Chasing Fashion Consumer Needs: Digitalising Old Concepts

By Anna Salewski, Founder & CEO at SCROBLE

Part 2

The ever-increasing demands of contemporary consumers are far more than challenging. It is indispensable for fashion brands and retailers to keep up with the latest and create new concepts to remain profitable. While some are addressed by start-ups and innovators, other consumer wishes still await materialisation;   especially when it comes to offline shopping. However, it remains crucial for brands and retailers to catch up with them and enable digitalisation to fulfil consumers’ dreams.The concept of physical stores will not cease to exist anytime soon, but it will become much more sophisticated. How else can it be convincing to a demanding customer? But digitalisation in fashion seems to be a slow and complicated process. In this paper, we take a closer look at issues preventing the fashion industry, especially offline retail, from innovating and try to figure out some ways to address them.

Digitalisation: New area for fashion business

It requires a specialist to gauge needs and define which type of innovation fashion really needs. A brand’s core business is to design and produce beautiful garments and not to dive into digitalisation per se. Another factor also affects the pace of digitalisation in fashion – one that touches upon the variety of brand profiles and their strategies. Influenced by culture and history, brands are often symbols of status quo or carry other aspirational messages. Each brand has its own unique way of communicating with its customers. Just like in any other industry, fashion brands need to compete based on their differentiated products and message to connect with their customers. This continues with digital concepts. However, the same does not apply to customers. They prefer a unified approach and enjoy experimenting with X or Z brand, while keeping everything in one place – their wardrobe. There is a certain conflict between the goals and strategies of users and fashion brands that makes digitalisation for users’ convenience even harder. Thus, it appears extremely difficult to find a way to satisfy consumers’ fashion needs. Digitalisation in fashion is the key, but fashion brands are confronted with this complex situation. As result, conglomerates with the right budget are experimenting with digital solutions. However, what we see are mostly apps that are nice to have, entertaining and amusing, but veer towards gamification of fashion and branding of a particular fashion label rather than confronting existing consumer problems. Smaller brands with limited budgets need to study in-depth and understand the alternative they choose before working on a digital solution. However, defining what makes sense is difficult.

Customer Wishes within the Existing Business Model in Fashion

As described by BOF, existing business model shapes and influences many processes within the fashion retail. I will look closer only at a single point within the business model – the communication between brands/retailers and their customers. Fashion brands using different distribution strategies, but they all have one process in common–managing the creation of the collection. Throughout the history of “already produced” fashion as we know it, there was almost no involvement of the customer feedback within this process. The entire involvement of the customer occurred and was also limited to a conversation about existing collections ready to be sold in the store. Another example of existing customer involvement are the loyalty programs. We all have a full pocket (or now a mobile phone) of them, created a long time ago and still existing as a customer binding system. Lesser processes reflect and respond directly to customers’ needs and communicate with users.

Well, times are changing now. The personalisation, we exercise in many aspects of our lives right up to when we sit on the couch watching personalised streaming services or driving cars produced according to our personal wishes, immensely changes our lifestyle and influences within our purchase decisions. Why am I saying this? It is because knowing what customers want is crucial for success in any industry and also counts strongly for fashion.  
However, there is no technology to make this interaction possible yet. No one can expect the customer to download an application for every fashion brand and brands probably will never outsource this process to multi-brand retail. Thus, an analysis of customer behaviour is hugely required, especially in connection to selection and influence, up to the product discovery and purchase process. In fact, most fashion brands are trying to find and use valuable analytics to understand current and to predict future customer needs. So, what is wrong with that? Nothing; except the fact that it is a kind of “blind date”–created to be general and with no connection to the personality of the fashion brand and its own fashion lovers. Also, any valuable analytics are created almost only from online sources because offline retail remains a “data black” hole according Forbes (please be reminded here that 80% of total sales will be done even in 2020 over offline retail). While big players have recognised the importance of data and customer interaction for better customer understanding by introducing concepts like ”stores of the future”, it is important to reflect what we will know about the customers’ behaviour with this innovation. Would this kind of in-store digital experience via retail devices deliver this desired information that will help fashion brands improve performance? I think no. We are still far from what we really need, but we are making a first step toward closer customer relationships, understanding its importance and establishing a way of how industry can learn more about the client’s wishes and desires.Interestingly, if we look at five top profitable fashion brands according to McKinsey, we would recognise one similarity among them  – they use the exclusive distribution strategy (sales only or almost completely in their own-branded stores). They have direct access to both online and offline consumers, with the greatest (currently technologically possible) insights into customers’ lives. This strategy allows the brands to have the closest contact with their customers, gaining the best understanding of their behaviour. We should not see this as an endorsement for the distribution strategy. However, we need to recognise the extreme need to be digitally connected with the customer, disregarding distribution channels, through instant connection between brands and users. It is clearly evidential that without the broad understanding of users’ behaviour, brands will lose the opportunity to improve their performance.

