Fashtech takeover?
There has been considerable excitement for some time about emerging technologies and their application to fashion but we are starting to see beyond the hype to more widespread use. This is only likely to continue as businesses invest in using fashtech to differentiate themselves and improve supply chains and marketing. Technologies most frequently associated with fashtech include:
Blockchain – everyone wants to use blockchain don't they? But in the world of luxury fashion, there are genuine use cases and developing solutions. Distributed ledger technology (DLT) can be used to authenticate luxury brand items and jewellery – Everledger, for example, tracks diamonds by creating an electronic identify for each diamond, assigning it a digital passport and then attaching that data to the transaction records held in the blockchain. DLT can also be used to provide a complete record of materials, sourcing and supply of a product.
As consumers become more concerned with provenance in terms of sustainability as well as brand, DLTs like blockchain can allow consumers to access entire product histories through their smartphone. LVMH, for example, recently launched AURA, an international blockchain to help consumers trace authenticity, and allow customers to access lists of raw materials and trace a product's entire lifecycle. Blockchain could well replace RFID tags which are currently used by brands including Michael Kors and Burberry among many, for tracking and verification.
AR and VR – Augmented reality and virtual reality are both being used to help sell products without the need to try them on, but also to provide a novel and immersive shopping experience – something prized by Millennials and Gen Z shoppers. Farfetch and Chanel have partnered to offer customers an enhanced customer experience which combines the boutique experience with online and digital services.
Virtusize is an example of a virtual fitting solution; you can compare items already bought on the site or upload measurements for something you know fits you well, in order to see how it measures up (literally) to a product you are thinking about buying. Sephora's Virtual Artist app (sadly not available in the UK) allows you to upload a photo of yourself and virtually try on makeup. Virtual fitting rooms are becoming increasingly sophisticated, moving from creating personal avatars to superimposing products onto our reflections.
3D knitting and printing – automation is hardly new in the fashion industry but it has traditionally been used in mass production. Small or even one-off runs have been too expensive to produce by machine due to the time and cost involved in reprogramming.
3D printing has been used for prototypes for a while but as the printers become more sophisticated, they can also be used to satisfy the increasing demand for new and exclusive products, reducing time to market, allowing nearshoring, and creation of innovative as well as personalised products.
Demna Gvasalia, creative director of Balenciaga, is an enthusiastic adopter of 3D printing for high fashion. His Autumn/Winter 2018 collection featured 3D-printed coats and jackets designed to be almost completely seam-free. Digital fittings were done on a laptop over 3D scanned bodies and the designs were turned into 3D molds.
Wearables and smart fabrics – smart fabrics are textiles which use embedded electronic digital elements to monitor the wearer's condition and nano technology to sense and react to environmental stimuli like heat and light to provide the wearer with enhanced functionality. They may also be designed to offer particular advantages like delivering medication.
The digital elements will often transmit biometric data via Bluetooth to an app or wearable for analysis. Ralph Lauren, for example, famously supplied Team USA with self-heating coats controlled via app for the Winter Olympics in South Korea.
In fashion terms, it is sportswear which has led the way. Underarmour's Phantom running shoes for example, combine 3D printing, ultra-breathable fabrics, molded cushioning and are digitally connected to track and analyse running metrics. Nadi-X is a range of yoga clothing embedded with technology which provides posture monitoring and correctional guidance with a range of other metrics.
The challenge with wearables in terms of luxury fashion has historically been to make a product which is both functional and aesthetically pleasing and which fits with a luxury brand. This is changing. Louis Vuitton's smartwatches, for example, are unmistakably luxury items which have connected features, rather than tech products stamped with a luxury brand.
Self-disruption
Self-disruption is a term which crops up increasingly in fashion retail. It refers to the process the big brands and fashion houses are undergoing to ensure they stay ahead of the expectations of Millennials and Gen Z shoppers. McKinsey's report on the State of Fashion 2019, found that 79% of surveyed executives put self-disruption among the top five trends in fashion.
Millennials and Gen Z shoppers are every bit as brand driven as other fashionistas but they are less interested in legacy brands and constantly in search of novelty. Many established brands are looking to fend off challenger brands which now have easy access to market through social media, influencers and online retail platforms.
One strategy is for high end brands to produce 'streetwear', for example, Balenciaga producing trainers, and another is for diffusion limited edition brands which will produce frequent new lines, moving away from the couture model of seasonal collections to resemble the operational model of the challengers. It is also increasingly common to find luxury designers partnering with the high street. H&M has been partnering with high end designers for some years and most recently announced collaboration with Giambattista Valli.
Fashion on demand is another disruptor of the traditional supply chain. The 'instant gratification' generation want products faster and they want them customised. This is leading to increased nearshoring and a move to diversify from the traditional outsourced manufacturing model. Personalised items and limited edition products are increasingly being made closer to the customer, often using 3D printing technology, AI and robotics to facilitate production.
