Fashion retailers are under pressure. Many physical retailers, such as H&M and Zara have seen their sales decimated by the growth of online competitors like Asos and Zalando, who themselves are struggling to reach the expectations of investors. The fast fashion retail models pioneered by the likes of Inditex, has now created a new normal in terms of consumer expectations and behaviours that are difficult to meet.
Innovation has largely not kept pace with consumer behaviour, in a world of mobile-centric millennial consumers, where their aspirations are global, their choice is diverse, their influence is communal, and their patience is zero. Amazon has launched many private labels, H&M tried celebrity-designed ranges, Uniqlo invested in vending machines, Nike went for vast indoor experiences, Supreme became the ultra-hyped drop brand, and Depop is the new normal for reselling and vintage hunting.
Of all the trends influencing retail, personalisation – in the forms of customised products, personalised service, local engagement, personal shoppers and predicted curation – is perhaps the biggest trend for fashion retailers right now. In order to achieve that some retailers are using technologies such as AI and 3d printing, some are using expert staff and local kiosking, some are using data to build more sophisticated interplay between different channels.
Here are some of the most recent examples of fashion retail innovations:
Alibaba’s FashionAI with Guess
Alibaba’s New Retail concept seeks to rethink the entire retail experience, physical and digital, enabled by next generation technologies. This week the Chinese tech giant launched its first “FashionAI” concept store enabled by artificial intelligence. The Hong Kong store showcases Guess apparel through innovations such as smart mirrors, which display product information on a nearby screen when shoppers are touching or picking up a garment. The smart mirror also makes mix-and-match recommendations and points to where the suggested items can be found in the store. It also uses machine learning to computer vision to “learn” from consumers, designers and fashion aficionados within the e-commerce giant’s ecosystem. These insights include images of more than 500,000 outfits put together by stylists on its Taobao platform.
Adidas Berlin travel pass
Berlin transit authority BVG’s unusual collaboration with Adidas Originals – limited edition sneakers with a built-in BVG season travel pass. As such the wearer (as long as they are wearing the pair of sneakers at the time) will get free travel around the entire city on trams, buses, ferries and subways for the year. Although the shoes were quite highly priced at €180, the value of the annual travel pass is €728 which means they offer the owner a significant saving. Limited to 500 pairs, the shoes continue the BVG link in their design by mimicking the seat upholstery design used on the company’s train seats.
Amazon Echo Look gets stylish
Amazon Echo Look’s screen and camera functionality is being put to good use by fashion publications Vogue and GQ. Customers can use the device’s AI stylist to get style suggestions from the magazines by uploading photos from their smartphone. The magazines will also host weekly content on the Echo Look app’s home screen with the ability for customers to click through and buy items. Although Amazon says Vogue and GQ don’t get a cut from any purchases made, it’s the sort of collaboration that you could add such an element to.
Columbia Sportswear’s Azure cloud
Columbia Sportswear has collaborated with Microsoft to offer a better customer experience. The company uses Microsoft’s Dynamics 365 and Azure cloud services to get insights into how customers respond to products – regardless of the channel used. This then helps Columbia Sportswear to personalise the experience. The technology is also used to improve merchandise management by offering better reporting and analysis.
H&M’s Afound discount marketplace
H&M is extending to discount fashion with its new marketplace Afound. Significantly, H&M will allow other fashion labels to be sold on Afound. And of course H&M will use it sell its own unsold inventory. The marketplace will be accessible online and through a physical store in Sweden. The aim is to present a mix of brands at different price points. Similarly, Inditex’s remainder products are sold through a separate brand Lefties in which own brand labels are changed from Zara or Mango to Lefties.
LVMH 24sevres multi-brand store
LVMH’s first ecommerce project is 24servres.com, which is a digital realisation of the Le Bon Marche store in Paris. The idea is to extend the physical experience to customers all around the world, including recreating the store’s famous window displays. LVMH also believes that its curated experience is what sets it apart with the brand taking an editorial approach to merchandising the site’s inventory.
Miquela, the digital influencer
Miquela Sousa is a 19 year old LA-based model and influencer. So far, so normal. But Sousa is actually a computer-generated figure – and no-one knows who is actually behind her. Still, she has more than 899,000 Instagram followers and fills her feed with images of outfits from brands such as Chanel, Supreme and Vans.
