The fashion and retail sector has had a tumultuous six months, underpinned by rapidly changing technology. At the end of the year, it was the first time in a holiday season e-commerce sites posted greater sales growth than bricks-and-mortar stores, with sales up 20% in the US. Physical stores saw a 10.4% dip in sales between Thanksgiving and Christmas.
Always characterized by speed, agility and the latest trends, fashion is one major sector being fundamentally transformed from the inside out by technology:
1. Fashion capitals are going digital
Never mind New York, Paris, London or Milan fashion weeks, the fashion agenda is now set by Instagram, is Periscoped, and will soon be seen on virtual reality. Just as Twitter has become central to political life, Instagram has become the store window display and Periscope the runway, making next season’s trends this season’s conversation. Through social media, designers now have a direct connection with their audience and designers are responding accordingly.
Industry juggernauts Burberry, Tommy Hilfiger and Tom Ford have all announced that their runway shoes would be readily shoppable for consumers immediately, shaking up the traditional structure of fashion week where editors, buyers and stylists typically have the power and customers need to wait at least six months for the latest fashions. These brands instead have decided to cater to the masses and allow influencers and social media mavens to buy the collections online and in store the same day they are shown on the runway.
2. Stores will become hubs
Today’s hyperconnected consumer expects to interact with retailers through multiple channels simultaneously, while at the same time expecting an integrated and consistent experience across all platforms. As a result a new business model has emerged: the fusion of digital and physical. Now that customers are armed with smartphones and tablets, there is no longer a separation between the online and offline world. Consumers are going online to browse, research and buy goods at unprecedented levels.
Even though foot traffic is down and stores are far from dead, the nature of store, and the space it occupies, is likely to change. According to a recent report by Westfield, retailers should begin to “rethink everything from pricing models and store design to the retail experience and the relationships forged with shoppers”. Rather than being a place for customers to simply shop, bricks-and-mortar retailers will become hubs, offering complementary services and experiences that go well beyond products. For example, Sephora already offers free events, classes and beauty services where customer can learn from instructors.
3. Companies will produce less
For the fashion and lifestyle industry, production has been about scale. The principle behind this is that fixed costs – such as a company’s rent payment on a building – declines the more the company produces. Therefore, if a company makes more T-shirts, each T-shirt begins to cost less and less to produce as the quantity increases. There is a built-in incentive for companies to always produce more.
As reported by TechCruch, there is a huge gap between the forecasting decisions made to guide manufacturers and the quantity of products actually demanded by consumers. In fact, an estimated 30% of all manufactured goods end up as waste just months after rolling off the production line. Think for a second about all of the waste that’s implied: the energy used to ship the goods, package and then transport them back to landfills. Applying big data and predictive analytics could significantly close this gap; as a result, customers are buying the more relevant products they actually need and companies can cut back on waste, benefitting both business and society.
4. Our entire closets will become “smart”
When thinking about the intersection between fashion and technology, one of the hottest topics today is wearables: items like fitness trackers or smart watches. While this continues to be a growing category on its own, technology is becoming more and more pervasive, and will soon be everywhere. Digitally enabled fabrics are expected to become big business. Just recently, the US Department of Defense and the Massachusetts Institute for Technology unveiled details of the Obama administration’s sweeping $315 million public-private project aimed at keeping the country at the forefront of fibre and textiles innovation. Wireless circuitry will be woven into digitally enabled fabrics that will look completely normal and washable – just like the fabrics we already wear. Can you imagine a world where your jeans and T-shirt are considered “smart”?