It is unprecedented. Globalisation has been a catalyst in this crisis. All sectors of the economy are being affected to a greater or lesser extent. The fashion industry, an economic and social pillar in Spain, which generates approximately 2.8% of the country’s GDP and contributes to more than 4% of its labour market, is suffering first-hand. The effects from the crisis have been immediate, generating a context that gave way to the blanket closure of shops, event cancellations, supply chain standstills, etc. Uncertainty is rife and retailers’ ability to foresee scenarios and pivot, almost on a daily basis, puts stress on the short-term management control that aims to secure the model. The crisis’s impact outlived the lockdown period and as was estimated in the report "Descifrando el Covid-19 en España (Decoding Covid-19 in Spain" by everis, the sector will not recover its 2019 profitability levels until 2025 at best.
The perfect storm
Surviving in an uncertain post-Covid environment means being able to adapt to the constant waves of change, managing the short term by making quick, effective decisions. Mid-term strategy is about reprioritising pre-Covid road maps, focusing on aspects that ensure an efficient response to any new lockdown eventualities. And it is in this point where, hybridising retailers’ value chain is being key. It is about finding a balance between physical and digital beyond the shopping experience, ensuring business continuity at all points in the value chain. Sustainability and digitalisation were already recurrently central themes in any discourse about the fashion industry’s future. The health crisis and its socio-economic consequences are presenting a scenario in which digital channels are seeing their evolution accelerate towards a more immersive model that “substitutes” the physical aspect. It is the perfect storm for an approach that has been fighting for relevance for years. Technologies such as virtual reality and augmented reality are already being key levers in the fashion industry’s business continuity plans, and even more so, if that were possible, in view of likely second-wave scenarios with different restriction levels linked to health compliance.
Early adopters during Covid-19
For many years, retail has been one the industries that most sought the use of immersive technologies, like virtual reality and augmented reality. According to Goldman Sachs, retail is –together with the real estate sector and health industries– the second largest sector in terms of investment in this type of technology after the video game industry. The onset of the pandemic in Europe coincided with a key time for the sector. Milan and Paris Fashion Weeks took place, but with cancellations and closed-door catwalks, revealing some weaknesses in the current model, which saw much of its value chain at a complete standstill. Some early adopters are choosing to pivot towards an alternative model, leveraged on solutions that current technologies offer. At the end of March, Shanghai Fashion Week became the first to be staged entirely on the internet thanks to Alibaba. Purely digital formats that are immersive to a greater or lesser extent, which brands like Hermès have backed and which Mercedes-Benz Fashion Week Madrid, a key event in Spain, is assessing. Matthew Drinkwater, Head of the Fashion Innovation Agency at London College of Fashion, reflected on this subject in an interview published in WWD, confirming, “People are beginning to question the reason for a physical show when the technology exists to reach a much bigger audience through a digital space”. Similarly, it is an opportunity to create more sustainable events with more engagement and during which brands can capture more valuable data for their clients and put them to action in real time to maximise their returns.
Beyond the catwalks
This seems to be merely the tip of the iceberg. The most notorious example. If we think about a fashion brands’ entire value chain, whether they sell Direct-to-Consumer (DTC) or are a mixed DTC and wholesale model, there are countless points of contact that are being impacted due to lockdown measures and which are key to business continuity, such as showrooms, catwalks, meetings, presentation events, co-creation sessions, etc. The conventional model needs to be reconsidered and moved towards more flexible and efficient models that adapt to the external needs at any time. Purely digital formats that also possess an increasingly immersive component.
Brands have seen how Covid-19 has entirely or partially limited their operating model and are working on a series of potential scenarios: physical scenarios with their corresponding public health-related restrictions (reduced capacity, additional health compliance efforts) and economic constraints (lower budgets), and those which, at present, seem more probable, which are highly leveraged by digital, immersive technologies.
There are only a few use cases:
- Creating digital spaces that aim to make the current e-commerce experience evolve towards a more personalised immersive model: extended use of avatars captured from body scans, which improve the shopping experience, improving return rates, among others.
- Augmented reality for trying on glasses with a very relevant reliability level.
- Creating digital capsule collections, aimed at generating brand equity.
- Other employee-centred use cases, such as immersive training, which can generate more robust and efficient experiences and whose consumption is upon request and rollout of upgrades is much more agile.
A scalable plan
At present, 3D product design may possibly be fashion retailers great challenge. From a quantitative perspective, in many cases, still only a very small percentage of the collection is designed solely in 3D. From a more qualitative point of view, the level of reliability continues to be a challenge. The realism of materials linked to their physical attributes is not a trivial matter and the impact is huge because it is the very essence of fashion to some extent. As this practice matures, it will act as a facilitator over a myriad of related potential use cases, such as sell-in and sell-out processes as well as way-of-working sophistication within product design and creation processes, merchandising, etc.
Business continuity is triggering the accelerated adoption of this type of initiative together with other factors such as the need for efficiency, agility and sustainability. Such influence is being decisive in the “efforts” on which companies are focusing to boost this type of initiative.
Given the cross-sectional character that this type of investment requires, defining a company-level strategy is paramount, while identifying the key lines of work that should be digitalised and defining a flexible road map that can adapt to changeable scenarios. Aspects to take into account for this type of initiative:
- Defining business processes associated with the experience being digitalised.
- The technological platform that supports these processes and enables the build&run of different initiatives. A technological approach supported by an enterprise platform provides the company with the ability to offer experiences that are extensible and scalable to all of the company’s use cases in a secure, attractive way in line with the brand.
- Assets that are part of the immersive experience in question, understood as scenarios, gadgets and content related to the experience itself and its level of personalisation based on each user’s knowledge.
- The technological medium on which the experience is consumed and the way the data is transmitted.
- The analytics of this type of experience means that metrics can be rethought, generating a discovery environment, geared towards full personalisation and, therefore, conversion optimisation.
The future is yesterday
At times of extreme crisis, it may seem tempting to quash innovation. However, the post-Covid parameters linked to the need to provide secure solutions that combine convenience and efficiency, while adapting to a more changeable environment than ever, are accelerating the use of this type of solution in the sector.
The future associated with this new approach is fascinating. This type of experience is influencing the very design process and is on the path to becoming a new language in which brands experiment in a more agile, sustainable way, better understanding their consumer and activating real product personalisation beyond pure marketing.
The adoption process is accelerating and once brands see the returns, its application will become more widespread. This path must involve profiles that complement technological ones like materials engineers, physics, psychologists, architects who make the experience more sophisticated and generalise the model.
It is too soon to think about scenarios without a high degree of uncertainty, and that’s why having a plan B that ensures business continuity is essential and this type of technology is precisely key here.