Ever-increasing customer demands against ever-limiting reality

Millions of customers eat and breathe fashion and mostly show their love online. They browse e-shops, spend time on social media and do online shopping. However, where is offline retail? In that sense, we have a disconnected universe. It follows a different pace and leads a different life, so to speak. Despite tech solutions trying to make purchases smoother and faster for the consumer by integrating stock approvals and delivery tools from online to offline, these environments are not easy to connect. There is currently no magical, seamless connection between offline and online shopping universes. Whichever option we may choose – online or offline – we will always be required to compromise on the benefits of the other. For instance, we compromise the sense of touch when we choose online and the sense of unlimited freedom of choice when we choose offline. Existing technology is unable to help in bridging the gap.Opening hours of physical retail shops is a problem nobody could solve yet – how could they? Is it even solvable? Well, it might be! I have a vision for how we could change the existing shopping reality by extending/digitalising fashion retail. Today, more than ever before, there is a high demand for flexibility because of the busyness of post-modern life and an even bigger need for convenience and user experience. We need to be in control of our shopping decisions. These needs are only partially addressed by existing solutions. Online shopping alone is not the solution to the needs mentioned above, because it is a different service altogether – it does not replicate the experience of shopping offline. Even if subscription services that sell/rent fashion-in-a-parcel address the same issues, they still provide a different kind of service and are far from making city shops more accessible, or let’s say digital, to the consumer. As mentioned in my earlier article, we have seen innovation in the offline fashion space. However, innovation is reserved for certain types of retailers and brands and goes in a different direction. Smart mirrors and digital shelves including i-Pad assistance make the customer experience richer and enjoyable, but do not touch upon real issues that exasperate customers on a daily basis and that could really solve brands’ and retailers’ problems. The same matters for new retailer software solutions (ordering online, delivering offline and vice versa). They only partially solve the problem. Why? This kind of service stands at the end of the product discovery chain, helping with delivery and access to the garment. The services can only support consumers who actively choose that retailer or brand after going through the decision-making and product discovery process, previously unassisted. And here we have dramatic figures about product accessibility – almost “96% of shoppers have left stores empty handed because they couldn’t find what they needed“. I would say it also reflects the time we probably invest in product discovery. (I don’t even start talking about lost amount of relevant data within this process). The manner in which we do offline shopping presently enables very limited product discovery within the available time, mostly wasted in searching.

Diversified retailer profiles bring an extra layer of complexity

To understand the challenges better, we need to distinguish between high-street retailers, usually owned by big brands that sell their namesake products and the rest, i.e. those who offer a multi-brand selection known as the “wholesale” concept. The latter creates diversity in the high-street, but they take high risk while attracting a customer.We must also consider the size of the brand. Smaller brands cannot afford what a giant like Louis Vuitton, with almost 3948 own stores, can. We have multi-retailers, shop owners and fashion conglomerates that operate multiple brands and their respective offline stores and brands that sell their own products in their own shops and within other retailers.Implementing any digital product or service by the brand will have far-reaching consequences for its different distribution channels. It brings another layer of complexity that prevents digitalising products or experiences in fashion. The risks of losing control on branding and its protection are another logical consequence of the processes.

