I can’t believe the end of the year is right around the corner. Wipe the sweat off your forehead because you just survived 2017 (well, almost)—a major feat in retail considering the numerous bankruptcies and store closures we’ve witnessed the past year. That aside, the fashion industry is undergoing a tremendous transformation, leaving a vacuum open for new competition and LOTS of experimentation. Before I start dissecting all the trending holiday shopping reports as we inch closer and closer to Christmas, it’s imperative for fashion retailers to get ahead on what’s to come when 2018 rolls around.
A Look Forward
Fashion is fickle. There’s no other way to slice it.
The fashion consumer of the past no longer exists. Gone. Finito. Inexistant.
Today’s fashion consumer doesn’t skip a beat, especially considering how short-lived trends are in our constantly connected environment. The pace at which styles appear and disappear is so fast, making it incredibly difficult for traditional apparel retailers to keep up.
Achieving success under such a rigid framework, where fashion trends are predicted and prepared for almost a year in advance, is no longer feasible. Additionally, the scale at which most apparel retailers operate make it incredibly difficult to shorten lead times and get the right product out quickly (and accurately).
As a result, innovative business models are taking off, including fast fashion and subscription-based services. More fresh blood in a game that’s already challenging to begin with.
Nonetheless, the fashion industry is pushing back. Traditional fashion retailers are introducing unique store concepts and enabling cutting-edge technology—all looking forward with a focus on the consumer.
In fact, BoF and McKinsey & Company’s in-depth report on the global fashion industry in 2018 reveal there’s a “new sense of optimism in an industry plagued by uncertainty.” Industry sales growth are expected to nearly triple between 2016 and 2018, from 1.5 percent to between 3.5 to 4.5 percent!
The report covers a range of emerging themes expected to dominate the upcoming year, and three stand out significantly:
- Personalization and curation will become more important to the customer.
- Leading innovators will reveal the possibilities of artificial intelligence across all parts of the fashion value chain.
- Due to an urgent and intense need for innovation across the industry, a growing number of fashion companies will aim to emulate the qualities of startups.
We’ve heard it before, but we’ll say it again—consumers value authenticity. People favor businesses who align with their own values, and fashion is a huge expression of this:
“Customers today want businesses with purpose […] Obviously the product has to be A-plus but it's also really what you stand for and what you believe in.” – Tory Burch
Such expectations are driven heavily by increased visibility across personal networks via social media, and only retailers who can identify with their customers in an honest, personalized way will succeed. Additionally, an increased demand for unique items—along with better quality, prices and exclusivity, is also prevalent:
“Consumers know what they want, and are not hesitant to shop around for it – choosing products ideally suited to their needs from a variety of brands and companies.” - Business of Fashion
In order to foster a long-term relationship with their consumers, retailers will need to offer a personal touch to stand out.
In 2018, we are expecting to see more fashion brands leverage data and machine learning technology to provide personalization in a variety of ways, including brand storytelling, custom recommendations, individualized curation and more.
AI Gets Real
The rate of innovation today is unprecedented and technologies like artificial intelligence have the potential to disrupt all industries—including fashion.
Obviously, personalization comes into play, but the capabilities behind AI will go beyond mere product recommendations and promotions. This kind of technology has the ability to completely transform the industry, enhancing the ENTIRE fashion value chain, “blurring the line between technology and creativity.” Such enhancements touch on areas like supply chain, design, predictive forecasting, customer relationship management, dynamic pricing and more.
About 20 percent of executives who took part in the BoF-Mckinsey Global Fashion Survey believe the use of AI will reinvent design, merchandising and marketing within the fashion industry.
In fact, those who jump on the AI train sooner rather than later will be the ones behind such disruption in the fashion industry:
“Research on early adopters suggests that AI-driven innovation will be a new source of productivity and may further expand the income gap between high-performing firms and their competitors. Demand projection is a particularly interesting area due to the trend-driven nature of fashion. An AI-based approach for demand projection could reduce forecasting errors by up to 50 percent, while overall inventory reductions of 20 to 50 percent are feasible.” - Business of Fashion
Such improvements are astonishing. The potential implications of AI will help retailers stay ahead of the competition and meet customer expectations on a whole other level.
“Survival requires constant innovation.”
This seems to be a major theme across the retail industry as a whole. The traditional fashion model is rigid and slow to adopt, in a space that’s increasingly unpredictable and fast-paced. With that being said, the need for a new framework to keep up with the pace of innovation is necessary to remain competitive.
Fashion players are thinking outside the box, looking beyond their own industries for “new ways of working, new kinds of partnerships and new investment models.”
Many businesses realize new collaborations will increase the speed of innovation, much like a startup:
“As the urgency to innovate grows many established fashion brands will begin embracing elements of typical startup mindset and culture – including rapid develop-test-learn cycles.”- Business of Fashion
This will allow fashion players to create a model that’s agile and flexible, with the ability to respond quickly to the constant change and demands of an unpredictable market.
It’s Up To You
As you can tell, the fashion industry has a lot to look forward to in the coming years. It’s an exciting time for transformation and innovation! Those who keep up with the pace to provide a more customer-centric model enabled by the technology available in the market will thrive.
The retail industry had a rough going the past few years, however, a focus on what can be done should be the mentality most fashion players can adopt to excel in today’s environment.
“You can’t control everything […] But we can control what our actions are. We can control what we’re going to do. We can control where and how we deploy our resources, what areas of our strategy we’re going to focus on.” – Chip Bergh, Levi Strauss
You can check out the rest of the report here!
The end of the year creeped up quickly, which means the past 365 days are clearly up for review. Check out our webcast replay (below) with Fung Global Retail & Technology to review the biggest takeaways from 2017 and tips on how to succeed in 2018.