Unlocking the power of online fashion with new technology
How retailers can use tech to remain relevant after COVID-19
The fashion retail industry has been majorly disrupted by the COVID-19 pandemic in the past few months, with most brands seeing an impact on both the supply and demand side of their business. In fact, wave 5 of Kantar’s COVID-19 Barometer shows that almost half (46%) of people say they will delay returning to shopping as they did previously because of pandemic-related safety concerns.
As the smoke begins to clear, it’s important that these brands move to find new sources of opportunity and growth if they are to remain relevant in our new normal.
One key development during this period has been the dramatic growth in online sales compared to offline. Kantar Retail IQ 2020 projections now suggest that even a conservative 1% annual growth in online retail globally, from now to 2025, would mean it outpaces offline growth by ten times.
These online, direct-to-consumer channels offer some pretty positive effects for high-street retailers, such as cost-effective customer acquisition and greater profitability. But these brands have to remain conscious of what they may be losing as well.
Fashion ecommerce brands face a new challenge. In a competitive online market, brand loyalty is often compromised. Kantar CX+ 2020 Retail analysis has found that only 16% of retail customers were ‘delighted’ with their most recent online purchase. Our research also found that globally, fashion retailers score poorly for brand promise (the experience a consumer expects each time they interact with that brand), compared to grocery and general retailers. So how can these companies build a brand that leaves a lasting impression without a physical presence on the high street and the face-to-face interactions that build loyalty?
BrandZ research shows that brands with strong brand equity recover faster during a downturn, whereas brands that fail to do so devalue over time. A key question, therefore, is how fashion brands can fully leverage online revenue growth, while also building loyalty?
Using tech to enable fashion’s future
As fashion brands battle over people’s discretionary, or non-essential spend, new ways of driving demand will be critical. Innovative digital technologies have the potential to deliver the personalisation and customisation that customers value.
Artificial intelligence (AI) is one emerging technology that is set to play a key role in fashion’s recovery. Building a greater understanding of customer data through AI will allow brands to deliver unique experiences and services for segments-of-one, in which the focus is on each individual customer.
At-home 3D printing may also democratise shopping by providing customers with on-demand and perfectly fitted products at the click of a button. This will reduce the risk of supply chain disruption and problems with sustainability, such as inventory excess, which has plagued the fashion business. Meanwhile, it accelerates product turnaround from design to delivery.
Sustainability is increasingly important for consumers. Kantar’s CX+ 2020 Retail research found that sustainability was the second greatest global driver of fashion brand preference.
With 3D printing, customers will be empowered through greater choice and products will be created collaboratively, catering to individual tastes and preferences. As a result, retailers will see healthier finances with increased cashflow, higher profits from less discounting, and lower risk of unsold inventory.
Vertically integrated retailers (brands that control their supplier chains, distributers and physical retail locations) and original equipment manufacturers (companies who produce parts and products that are sold on and used by another manufacturer) are advancing in this space. Custom knitwear manufacturer Knyttan solved a key integration challenge by developing design software that would bridge the gap between a design customisation interface and the instructions provided to the digital knitting machines. Many global athletic wear and shoe retailers also have offerings in the custom space, including Nike with its ‘Nike by You’ initiative.
Innovate to stay ahead
Simply using recommendation engines to give consumers a personalised product selection will soon no longer be enough for tomorrow’s ecommerce retailers. Instead, customer data will underpin a revolutionary process of mass-product and service customisation, as well as personalisation, at an individual level. This creates an opportunity for retailers to engage customers through immersive experiences and collaborative creation, resulting in a more sustainable industry with greater brand loyalty online.
11 September 2020
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