Ultimate challenge for the fashion industry
Digitisation in fashion – how is the industry changing?
The fashion industry, ranging from global discount retailers to exclusive luxury brands, drives a significant part of the global economy. Fashion is one of the most challenging fields, highly impacted by global economic uncertainty as well as distinct trends and industrial changes. In response to the pressure for growth and cost efficiency, many brands have started a series of initiatives to improve their speed to market and to implement sustainable innovation in their core product design, manufacturing and supply chain processes.
A fundamental challenge for many fashion brands is that, increasingly, they lag behind consumers’ expectations. The role of the consumer has shifted from one of passive observance to enabled dominance. They are no longer content with simply buying fashion products; exponential growth in the use of digital technologies has empowered them. They want to interact, belong, influence and be the brands from which they buy. Informed, selective, and in charge, they care about how they look in public and on social media, and about the perception of the goods they buy and own. The vast majority of consumers use digital channels before, during or after making their purchases.
This means that becoming a digitally-savvy brand can no longer be considered a separate business. Instead it will increasingly be fundamental to organisations and the entire consumer-brand relationship. There are no more typical consumer segments, no more geographies, and no more one-size-fits-all solutions.
New standards of service and experience are being set, and it is mostly about moving away from being a product brand to becoming one that shapes and implements contextualized, consumer-centric propositions – a brand that considers its entire experience eco-system. Legacy businesses with analogue systems and processes are judged by these new standards, and find themselves obsolete and outdated in comparison.
But many brands are still wondering how to bridge the digital divide. Given what’s at stake – the brand heritage and identity – it is a very delicate path to tread. Any digital manifestation of the brand – from social platforms to third party distributors – needs to go hand in hand with redefined brand values and must be tailored to the needs of the consumer. A misaligned or generic digital offering may actually widen the digital divide and even pose a threat to brand and reputation.
Reputational risk – protecting the brand in times of change
It can take many years to build a successful brand, but only a short time to destroy it. Fashion brands have always needed to be ready and able to respond to issues of uncertainty, risk, and reputation, all at varying times.
But in a world of increasing complexity and volatility, brands will need to balance growth aspirations and operational plans with the strategic risks they face. Several factors are contributing to this environment, such as:
- Evolving regulation
- Social media communications
- More consumer channels
- Broader geographies
- ‘Faster’ risks
It is therefore essential that companies increase their vigilance – with brand and reputation being the most important commodities to protect.
Digital transformation is the means by which companies effect organisational change, manage reputational risks and close the gaps between customers’ expectations and the service and experience they receive. For a fashion brand this means re-imagining how shopping in a digital world should play out, rather than merely digitising the shopping process for a physical world.
Digital transformation is about challenging and changing ingrained perceptions about what a company is, does and says, in order to increase relevance to consumers. Whilst the shift towards omni-channel is real and growing, the vast majority of fashion revenues are still driven by offline, physical channels. For some fashion brands, it might remain true that geographical location is still the cornerstone for capturing offline retail demand, but a key enabler for success will be to ensure a consistent omni-channel consumer experience that encompasses physical, virtual and emotional aspects, from communication to conversion and beyond.
Clienteling – how digital can help
It is the convergence of digital and traditional channels, together with the rise of consumer power, that will lead to an increased demand for cohesive brand experiences. The value of information and analytics will therefore grow.
Imagine knowing what every consumer is going to buy as they walk into a store.
Imagine knowing how to activate consumers at exactly the right time, and have the possibility of nurturing relationships with each consumer individually – in a distinct and personalised manner.
This may be the impossible dream, but advances in clienteling – establishing long term relationships with customers based on their habits – are bringing the dream closer. Clienteling may not be new to fashion brands – sales associates can recognise key customers on sight. However the rise of the global customer, operating across geographies and multiple channels, makes it harder for brands to understand their consumer base fully.
Digital clienteling (including leading-edge processes, analytics, technological developments in Digital Marketing, Commerce and Sales & Service platforms) is delivering a personalised customer experience across multiple channels – and ultimately improving conversion rates and revenues.
There is more information available than ever before about people’s consumption habits, behaviours, trends and decision drivers. However, investment in Big Data and analytics is wasted if decision-makers receive erroneous insights, or do not have the skills or competencies to convert solid insights into business decisions. Unlocking this information is key to understanding what the mindset of the consumer is now, and is likely to be in the near future.
Driven by the convergence of Big Data, the Internet of Things, and data science, fashion brands will be able to understand their customers better, respond to market trends and tailor their sales information and products.
Digital transformation – getting it right
Many fashion brands take a fragmented approach to digital transformation, focusing on digitising processes or isolated functions. Digital transformation is often restricted to individual programmes or projects that affect only a small number of departments. Sometimes it may even focus on just one area, such as Marketing or Sales – with limited or very slow returns.
But there is an urgency and momentum building up behind digital transformation, as organisations re-imagine, reshape and retool for an era in which traditional boundaries are broken. The accelerating progression of technology and its fast-paced uptake by consumers deserves a different level of priority for many fashion brands.
The primary drivers for digital transformation are mostly either significant opportunities or existential threats. And the opportunity, or existential threat, that these changes represent should be the focus for business leaders who are considering the future of their organisations and industries. To re-imagine the service and experience a brand offers, and to increase relevance and revenue, may often feel like something that can be done later stage with a large investment and a long term return.
The key is to find the right balance between placing bets – provoking fast results with innovative ideas – and building the solid ground for a digital transformation. For both, the major challenges are not just about releasing the power of data and analytics, managing brand and reputational risks, managing the full value chain, or bridging the digital technology divide. These are all essential ingredients of the ultimate digital challenge for fashion companies – an entire change in organisational culture that puts the consumer at its head.