Fashion Industry: how is it changing?

The Editorial Staff
Content Intelligence Network

Facts and figures offered by Roberto Liscia, president of Netcomm, about the trends that are investing the world of fashion and that you should be following to be competitive.

More and more channel agnostic. The real challenge for fashion brands in the digital age is the integration between online and offline.

Some projects, such as Gucci 9, are already working in this direction: the well-known maison, has indeed hired 150 consultants ready to assist the customer, regardless of the channel used.

But what data support the need to rethink go-to-market strategies and customer approach, not only in terms of skills, technologies and processes but above all in terms of investment?

At the Netcomm Forum, Netcomm president Roberto Liscia talked about that:

  • The number of clothing e-shoppers is growing

The growth in the number of digital consumers in the Apparel sector (but also Footwear and Accessories) is unstoppable. On a global level, it is estimated to be two and a half billion people.

The online revenue of fashion is expected to register high growth rates in the coming years: the CAGR index is around 11%.

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  • The penetration of the digital channel becomes more and more relevant

33% of worldwide apparel purchases were made through digital channels, which make up for a third of the total revenues.

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Including digital in your business model brings advantages, as several studies prove: from 2013 to 2017, the CAGR of online fashion companies grew four times more than that of pure retail companies.

It becomes a fundamental lever for those companies that know how to use it strategically.

  • China has the highest market values and the highest growth in clothing

Internationally, China remains an outperformer both in terms of value and growth. Without a traditional retail past, the "leap" happened directly on digital retail, with very significant penetration.

Estimates indicate around 600 million online shoppers in China. Of these, 50% buy cross-border, outside China: this means 300 million Chinese are interested in foreign products.

To date, 52% of clothing purchases are made online and this percentage is set to grow, to touch 65% in 2023.

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  • In Europe, the UK is the first digital fashion market, followed by Germany

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The main findings, in progress

 

1) New trends in consumption and in customer-brand relations

Three new consumption patterns can be spotted:

- speed: with consumers increasingly mobile and international, the traditional definitions of seasonality and territoriality of the products are dropped. Micro-collections (in Fast-Fashion there can be even 52 in a year) and agility characterize the entry of clothing items into the market, and fast production rhythms.

- social media: they are increasingly relevant in orienting purchases (think of influencers, or See-now, buy-now), here again China stands out as the best performer.

- social: the sensitivity of consumers has changed, and they favor companies that pay more attention to environmental sustainability, from circular economy to packaging (for example, Zalando packs its products in 100% recycled paper). This awareness towards sustainability involves the raw materials and all production processes.

2) Marketing and new retail

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As highlighted in the chart, the behavior of Italian shoppers can be divided into 8 categories, as they become more digital the number of touchpoints increases: that’s where you have to reach, serve and convince them. This entails marketing costs.

In the activation of online purchases of clothing, shoes and accessories, the physical store continues to play a significant role (24.8%). For this reason, it is essential to guarantee omnicanality, i.e. to be able to integrate online and offline touchpoints.

3) Digital technologies, AI and mass customization for a smart supply chain

Technology impacts the Fashion industry in many ways. From the product itself, as in the case of Louis Vuitton's Cruise 2020, where on the most iconic bags were attached screens showing animated images (see here) of whole the buying experience, starting from the supply chain.

The redesign of the entire supply chain begins with the forecasting of the demand, passes through the optimization of operations, a modernization of processes, up to the factory on demand and the customization of products

As far as customer experience is concerned, technology can improve services in the physical context (e.g. digital mirrors) and customize the interaction at every stage of the buyer’s journey.

80% of the respondents expect to be welcomed in their uniqueness with offers, experiences and personalized content, an expectation shared by all sectors.

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AI is also involved in design: it can invent creative models on its own (e.g. Project Muze designed by Google in collaboration with Zalando) or support designers in their creative process, as was the case for the brand Tommy Hilfiger (to learn more, here).

But it can also innovate the purchasing experiences starting from predictive models (for example, the Bento Box of Mm. Lafleur, with the sending each month of an increasingly personalized offer) and interaction with chatbots and virtual assistants (e.g. the chatbot Dior Insider). 

4) Platform Economy

With the advent of digital, platforms which act as intermediaries in supply and demand have come into the limelight. Fashion is not immune, statistics reveal that marketplaces are the first place (59%) where e-shoppers luxury complete their purchases (go here to learn more).

Reasons include better prices (51%), better promotions (43%), wider assortment (29%).

Brands adapt to this trend by controlling marketplaces, e-retailers and aggregators: in the following chart, which analyses the ratio between 50 significant Italian and European brands and 30 aggregators and organized intermediaries, we can read a high average presence, 15.7

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In the same way, digital retailers are increasing their collaboration with brands and this touches in depth the distribution of the overall value over the entire marketing chain.

Brands must therefore be able to define and manage the optimal mix of digital distribution.

The figures come from the presentation by Roberto Liscia, available on the Netcomm website.