Net a Porter’s intelligent shopper
Luxury online retailer Net a Porter has invested £442 million in technology and personalisation. A robot selects clothes for customers based on their future plans, for example a planned vacation. The system uses AI to offer the personalised service. Net a Porter has also developed another tool that uses AI to put together outfits based on other items a customer has selected.
Nike’s superfast customisation
The Nike By You studio in New York lets customers customise a pair of trainers in less than 90 minutes. Known as the Nike Makers’ Experience, the process involves a series of graphic options and patterns, plus colour and size options, to create a design that’s unique to the customer. The experience uses a special model of trainer, the Nike Presto X, which was specifically created for it. Currently the Nike Makers’ Experience is invitation only.
Nordstrom’s local advisory stores
US department store Nordstrom’s new retail model is very different to its existing store proposition. The new concept deconstructs the department store into smaller, targeted spaces. The first of these is Nordstrom Local, which is a clothing store that stocks no clothes. Instead the small space has a stylish suite and dressing room with personal stylists ordering in products for customers to try. If they want to buy anything it will be shipped to their home. The space also offers alterations and tailoring.
Orchard Mile’s personalised ‘shopping street’
It’s been a slow process but more and more luxury brands are online, whether via their own initiatives or platforms like Net-a-Porter and Farfetch. One company changing how customers shop for these brands is Orchard Mile which lets customers create their own ‘shopping street’. The customer pick their favourite brands to populate the street, They can then click on them and go to a customised website featuring the designer’s entire collection. The goal is to make the experience akin to walking into the brand’s shop.
Start Today’s ZOZOsuit
The US subsidiary of Japanese fashion brand Start Today is aiming to change the way we buy online with its new at-home measurement device. The ZOZOsuit is an enhanced suit that uses sensor technology to capture 15,000 measurements from all over the wearer’s body. The data is then sent by bluetooth to the accompanying ZOZO app. Customers can then shop Start Today’s products and get recommendations on what will fit based on their exact measurements.
Stitch Fix intelligent box
Stitch Fix is using artificial intelligence to take the effort out of finding new clothes. Rather than the customer going from store-to-store browsing, the company uses a mix of human personal styling and AI to find and send products directly to customers. It uses customer data to find the products it thinks the individual will like. The AI is constantly learning based on what the customer returns and keeps, which means its recommendation get better and more personalised over time.
Tie Bar’s data-gathering stores
Menswear brand The Tie Bar started as an online store, but has since moved into physical retail. Notably the company started with pop–up stores, but found they were turning a profit so converted them into permanent stores. However they don’t operate in isolation. The Tie Bar uses the stores to improve its online offering by testing out new products and uses learnings from customers’ in-store stylist sessions to improve its online equivalent. The Tie Bar also uses online data about where its customers live and what they buy to decide where to open new stores.
Untuckit’s RFID merchandise
Casual men’s apparel retailer Untuckit is piloting the use of RFID in its Fifth Avenue store. The company will use the tech to track inventory and see which items are selling best. They can then use this to optimise inventory in real-time. Just as importantly the RFID will show which sizes and styles have low demand enabling Untuckit to remove or improve them. The store can also track staff and shoppers around the store to better understand journeys.
Viktor & Rolf and Zalando’s recycled collection
Zalando has linked up with fashion designers Viktor & Rolf to create a collection focused around using recycled materials to make handcrafted garments. Called RE:CYCLE, the new collection consists of 17 pieces of womenswear. The materials come from Zalando’s overstock fabrics, while Viktor & Rolf manage the design. The collection is deliberately priced to be accessible with the idea being that it’s a viable alternative to a customer’s usual purchases.
Wardrobe’s direct-to-consumer luxury
Wardrobe.nyc is a luxury direct-to-consumer fashion label from designers Josh Goot and Christine Centenera. The brand sells clothes as ‘wardrobes’ with customers having the choice or four or eight seasonal essentials costing £1,104 and £2,208 respectively. Catering for both men and women it’s an interesting look at where luxury fashion could go in the future by offering high quality products, curated into capsule wardrobes at a lower price.
Zara self-service kiosks
With click-and-collect a well-established part of the retail mix some brands are looking at ways to improve the process. Zara is one of these. It’s testing self-service ‘pickup towers’ in-store which can hold up to 4,000 packages. Customers can use them to retrieve their online orders by scanning a barcode on their phone. The machine then locates and retrieves the package in just a few seconds. Given that most retailers’ click-and-collect services requires customers to queue up at a desk or till to get their items, this technology is a win-win. It makes the process faster for customers and frees up staff to do more important tasks.
