2019 saw fashion brands and retailers testing new technologies and developing new business models. 2020 will see them identifying, and scaling, practical use-cases.
Last year’s fashion-tech investments followed shifting trends in customer behaviour. Developments in data and AI led to new programs from the likes of Kering and Yoox Net-a-Porter aimed to better deliver what customers want, including smarter omnichannel shopping journeys, advanced clienteling and data-informed product development and merchandising. An increasing appetite for newness that doesn’t create waste led to a slew of rental and resale models: Urban Outfitters Inc. launched rental service Nuuly; luxury brands like Burberry inked official partnerships with The RealReal and other resale sites. Pushing that trend forward, brands like Louis Vuitton and Farfetch experimented with digital designs through the world of gaming.
This year, brands will continue to eschew big, tech-centric launches in favour of incremental tests, and they will build on what worked best in 2019’s year of experimentation. Based on momentum from many of last year’s emerging themes, here are the technologies and trends expected to make headlines in the year ahead.
Influencer marketing could benefit from a data squeeze. As data literacy matures, so does consumer and governmental awareness of data privacy. California’s new Consumer Privacy Act builds on the EU’s General Data Protection Regulation, which gives people more control over the usage of their data, and Apple is making it harder for third parties to gather data. Thus, Forrester predicts that “2020 will be a bad year for third-party data and a good year for marketers who take consumer privacy seriously.”
Brands will have to limit reliance on aggregated third-party data to target customers, Forrester says, which might result in decreasing data-informed personalisation efforts. Instead, brands should seek to build authentic connections through influencer marketing, especially as Instagram builds tools to help brands create targeted influencer campaigns based on ideal audience.
Blockchain use-cases will mature and scale. Last year confirmed that the potential of blockchain is becoming apparent to fashion retailers: Farfetch joined the Libra Association, LVMH linked up with Microsoft on Aura and Ba&sh is offering resale through blockchain-enabled purchases. This year, expect Farfetch and LVMH’s blockchain strategies to accelerate, which will likely include providing a unique digital identity to items, plus more pilots and products that use blockchain to help authenticate luxury goods like bags and sneakers or anonymously transfer ownership of pre-owned goods. This year could potentially even see the development of luxury payment through cryptocurrency.
Rental and resale will continue their proliferation. In 2019, Burberry, Harvey Nichols, Selfridges, Farfetch and Ba&sh saw business opportunities in customers’ growing interest in consigning, while startups like Caastle, Reflaunt, The Restory, LePrix and Eon grew to help both brands and customers participate in circular business models. The RealReal’s continued rise encapsulated the surge of the model: The company’s Q3 revenue increased 55 per cent to $80.5 million, and average order value climbed to $438 from $418. This year, expect a major fashion player to make an even more significant step toward fashion’s version of “reduce, reuse, recycle” through in-house resale, rental or the use of deadstock fabrics to make new designs. Last November, for example, Kering’s chief client and digital officer Grégory Boutté acknowledged that rental and resale were on his radar. Menswear and streetwear wear will also see more options for rental and resale with startups like Seasons and Laced.
A luxury brand will offer digital clothes. Last year introduced the concept of clothing that exists only digitally: Gucci let customers “try on” Ace sneakers through augmented reality, Louis Vuitton designed “skins” for League of Legends characters and Drest sold digitised versions of Farfetch inventory. While selling digital clothing at luxury prices is yet to come, it’s an intriguing method for a brand to experiment with technology, engage with customers and cater to both Instagram culture and sustainability.
Already, some brands are using digital designs to gauge market appetite: In addition to Tommy Hilfiger’s digital showrooms, San Francisco brand Taylor Stitch invites customers to pre-order digital designs before they go into production. This programme has been profitable, says Matt Field, co-founder of product development platform Maker/Sights, which works with the brand. Field anticipates seeing bigger brands adopting “flavours of that approach” — by “dropping” digital designs on Instagram before the most popular design is produced, for instance. Already, Scandinavian brand Carlings has created and sold a T-shirt whose designs can be changed digitally using Instagram AR filters.
5G will power augmented reality and live video shopping. The processing power of smartphones and their networks has limited effective augmented-reality projects, including shop-adjacent uses in fashion. As the fifth generation of wireless technology, 5G promises faster downloads and less latency. Combined with the influx of AR developer tools from mainstream platforms like Apple and Facebook, 5G could facilitate the technology’s presence on social media in 2020. For example, customers will be able to “try on” designs on social platforms before checking out in-app.
5G will also allow new streaming media formats with higher-definition graphics, sound and interactive technologies, says eMarketer principal analyst Yoram Wurmser, suggesting that livestream video shopping, already generating $4.4 billion in sales in China as of 2018, will become more popular in Western regions. Early players include H&M-owned Monki and ShopShops, which connects Chinese shoppers with US boutiques. Expect platforms like Facebook, Instagram and YouTube to jump in with potential new features that facilitate in-app live shopping.
VCs will reward profitability and practicality. Consider it the Softbank effect: the venture funding climate has grown more conservative, with investors prioritising stable growth over bloated scale. In the year ahead, investors will look for companies that can demonstrate customer loyalty and diverse customer acquisition strategies beyond Facebook — a strategy that applies to existing consumer brand startups as well. Building customer loyalty and competing with the technology of Amazon while achieving profitability is a lot to accomplish at once, which is why 2020 will require brands to invest in the less sexy categories of innovation, including fulfilment technology and e-commerce experience.
The B2B companies that facilitate these capabilities behind the scenes are in a position to step into the spotlight this year. Forrester anticipates the rise of “agent whisperer” technologies that help customer service agents more intuitively and accurately respond to customer inquiries.
EMarketer’s Lipsman says that brands will find refuge in “Retail as a Service” (RaaS) platforms that deliver off-the-shelf, on-demand services that “fill the innovation gap with back-end technology and infrastructure”. He points to Shopify’s new fulfilment services, Microsoft’s white-label “store-of-the-future” technology and Neighborhood Goods’s flexible pop-up format as clear leaders.
After 2019’s experiments, 2020 will be a time to stick to the technologies that help brands with staying power. “2020 could become the year that companies convert on the potential energy built up in 2019 to move from prudent investments to breakout growth,” says Forrester senior vice president of research Sharyn Leaver. “The most successful will be those that properly invested in their foundation — and have the innovation skills to move quickly.”
https://www.voguebusiness.com/technology/future-fashion-tech-predictions-2020