Far-reaching consequences for customers and environment

Unsold inventory, which costs brands over 210 billion dollars a year, should qualify as a very important consequence. I see it as an outcome and logical result of all the problems, including the old business model described above. It was not such a major problem in the past. Living in an economy of speed and consumer consciousness has changed everything. Trend forecasts and predictions are not efficient enough and allow incorrect type or quantities of items to be produced and distributed. It is not a matter of which AI-driven tool provides it, if simply the way of collecting necessary data does not exist yet. We should eliminate unnecessary orders even more urgently than improving supply chains. Technology could and should help in doing it, because any even sustainably produced garment is unsustainable per se if no one will purchase it. Personalised production on-demand is an answer for some fashion brands, but the most would need another digital concept. Customer experience is another challenge.  Technology in fashion, nowadays, is not really changing the way we go about fashion shopping. It is just transforming/digitalising single processes. Whether online or offline, I still browse platforms and visit city shops, trying to find what I need or look for inspiration. This makes me think that fashion shopping is obsolete, even if digitalised. Real innovation would enable me to do something entirely different, connecting the dots of offline and online shopping. Only then would innovation improve the quality of life, in the sense of saving time and having unlimited freedom of choice.

 
Is it possible to develop a new business model and technology that transforms fashion into one with the ability to solve existing challenges by creating a new win-win business and reality for shoppers?

Photos by Francis Duval

Do we need aliens to redefine fashion?

by Anna Salewski, Founder & CEO at SCROBLE S.A.

Part 1

It all began with a question: “Why do I need to spend hours, even days to find the clothes I want?” Am I so demanding, or do I simply have no access to information that would help me make a fast and educated shopping decision? Well, the journey to find a satisfactory answer took a while  —  five years to be precise. I spent three years researching and finalizing my own conclusions, which became the backbone for SCROBLE — a fundamentally disruptive innovation and eco-system in #FashionRetailTech through which I am fulfilling a vision; the vision of reinventing the brick-and-mortar retail experience while merging the offline & online shopping environments. My method of developing SCROBLE relied mostly on my natural curiosity and analytical consolidation of information whilst questioning everything, which helped me to come up with a new and very “own” solution.That’s why I decided to write a series of articles: in order to describe my non-academic findings more broadly, document the conclusions and enable everyone to understand the path that led me to breakthrough innovation; a solution based on a business model different from the existing ones, which has the ability to change almost every shopper’s life.

Let’s start questioning it all.

How did I start looking for solutions to a pain point? It was not only by asking “why can I not find the clothes I want”. I was also at a loss for words regarding what I can describe as an utterly weird situation: why do we have to enter a store, find ourselves exposed to hundreds of articles and still be unable to find what we want? It can be due to time restrictions or the simple fact that we don’t know what we are looking for. Yet we spend our valuable time, running from one store to the other, hoping to find what we want: the item that corresponds to a cerebral image hard to put into words. Come on, we are almost ready to colonize Mars, but cannot find a solution for that? And then we keep wondering why we end up with tons of unsold stock. It’s (not) funny. Well, okay one after the other.We have an overall and global consumption in fashion with about 80% still running over offline retail — figures for 2019 showing that e-commerce still represents only 15% of US retail sales as the strongest fashion market worldwide. Validating this statement, 98% of Z-Gen young consumers confirmed, according to the NRF Survey, that they consume in a store “some or most of the time”. While the numbers of consumers may change and fluctuate, we must accept that the importance of brick-and-mortar is tremendous. It’s the only place where physical garment meets physical consumer and it remains the first venue of fashion consumption. Can we improve the fashion system without entirely improving brick-and-mortar? In my opinion, that’s not possible.Now, let’s focus on the flow of certain facts regarding the brick-and-mortar business today. Many brands with offline-retail presence struggle to survive nowadays. As most recently reported by BoF, declining high-street traffic is one of the reasons for the bankruptcies of big fashion houses already taking place, as well as dramatically decreasing sales at Macy’s, Tapestry and J.C. Penney among others. According to FORBES, more than 50 of the UK’s largest retailers claim to have changed taxation due to stagnation of sales and high street traffic. The amount of empty retail units is at a four year high at 10.3%. 

Overall, the situation is not a new one — it has been going on some time and it is known as the Retail Apocalypse. If it is an apocalypse or not, it’s a matter of interpretation. In the end, there will always be brands doing well and others that don’t. What we cannot disregard is the fact that the entire industry is trying to re-define itself and perceives this as a time of change. The wind of change is blowing for offline retail, and it has nothing to do with interior design or making a shop more welcoming. Fashion brands are trying to find new ways to entice customers as a means to increase sales and profitability, while under a pressure from increasing demands for transparency and higher marketing and production costs. Ineffective strategies, especially in the brick-and-mortar business, will start to become visible and drive many more brands into bankruptcy in the future. Already in 2018, McKinsey predicted that “for fashion players, 2019 will be a year of awakening” and hopefully it is.

