With the arrival of the technological revolution to the fashion industry, there is an opportunity to more effectively meet consumer demands as well as create more sustainable businesses.
6 min read
The Business of Fashion and McKinsey & Company once again give us the keys to what is to come in the fashion industry. This is reflected in “The State of Fashion: Technology”, a special edition that is part of a series published to complement its annual report on the state of fashion. While the main report focuses on the changes that will shape the global apparel industry over the next 12 months, this edition seeks to analyze existing and emerging technologies to address the industry’s biggest challenges. Read on to find out what technology opportunities your business can explore to improve its competitive advantage.
This analysis aims to define how technology can help solve the challenges facing the fashion industry and generate a positive impact on business performance
Based on interviews with executives and other experts in the clothing industry, in addition to analyzes made by textile companies and market research, this report gathers the technological opportunities in which fashion professionals should focus their investment. The State of Fashion Technology Report lays the groundwork to end uncertainty and shed light on some of the hottest concepts. This analysis aims to define how technology can help solve the challenges facing the fashion industry and generate a positive impact on business performance.
According to the report, fashion companies are expected to double their technology investment by 2030. The aim will be to keep up with consumer trends and strengthen their competitive advantage. Brands will go from investing 1.6-1.8% of their income to 3-3.5%. At the same time, investors are expected to allocate their capital to companies whose technologies are focused on creating fashion in a more nimble way without neglecting environmental and social responsibility.
The pandemic has consolidated the role that technology plays in the fashion industry, accelerating the growth of e-commerce and incorporating digital tools in decision-making. Despite the fact that until now technological innovations were more oriented towards the end customer, brands in the textile sector now have the opportunity to apply these advances to strengthen their supply chain, avoid obstacles, as well as enhance their transparency.
We reveal the five technological imperatives in which professionals in the fashion industry should invest to solve some of the most urgent challenges in the sector, according to the report by BoF and McKinsey & Co.
Traceability powered by tracking software and Big Data has great potential to help fashion brands looking to achieve sustainability. Having a greater knowledge of supply chains to understand the impact of the complete life cycle of textile products is the key to making decisions aimed at improving business efficiency as well as its responsibility. Solutions such as digital passports gain relevance as verified information related to the entire life cycle of items is claimed.
The Business of Fashion and McKinsey & Co say that defining a centralized system for sustainability metrics calculations and data collection through supply chain traceability are essential to making significant progress on social and environmental goals. To achieve this, fashion brands must take into account the following:
“I think a lot of the challenges in fashion with regards to sustainability is fundamentally a data and collaboration problem. As fashion brands get more data-savvy in terms of their own supply chain, we can all jointly produce a fashion ecosystem which makes more sense and is less resource consuming”. Robert Gentz, Zalando Co-Founder & Co-Chief Executive.
Digital tools have revolutionized a large part of the fashion value chain, but these innovations are often limited to specific areas of the company, preventing improvements across the board.
According to the report, by adopting comprehensive digital solutions throughout the entire value chain, brands could see their speed to market increase by up to 50%, full-price sales by up to 8%, and lower manufacturing costs up to 20%. For this, it is recommended to follow the following guidelines:
“At Levi’s, company-wide machine learning combined with a cloud-based data repository provide multiple processes with resources to make better decisions around everything from pricing to consumer marketing”. Katia Walsh, Levi’s Chief Strategy and AI Officer.
What is the role of physical stores after the growth of e-commerce during the pandemic? 60% of European buyers still want to go to physical stores to touch and try the products before buying them.
Inside the store, those who interact with the available technology spend up to four times more time than those who don’t. Mobile apps provide a frictionless shopping experience for both those looking for functionality and a more engaging checkout flow.
To guarantee the success of technological investment in physical stores, it’s essential to take into account the following:
“Through an in-store app, the sales associate is really able to tell the story of this product and the consumers want to buy it even if they haven’t tried it on”. Sandrine Deveaux, Farfetch Executive Vice President of Future Retail.
Brands increasingly have access to personalization tools that allow them to improve the way they engage with their customers. The main opportunity focuses on the exploration of Big Data and AI to create one-to-one experiences that engage their community and generate long-term loyalty.
71% of consumers expect companies to offer personalized interactions and a similar proportion say they feel frustrated when this doesn’t happen. Thanks to technological innovations, brands have the opportunity to go beyond basic segmentation and create hyper-personalized shopping experiences at all touchpoints with the consumer. These are the recommendations to achieve it:
“Using technology and data to bring the right customer to the merchandise, or the right merchandise to the customer, is important because, for these million choices, how do you make sure that she finds one item? So we’re trying to use technology to personalize it for customers as much as we can”. Robert Gentz, Zalando Co-Founder & Co-Chief Executive.
For a few months now, many fashion brands have taken their first steps in the metaverse through digital assets. As NFTs gain popularity in the industry, brands need to consider their strategy in the world of digital fashion in order to generate a stable revenue stream in this new environment.
Companies with a commercial presence in the metaverse are expected to generate more than 5% of revenue from virtual activities over the next five years. For this, it will be essential that those companies that are considering being part of this new world take into account the following factors:
“Forerunner is walking before we run and thinking about where the consumer utility is and the biggest opportunities for mass consumer adoption in those spaces.” Nicole Johnson, Forerunner partner.
The main conclusion we draw from this special edition of The State of Fashion report is that technology will be critical to establishing a competitive business model in the fashion industry for years to come. Due to the complex and fragmented nature of the sector, technological innovations are key to implementing solutions that speed up the activity of brands and promote their sustainable development. Fashion businesses must embrace a new collaborative mindset to enable information sharing, while expanding tools and supporting their suppliers so they too can build a more efficient and responsible industry.
BCOME takes a multidisciplinary approach to sustainability to integrate knowledge and technology with the aim of accelerating the transition to systemic change in the fashion industry. We have the tools that your business needs to bring transparency to your supply chain and take it to the end customer. Are you joining this great change? Let’s talk!
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