More on fashion
- Channel: Future Fashion … “Gamechangers” of the fashion world, including 25 case studies from 1Atelier to Agua Bendita, Diesel to Rapha, Toms and Triangl, Under Armour and Vinyana
- Article: The future of luxury … How can luxury brands capture the new luxuries of time, individuality, authenticity, belonging and experiences?
- Article: A New Textiles Economy … Fashion and the Circular Economy, exploring the changing role of sustainability within fashion, by the Ellen Macarthur Foundation
- Article: Future Fashion Report … Why creating a more future-focused fashion industry is essential, according to The Future Laboratory
More on retail
- Channel: Future Store … “Gamechangers” of the retail world, including 25 case studies from Amazon to & Other Stories, Etsy and Farfetch, Inditex and Sonae
- Article: Retail Futures … Alfred to Amazon, Brandless Brands and Sephora’s Studio … Smart, personal and integrated
- Article: Creating the future one click at a time … why Amazon has just been voted the world’s most innovative company
- Article: Design thinking with Fortnum & Mason … the beautiful reinvention of a British retail icon, combining heritage and innovation
From Amazon Dash to Aussie Farmers, … through branded boutiques and online marketplaces, digital walls and mobile marketing, big data and personalised promotions … what is the future of retailing?
Online retail has grown rapidly over the last decade, from a marginal bolt-on, to major revenue stream in a multi-channel model. In the US, it has grown by around 18% per year, and now accounts for 8% of all sales. But digital is more that this, it is not just another way, but a fundamental capability that can enhance every channel. Search on your phone, buy online, pick up in store. Go to store, use your phone to buy, delivered to your home. Retail innovation is about hybrids, combing physical and digital activities and options in a more experiential and valuable way.
Retail purpose, formats and incentives all change – whilst loyalty cards originally drove behaviour through points, people soon became wise that the rewards were trivial compared to special offers in store. Whilst stores have enhanced their shopper experiences, markets have fragmented with more space for discounters. In Turkey for example, BIM has taken around 40% of the food market with low price, small outlets across cities. At the same time, online players have morphed into credible alternatives, where Amazon sells wines and eBay replaces physical outlet stores. More emotionally, technologies such as Synqera from Russia can “mind-read” a shoppers emotions, judging how to best engage them as they shop, and how to make them smile.
Big data, the huge quantitites of transacational data, mashed with other sources of personal and behavioural data through complex algorithms, means that marketing is highly personalised. Around 35% of all Amazon purchases and 75% of Netflix movie choices are based on recommendations. Of course these suggestions compete with the much more trusted recommmendations of friends and peers on social media, often valued around 10 times more highly than anything from a brand. A brand therefore needs to think laterally, about how to influence communities, and give them the abilities and incentives to influence each other. Consumers also become much less tolerant of failures, unavailable products or poor service, they expect free and easy returns, and they immediately tweet their feelings, particularly the negative ones, to thousands of people like them.
You can explore more of the retailers driving innovative experiences online and physically (and most often in an integrated way) at FutureStore and also innovators in other sectors who are embracing retail as part of their changing business models and consumer experiences at Gamechangers. Also, here are the top retailers as featured in the 2018 World’s Most Innovative Companies rankings by Fast Company magazine:
Amazon … from clicks to bricks
24 years old, and now worth $940 billion, Amazon was initially known for selling books through its website (and later digital versions via its Kindle e-reader), Amazon has built up a customer service, inventory, and shipping empire that allows the site to offer everything from clothes to lawn furniture to janitorial supplies. It also sells digital content like movies, music, and apps. Its Amazon Web Services arm is a multibillion-dollar provider of cloud-based services for millions of business customers around the world, including government agencies and universities. And it’s a major player in consumer electronics–not only by offering devices such as Fire tablets and TV boxes, but also via its Alexa AI assistant service, which made news at the CES 2017 gadget show by being built into everything from LG refrigerators to Ford cars. In an interesting twist, Amazon has made significant investments in brick and mortar, opening its first bookstore in Seattle in late 2015 and since then expanding to 13 locations. In 2017, the company completed its acquisition of Whole Foods and in early 2018 opened an Amazon Go grocery store to the public at the company’s headquarters in Seattle.