What’s wrong with consumers’ behavior?

Admittedly, there should be a reason for declining sales in brick-and-mortar; changing consumer behavior is one of them. Understanding and defining these changes is crucial to pin down so as to find a solution.I have summed up some of the main changes in consumer behavior below:
1. Real needs and sense of “clothes” for consumers is changing.
2. New behavioral patterns — occasional, lunchtime or vacation shopping rather than all-day shopping. People are trying to use their time more efficiently.
3. Decision-making process is segmented and open to influence. Customers are exposed to more streams of information and show up to the store as educated users.
4. People are becoming more creative through social media and are not willing to compromise for less.
5. Environmental and conscience-related factors are also part of the decision-making process nowadays
Being able to understand how these changes influence purchase decisions will allow also to decipher current developments i.e. why the number of customers visiting a high-street shop and leave without making a purchase is increasing. In other words, the gap between customer needs and expectations and what brick-and-mortar is able to deliver is widening. In my point of view what is behind decreasing sales is not city shops’ traffic, but a fast decreasing conversion rate, which simply reflects a need for change. Our fashion shopping habits have become outdated and don’t correspond to the needs of the contemporary consumer. The conversion between visits/sales in brick-and-mortar will continue to go down.So can we reduce all problems of brick-and-mortar down to the existence of e-commerce itself? Or do we use e-commerce because it helps us to achieve our goals in a more efficient way than we could ever expect from offline retail? The natural assumption is that we’re seeing the end of retail as we know it, because everyone is going to use e-commerce, and yet, statistics fail to support this theory as they reflect a difficulty to maintain the growth of online shopping when it comes to fashion. And again, why? If e-commerce provides the answer to all consumer demands, that would for sure have killed the offline experience once everybody had experienced online shopping.While fashion brands and retailers struggle to survive, customers still need to compromise between the online and offline experience for fashion shopping. The customer finds himself in front of a store full of hundreds of styles, unable to find the right one, while elsewhere this exact garment is part of unsold stock. At the end of the day, the unsold stock is partly a technological disability to understand, inspire, convince and deliver goods to nomadic clients. Why specifically them? Because nomadic clients have unpredictable consumer behavior and are not loyal to a few fashion brands only.Now, what is the real meaning of digitalization in fashion and how is digitalization addressing such issues? Let’s quickly scan this brave new world without claiming that this list is exhaustive. We will also avoid naming startups/products from the many successful out there, for fear of favoritism. The purpose is just to identify the most obvious directions towards which technology is helping fashion evolve under the prism of #fashiontech and how the latter is leading the way to solve existing issues.

The customer needs to be inspired and stay informed

It all started with fashion blogs, which are not even a thing anymore, but they certainly started as inspiration portals. Then came Pinterest, Lookbook and many more; they elegantly took handmade mood boards to another level. Pinning and collecting your favourite photos on your own digital mood board has never been easier, and you can even make it public for the world to see or follow. Now we are immersed on shoppable Instagram posts or any platform where you can follow fashionistas, influencers or just other fashion-curious individuals. Admittedly these changes create a new element, whereby social media content and shopping are converging — the fact that many online players are focusing more and more on the ‘discover fashion’ segment and implementing new technologies into it, hoping to inspire and shape customers’ wishes is here to prove it.