The need for the new is also driving an active M&A environment and leading to investment in innovation and product development, often through incubators and accelerators.
Changing channels
The traditional battle between online and physical retail is being replaced by one to provide the ultimate omnichannel experience. Streamlining the process between picking out an item and purchasing it, whether that's on a smartphone, online or in-store, is an ongoing battle; converting clicks to buys is vital. Integrating the shopping experience online and in-store is also seen as critical to building brand loyalty.
Some of the fashion platforms like Wolf & Badger, are using bricks and mortar stores (whether pop-up, kiosk or permanent) to develop their brand visibility and others like Farfetch are building augmented retail solutions linking online and offline shopping experiences.
D2C (direct to consumer) brands are using sophisticated social media strategies and data to develop loyal customer followings while bypassing retailers and so streamlining their supply chains and increasing their margins. Everlane, for example, built up a 200,000 membership in a year, spearheaded by a 'choose what you pay' model.
Ethical fashion
Brands depend on their customers wanting to wear them to present an image of themselves but increasingly, it isn't only the logo that counts. Typically eco-conscious and concerned with social justice, Western Millennials and Gen Z consumers want their brands to be associated with their own attitudes.
Of course, this is not a simple thing to synthesise and some of the social issues adopted by fashion labels are far from universally popular – H&M produced its first Pride collection in 2018 – we'd like to think this would be uncontroversial but, unfortunately, that's not necessarily the case although there is clearly more to gain than lose given H&M have produced another collection this year.
The fallout from getting it wrong on social issues can be considerable. Gucci was accused of racism and racial insensitivity over products which appeared to be based on the 'blackface' trope. Gucci claimed that as an Italian brand, it was unaware that its black balaclava jumper with red lips would be associated with 'blackface'. Whether or not you accept this, it highlights another issue in a globalised market; what may be unremarkable in one geographical area, can be extremely problematic in another.
It's not enough simply to associate with a cause, consumers increasingly demand ethical and environmentally friendly standards in the supply chain. Consumers are looking behind the superficial branding and this goes for all age groups. Whatever the slogan on the front of a t-shirt, if a brand is shown to use cheap labour and materials, or to have poor environmental practices, it will suffer considerable damage. Conversely, brands that are transparent about their supply chain, preferably beyond the legal requirements will benefit (see our article on Modern Slavery for more).
The drive for sustainability is also impacting shopping habits. While young consumers are continually in search of a new outfit to grace their Instagram, there is the beginning of a move away from cheap, 'fast fashion' clothing towards quality pieces which will not only last but might also be recycled.
Novelty is no longer the antithesis of sustainability with a rise in rental, resale and refurbishment. Items don't have to be brand new, they just have to be new to you. Farfetch, The RealReal and Rebelle are examples of platforms which facilitate the re-sale of luxury fashion items and Stella McCartney (a long time champion of ethical fashion) has a partnership with The RealReal, offering credit as an incentive to re-selling.
Rental models like Nothingtowear and Frontrow, are also on the rise as is recycling and upcycling. In January 2019, Tommy Hilfiger became the first luxury retailer to launch 100% recycled jeans, using technology already used by other brands including Levis, and as recycling techniques progress, this will be a growth area.
For more on sustainability, see our article.
AI, robotics and data
It's almost impossible to write about trends in any industry without mentioning AI and data and luxury retail is no exception. The benefits of collecting customer data both in terms of personal data to help targeted marketing and big data to establish trends and analyse the market, are well established.
Making the data work harder by applying AI or machine learning is all important – the more effectively a retailer can recommend products on a personalised basis, the more it will sell and the more efficient its supply chains will be.
AI and machine learning have a whole host of uses in fashion, some of which are still in their infancy, including:
- Chatbots to help customers find what they're looking for – some luxury brands such as Burberry, Dior and Estée Lauder have already implemented their own chatbots.
- Real-time inventory management and on-demand manufacturing – for example Amazon has patented a manufacturing system to support on-demand clothing production.
- Automated or robotic smart manufacturing – SoftWear Automation has developed 'sewbots' that can run fabric through sewing machines and track individual threads.
- Similarity matching – finding something similar to something a customer is searching for and using image recognition to locate it; Syte is a startup whose product allows shoppers to upload their favourite items and then shows them similar items. Its clients include Farfetch, Kohl's and Tommy Hilfiger.
- Customised shopping experiences – size and product recommendation based on personal preferences; True Fit uses big data and AI to analyse customer preferences and recommend products down to the size and fitting.
- Trend predictions – Stitch Fix uses AI to identify styles missing from its inventory and suggests designs based on consumer data about preferred colours, patterns and textiles.
Traditional fashion businesses are increasingly diversifying into tech start-ups to get ahead on AI.
The next collection?
Fashion forecasting is not our area but the pace of change in the fashion and luxury retail industry is not simply driven by the need to move away from biannual or quarterly collections. The novelty customers demand is being met not just by new designs, but by the technology which can create them and drive their sales.
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