In the past 100 years, Fashion Retail has seen several changes. From prim and haute couture to fast fashion, the industry has taken a huge leap. As such the sales method has also greatly changed from tailor boutiques to retail outlets, with the latest leap being e-commerce. Is Artificial Intelligence the next big leap for fashion retail? Before we dig deep in the subject let us broadly define Artificial Intelligence as machines being able to carry out tasks in a ‘smart’ way. The technology relies on algorithms and data.
Artificial Intelligence has the power to interpret data, which is available in abundance in the consumer-centric Fashion Retail industry. It can be used for several different purposes and can prove to be a major pivot for the industry.
How will Artificial Intelligence change the industry?
First, Artificial Intelligence can be a support to fashion designers. It is a popular opinion that design is a creative process and hence designers cannot be replaced by machines. This is true to some extent. However, not all of the designs in a collection require creative thinking.
Anna Franziska Michel, founder of the fashion pre-seed startup YOONA AI, clearly seems to think this. About 70 percent of the styles that YOONA sells are the best-selling styles from the previous season with minor colour and design changes. This work is facilitated by AI since the creative process relies on historical consumer data analysis which can be automated and quickly analysed by machines. The designers themselves can then concentrate on the remaining 30 percent of the design work which require creative and abstract thinking.
Artificial Intelligence can also predict the precise amount of material required therefore preventing wastage and making the process more sustainable which is of critical importance to an industry with a notoriously poor environmental footprint.
Second, Artificial Intelligence can revolutionise the personalised shopping experience which is gaining popularity in Fashion Retail. OUTFITTERY, which is reported to have raised nearly $60m, is a series E start-up based on this idea. It combines AI and real-life stylists to make personalised gift boxes for its customers. STITCH FIX is another company, listed on Nasdaq, which provides online personal styling service. It uses data and algorithms to personalise clothing recommendations based on size, style and budget preferences.
Personalised shopping recommendations will be crucial in the future since the endless growth of listings on e-commerce marketplaces are making it almost impossible to go through all the available products and choose the best suited item. It is exhausting to unendingly scroll and select. Hence, due to the large amount of clothing available, customers end up choosing the item that is most easily found rather than the item that aligns with their preferences. Personalised shopping recommendations driven by Artificial Intelligence solve this problem and give consumers real choice.
According to a report by Accenture, using Artificial Intelligence to personalise shopping will boost profitability by 59% for wholesale and retail companies by 2035. It is therefore an attractive choice for any retail who has the courage to be an early-adopter.
E-commerce retailers already have several advantages as collecting data comes easily. Companies have experience in leveraging Artificial Intelligence to develop personalised sales, including marketing and communication strategies based on previous customer behaviour and preferences. An obvious example is Amazon.com which was one of the pioneers in providing personal product recommendations for its customers in 1998. The hardest switch will be for brick-and-mortar shops that have mostly relied on in-person shopping and have not invested in digital strategies.
A report published by Boston Consulting Group shows that retailers who have adopted technology-led personalisation strategies actually see sales gains of 6-10%. This rate is two to three times faster than retailers who do not leverage Artificial Intelligence.
Third, Artificial Intelligence can be used to forecast fashion trends. Traditionally, fashion forecasting has been a labour-intensive job. It involves manual or digital observation and data collection from fashion designers and influencers. With the revolution in data collection and Artificial Intelligence brands can conduct better more accurate trend analysis. By harnessing data directly from users, brands have fast, easy access to information that helps them plan the styles people will love and know what quantities to manufacture.
Concluding thoughts
The Artificial Intelligence revolution is still in its early stages in the Fashion Retail industry but it has a great potential of becoming the next big leap. The technology is changing the way retailers design and sell fashion and it is benefitting both the retailers and customers. According to market estimates the global value of artificial intelligence in the fashion market amounted to 270 million U.S. dollars in 2018. It is expected to grow at a CAGR of 36.9 percent up to 2027, amounting to a total value of 4.4 billion U.S. dollars.
The future of Fashion Retail is filled with opportunities for those who make the right investments in Artificial Intelligence and those who do not risk falling behind in an evolving competitive market.
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