Digital transformation in the fashion industry: what are the main challenges?

The fashion industry is facing many changes as a direct result of technological innovations and their impact on customer behavior.

Before delving into the specifics of this revolution, let’s clarify some key concepts. First of all, digital transformation: this expression indicates the integration of digital technologies into all the different areas of a business, this changing the way companies work, build value for their customers and interact with them. Nowadays all types of businesses are required to adapt to the digital transformation and modernize their organization and operations. Of course this change, although always radical and necessary, appears very different from company to company because it is hard – if not impossible – to define specific processes that can be applied to every business model. The digital transformation is also a cultural revolution, as it requires to challenge the status quo and experiment with new solutions.

In this ever-changing context, Fashion is one of the most challenging industries as it is very dynamic and highly impacted by the global economic uncertainty. Many brands have developed a series of initiatives to improve their processes, their speed, their supply chains and operations and to increase the levels of innovation within their business. A crucial challenge to consider is the change in customers’ behavior: people all over the world are increasingly empowered by technology, informed and selective about their choices and willing to interact with the brands they purchase from.

From these premises, it is possible to identify and define some of the main trends in today’s fashion business world.

o Virtual try-on: online shoppers can create a personalized avatar by submitting their pictures and measurements in order to receive customized fit and sizing recommendations and understand how the items fit before actually buying them. At the same time, this also helps brands in lowering their return rate, a sustainability problem in both financial and environmental terms.

o Novel fabrics: some startups are currently working on developing sustainable fabrics with alternative materials; this aims at totally reshaping the garments we wear in our daily life, and will be the heart of the future of fashion.

o Omnichannel: this approach integrates the different methods of shopping online and offline, placing the customer at the center of the business strategy.

o Social live shopping: marketing strategy that consists in an influencer/celebrity promoting a product through a live video, giving all viewers the possibility to directly buy the items showcased in real time.

o Conversational commerce: interaction with customers through messaging and chat/social applications such as WhatsApp, Facebook, Messenger or WeChat. Fashion companies are already using chatbots for customer service, but this system allows them to have a more direct and personal contact with the customers as well as to interact with them in real-time, provide recommendations and create a stronger emotional connection.

o Metaverse: a virtual-reality space in which users can interact with each other in a computer-generated environment. Fashion companies are integrating the metaverse in their business by creating “digital garments” to be worn by digital avatars, allowing customers to experiment with style more than they normally would in real life.

o NFTs: NFTS are digital tokens that provide proof of ownership over an asset; they can also be traded, with the transaction registered on a blockchain for transparency reasons. Fashion companies use NFTs to create the virtual clothes that customers can wear in the digital environments described above.

o Blockchain: mostly used as a record-keeping technology, it is a great tool for transparency, traceability and to improve the supply chain-related processes. It is also used to exchange information, documents or data with suppliers and intermediaries.

o Artificial intelligence: brands are using avant-garde AI technologies to improve customer experience, analyze data, increase sales, forecast trends and reduce costs related to supply chain and inventory management.

o Internet of Things (IoT): IoT impacts the fashion business as it enables data sharing, inventory management and security while also improving the overall customer experience.

o 3D Printing: by developing 3D prototypes, designers can create 3D garments directly on digital avatars of specific sizes and measurements. This helps brands to design specific samples and items and therefore reduce waste. 3D technology shows very realistic images of clothes, down to fabric appearance and tiny details: the main benefits of this are lower sample-making costs and increased production speed.

In conclusion, fashion companies need to expand their digital and analytics tools and skills to maintain competitive advantage and strengthen their business; they ultimately need to follow the digital trends and invest in innovation because, otherwise, the biggest risk is to lose customers and market shares.