Customers want the advantages of both Online and Offline Space

Connecting brick-and-mortar stores with online shops is a trend fashion players are catching up with. More and more offline retailers are seeking to take advantage of the momentum that their online counterparts have gained over the years. Offering an omnichannel or cross-channel experience is what is in vogue these days; i.e. blending different distribution and promotional channels in order to better market fashion — whilst better serving customers at the same time.Online-to-offline commerce, or O2O, is a different method that starts online and tries to lure the online customer into the shop. It’s great for everyone’s sake, both customer and physical retailer alike. Other examples are where the customer gets an enhanced shopping experience in stores reimagined for the digital age: smart fitting rooms, digital mirrors, and personalized suggestions are at his or her disposal, whilst the retailer ensures more traffic in his store, but also offers the possibility to order online. Futuristic-like shopping is very close to entertainment or “merchant-tainment”, as it was rightly referred to. There’s even more to this: some merchants are trying to give the customer multiple options: try in the shop and request home delivery, buy from interactive screens in the entrance of the physical shop even when closed, put an item you’ve tried in the shop in your online cart to buy later or choose from a wider selection of products available on a virtual shelf.The new bundle of futuristic #fashiontech applications are trying to enhance our imagination and to replace trying the garment in the fitting room with the help of Artificial Intelligence, Augmented Reality and Virtual Reality in order to help this particular customer save time with the introduction of new “pre-trying” or fitting processes. Such solutions include Virtual Artists for makeup and smart mirrors or, better, a virtual fitting room that allows customers to dress their reflection and look at it from every angle. Other solutions include the use of AI and picture recognition to find online similar articles to the one we’ve liked but cannot identify — services of great help for those experiencing the paradox of choice.

Customer in control of his garments and wardrobe

Being more in control of the clothes and styles within your wardrobe is another challenge technology has addressed recently. Until now, you had to hire a personal stylist to optimize your wardrobe. Now, you have a better option: uploading our wardrobe online. Integrated AI can create new looks and new combinations based on your clothes — it can also help you pack for your travels in a smarter way than laying outfits across your bed.Customer-centered design is another episode within fashiontech: now at a fraction of the cost of the made-to-measure dress or pair of shoes, customers can have a product which gives them the perfect fit. Or customers can have a pair of shoes that they have co-created together with their favorite brand. Colour, shape, texture, details and of course size can all be chosen among predefined options or measurement predicting algorithms and the customer is enjoying increased control within the co-design process.

Making an impact: Sustainable-friendly solutions

Adding new words to the fashion dictionary, words like “sustainability”, comes with a new set of solutions. The initially customer-incited transparency and tracking backward is proposing various solutions i.e. scannable barcodes that tell you how sourcing the materials of a garment affects the planet and how it can stay in the loop to be re-used — aiming to bring circularity where there was none.Renting your clothes instead of buying is another recent innovation that would not have been there if not for technology: quite a few startups are successfully bringing this new model of sharing economy into fashion and, trends show that it’s here to stay. Luxury items are entering the sustainability fashion game as well: now buying with reselling in mind is in vogue, and numbers show that the resale market will surpass the fast fashion market in a few years time.

A pressing need to save time — Retail, only different

While e-commerce itself is the only option when flexibility/zero opening-hours restrictions are essential, whether it saves time or not is questionable. We still need to find the perfect garment among a vast offer of items, order it, try it on and hope it fits us well — in the opposite case we will need to invest even more time to return it and repeat the process. AI-powered tools can speed up the process of finding and purchasing an item. Other solutions such as payment systems are also revolutionizing the fashion and consumer goods space: pay cash or by card is still available, but you can also choose among smarter methods. Mobile apps or clothes tags and QR codes can allow you to skip the queue and head home with your purchases while the payment has been processed automatically.

Why are there still so many problems in fashion?

Looking at different areas of innovation in fashion destined to satisfy consumer needs, we cannot disregard that most processes revolve around transformation in an online environment whilst offline retail is not as digitalized. There are still numerous customer needs that make him leave the store without purchasing i.e. the need for market research or the need to sleep over it — there are many factors within the offline environment that are the cause behind the unsold stock, lost sales, closing down of stores and other fundamental problems.Despite new technologies, the industry is facing its greatest economic and reputational crisis. Do entertaining and gaming products and Apps with or without AI and AR mismatch with core customer desires and expectations?Is it that service and technology providers are focusing on solving specific problems for one of their target customers (fashion industry or users) instead of creating solutions to cover them all? Or maybe it’s simply a loss of focus that results in disregarding simple, fundamental but still unsolved pain points? Is it really a technological gap that we need to close or is it simply a lack of honest reflection and understanding of the needs of our customers? Or maybe a combination of both? It could also be that the fashion industry lacks the willingness to collaborate and participate in a unifying multi-service and omnichannel product. What exactly lies behind this missed opportunity to have the optimal conversion at the brick-and-mortar, after all?


Let’s dive deeper into this exciting topic in the next article.
Photos by Simon Launay