The pandemic cemented the role of technology in the fashion business. Large companies boosted their sales on the Internet and launched new tools that streamlined their processes. And that trend is going to intensify. Textile distribution groups will triple their investments in technology, which now represent between 1.6% and 1.8% of their sales, to 3%-3.5% in 2030, according to a report by the consulting firm McKinsey. The personalization of the offer thanks to the use of algorithms and the development of the metaverse are going to be two of the most innovative elements.
“Buyers have become accustomed to personalized and tailored services in other industries thanks to companies like Netflix or Spotify, which take advantage of technology such as artificial intelligence to provide experiences specific to the tastes and individual needs of customers”, explain the authors of the report. . Only wealthy consumers can afford exclusive advice, but new technologies open the door to more direct advice to the customer based on their tastes and past purchases.
71% of consumers want companies to offer them personalized products and services, and 76% are dissatisfied when this is not offered, according to the report. “Hyper-personalization is inserted into the entire process of interaction with the client, both in on-line —from the customer’s entry on the home page to the shopping cart— as well as in the physical store, through, for example, the applications in shop mode that players like Inditex have already launched”, explains Carlos Sánchez Altable, a partner at McKinsey. That shop mode It allows the customer to search in the brand’s mobile application where a garment is in the physical store or pay without having to go to the checkout, for example.
Of consumers who made the leap from physical purchase to on-line in 2021, 48% did so due to the pandemic, 27% due to convenience, 11% due to product availability and another 11% to get a promotion. And, once the worst of the pandemic is over, this trend to buy online has been consolidated, although physical stores are still important.
Large companies have been betting in recent months on a strategy on-line more aggressive. Mango, for example, already sells 42% through the digital channel, H&M 32% and Inditex reached 25.5% of its turnover last year. The Chinese company Shein, an opaque company from a financial point of view, but which has managed to position itself very well in markets around the world, such as the United States, only sells online, it does not have physical stores. It also does not have physical Zalando stores, whose strategy is very focused on increasing personalization. It incorporates the preferences of its customers into the algorithm and the product proposals on the web are automatically adapted to their tastes, sizes and favorite brands.
Not only in supply, technology is being key to improving processes. The report points out that companies that are already applying artificial intelligence to be more efficient will see their cash flow grow by 13% between now and 2030. “The laggards”, they say, “should expect a relative decrease of 23%.
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The virtual world or metaverse is another of the elements to be explored in the business, according to the consultancy, which, however, recommends distinguishing between its real application and the hype that is being given to it. But the potential is there: global spending on virtual assets hit $110 billion in 2021 and is expected to grow as much as the video game market, to be worth $135 billion or more by 2024. “The next challenge for companies it will be to convert these unproven technologies into sustainable income”, warns the report. In the next five years, fashion companies can generate more than 5% of their income with investments in virtual activities.
Although it may seem like a distant reality, the truth is that 70% of consumers under 55 consider their digital identity “somewhat important” or “very important”. There are companies that are already dedicating themselves to creating individualized avatars. The start-up Fashion designer DressX, which sells virtual clothing that can be added to photos and posted on social media, has partnered with brands like H&M to launch digital collections. Meanwhile, game platform users on-line like Roblox they update their avatars with many styles on a regular basis. Gucci recently sold a virtual version of its Dionysus bag for the equivalent of $6 on Roblox, which was then auctioned off on a virtual second-hand market for more than $4,000.