy and decision-making. As fashion leaders seek new digital transformations in their organizations, they will need to prioritize technology and align their companies’ talent and resources accordingly.

The report explores five technology imperatives for the fashion industry:

1. Metaverse Reality Check

The marketing value of digital fashion and NFTs may now be clear, but fashion brands will need to separate the hype from the concrete opportunities to generate sustainable revenue streams presented by growing consumer engagement with the metaverse.

2. Hyper Personalization

Brands have access to a growing arsenal of personalization tools and technologies to improve the way they personalize and personalize their relationships with their customers. The opportunity for leaders now is to harness big data and AI to deliver individual experiences that build long-term loyalty.

3. Connected stores

The inexorable rise of e-commerce is forcing fashion players to rethink the role of physical stores. Fashion executives can solve consumer pain points by using in-store mobile apps to enhance the experience and micro-execution technologies to leverage their physical retail networks in the age of fast-paced commerce.

4. End-to-end upgrade

Digital tools and analytics have transformed key parts of the fashion value chain, but these optimizations are often siloed within organizations, limiting the potential for cross-functional improvements. Brands should embark on end-to-end value chain integration to create more efficient and profitable ways of operating.

5. Traceability first

Traceability systems powered by tracking software and big data will help sustainability-focused fashion brands go deep into their supply chains to understand the entire lifecycle of their products.

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