Sephora … beauty studios get personal
Premium cosmetics retailer Sephora was founded in France in 1969, acquired by luxury conglomerate LVMH in 1996, and has evolved into one of the world’s most powerful beauty chains. While women had been accustomed to sampling products at department store beauty counters with the help of brand representatives, Sephora allowed women to test products on their own along the aisles of the store. This alternative model of product discovery has been very popular and has allowed the brand to scale globally. Sephora has invested heavily in its website that contains educational videos that teach customers how to use different products. The brand also has a popular loyalty program and a monthly subscription box that allows women to discover new products at home. In 2017, Sephora started rolling out small format boutiques that offer a more intimate shopping experience in neighborhoods. These will exist alongside its larger format stores in malls.
Brandless … the unbranded branding concept
Brandless launched in 2017 with a simple concept: An online retailer, selling its own line of nonperishable food and other household items, where every single product costs $3. Much like other direct to consumer startups such as Everlane and Warby Parker, Brandless wants to cut out the hidden middleman markups from many national brands found in grocery stores. Brandless also abides by its own set of values when manufacturing products. All food products are non-GMO and preservative free, for instance, while all beauty products are devoid of more than 400 harmful ingredients like parabens, phthalates, and sulfates. Founded by serial entrepreneurs Tina Sharkey and Ido Leffler, Brandless has so far garnered $50 million in funding and is set to grow quickly, providing consumers an alternative to Amazon.
Everlane … next generation clothing brand
Everlane launched in 2010 with a concept that was, until then, unheard of in the fashion industry. It would offer the customer a full breakdown of how much it cost to make each product, from the price of the raw materials and transportation to exactly how much of a markup Everlane would take. Millennial shoppers were very attracted to Everlane’s vision of radical transparency, and the brand has grown exponentially over the years. Founder and CEO Michael Preysman has taken the concept of transparency beyond price to offering customers a glimpse into the company’s supply chain, which is both ethical and environmentally sound. On the brand’s website, customers can get a glimpse into the factories where products are made and see photos of the workers making the garments. In 2017, five years after saying he would rather shut down Everlane than open a physical store, Preysman launched the brand’s first permanent brick and mortar location in New York. The brand will continue to roll out new locations around the country over the next few years, each equipped with a proprietary new point of sale system that will make the transition from shopping online to in-store more seamless for the customer.
Sugarfina … vodka-infused artisan treats
Sugarfina’s founders, couple Rosie O’Neill and Josh Resnick, have built a multimillion-dollar business on selling artisanal, high quality candies–often infused with alcohol like vodka and champagne–presented in clear, Instagrammable boxes, perfect for gifting. Founded in 2012, the store now has more than two dozen stores across the U.S. with more opening soon, with the infusion of $35 million in growth financing it received in late 2017. These stores, much like the candy boxes, are minimalistic and encourage customers to sample and savor the products, much like they would wine. The brand now frequently collaborates with artists like Gray Malin and brands like MeUndies to create “Candy Bento Boxes” with sweets and products.
Alfred … AI-enabled personal concierge service
Founded in 2014, New York-based personal-concierge service company Alfred combines artificial intelligence with human assistants to create experiences that go beyond just picking up laundry or ordering groceries (though Alfred does that too). The Alfred platform works in conjunction with an app to provide customers with next-level services such as putting groceries away in the refrigerator and auto-ordering and restocking toilet paper. Alfred assistants also learn about customers’ usage habits, using that info to better inform the AI work. Meanwhile, Alfred has partnered with brands such as Diageo, Nestlé, and P&G to allow Alfred’s customers to test new products (and have the brands receive helpful feedback on beta goods). Available at various price points, Alfred is now focused on incorporating itself into more and more apartment buildings. In 2017, it signed a deal with major real estate company Related Companies, which added Alfred services to an additional 11,000 units while helping Related’s luxury buildings retain tenants.
Find out more
“FutureStore” is part of the Gamechangers project, exploring the future of retail, the fast-changing needs of consumers and the best new ideas from retailers across the world. You can explore FutureStore online with in-depth case studies, downloadable tools and videos, but also through keynotes, workshops and practical fast consulting support for your business. To think of new possibilities. To learn from the best ideas around the world, and even from other sectors. And by applying new approaches from design thinking to gamechanger strategies, new business models to lean innovation, consider how you can innovate and grow.
Here is an example of Peter Fisk’s retail keynote, which is always updated and customised to the audience and event:
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