Digital Revolution in the Fashion Value Chain

The challenging retail landscape has triggered a massive digital revolution for the fashion industry. The urgency to digitise every link of the value chain has never been more apparent as the Covid-19 crisis renders old processes obsolete. This report aims to guide retailers in understanding how digitisation can bolster business agility and speed-to-market in the new normal.

Written by Ashley LooiJune 9, 2020

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Introduction

Key Insights

  • Speed to Market: Adoption of digital innovations such as 3D prototyping, virtual lookbooks and data analytics tools helps streamline processes, shortening lead times by up to 50%.
  • Trend Validation: Trend analytics tools bolster data-backed decision making, minimising the risk of relying on intuition that comes with trend forecasting.
  • Customer Engagement: Visual merchandising solution enables a unique online shopping experience with curated messaging and offers.

The retail industry has been long overdue a digital revolution. Covid-19 has brought age-old issues to light and accelerated the need for agility and speed to market.

China’s post-pandemic recovery in physical retail has been slow, as physical traffic only recovered to 30%-40% of pre-crisis levels. This paints a bleak picture for fashion retail in the near future. Brands must invest in improving their digital customer experience to make up for decreased foot traffic.

This report aims to demonstrate how digital revolution can bolster businesses’ agility and speed both in crisis and entering the new normal.

 

All data used in this report comes from products retailing online as tracked by Omnilytics, unless otherwise mentioned.

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Democratisation of Roles

The frequent disconnect between retail or brand buyer and manufacturers can typically lengthen the go-to-market cycle.

The roles of buyers and manufacturers can be democratised through the integration of digital tools, establishing a two-way exchange of information. Having a shared platform ensures an efficient flow of information, increasing speed to market.

Virtual Lookbooks

Digital tools make creating mood boards and bookmarking products that inspire design ideas easier than ever. Designer teams are able to save notable products into collections, segregating them by segment and styles.

Designers can create saved collections that function as virtual lookbooks with Omnilytics’ saved products feature, which enables sharing across internal teams and with manufacturers. The collections can also be modified as ideas and concepts change and is reflected in real-time.

Virtual lookbooks can be used to allow efficient information exchange between relevant stakeholders.

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Trend Validation

Trend Analytics vs Forecasting

Trend forecasting’s macro lens can lead to error, leaning heavily on intuition to plan many seasons ahead.

The emergence of trend analytics tools complement trend forecasting with data-driven validation, removing the element of risk. Moreover, trend analytics detects the early signals of emerging trends. This creates opportunity for planning and design products that will meet demand at the right time.

Data-Backed Decision-Making

The use of trend analytics tools reveal insights into current demand, archiving the lengthy process of conducting market research and expediting the trend validation process.

The trend performance solution by Omnilytics analyses trends across different markets and segments. Over the 12 months, among the top performing categories for floral prints in US womenswear was Intimates. The category had a high trend score, consistently outperforming other categories. Popularity of floral prints in Intimates remained stable over the past 6 months – even when the coronavirus hit, while other categories continue to fall. The strong consumer demand presents an opportunity that can be leveraged to produce potential bestsellers, minimising risk of overstock.

Data-backed analytics assist in accurately meeting consumer demand and driving speed and efficiency to gain headway over competitors.

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Digitised Supply Chain

3D Prototyping

The latest iterations of 3D CAD software produce incredibly realistic digital renders to aid faster decision making in product development. Virtual sampling allows brands to visualise the end product in early stages, while allowing manufacturers to assist brands in the design process. The agony of waiting weeks for physical samples to arrive and remaking samples are over. The reduced number of samples produced can result in up to 70% of cost savings.

This digital transformation shortens lead times by up to 50%, increasing speed to market. Levi’s has deployed virtual sampling as part of its recovery plan.

“By leveraging this digital technology to hold the meeting virtually, we were able to engage everyone simultaneously and complete the process in one meeting, taking weeks out of our go-to-market cycle.”

Chip Bergh, President and CEO of Levi Strauss

 

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Digitised Supply Chain (cont’d)

The Right Channel

The lack of visibility in subcategory performance across channels commonly leads to overstock issues due to inefficient product allocation. Data tools can be integrated in decision making at the distribution stage to effectively drive out product and maximise profit.

Retailer analysis needs to be conducted at a granular level to identify opportunities for efficient product allocation. Such granularity can be achieved with Omnilytics’ competitor benchmarking tool.

In the past three months, A-line Dresses garnered a higher sell-out rate on Nordstrom than at Macy’s and Bloomingdale’s. Additionally, data shows there is a white spot opportunity for A-Line Dresses priced under USD 50 on Nordstrom where sell-out is high and product saturation is low. A higher proportion of A-Line Dresses should be assigned to Nordstrom to ensure product allocation is optimised.

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Digitised Supply Chain (cont’d)

Replenishment Strategy

The Covid-19 pandemic has rendered past data as unreliable – the industry hasn’t experienced the current climate before – and this has led to brands having to re-learn and re-establish new core and bestsellers to optimise trade quickly.

Without consistent and close monitoring on recent trade performance, including that of the relevant competitors, it is now incredibly challenging not only adapting to meet changing consumer demand, but also optimising full price sales through a robust replenishment strategy.

The deployment of digital analytics will  enable speed and agility in this area.  Brands can identify potential products as granular as SKU-level to enter replenishment cycles and react accordingly based on trade monitoring.

Omnilytics discovered replenishment opportunities in A-Line Dresses and Cami Dresses for Zara, which achieved high sell-out in May (Chart 5). A further drilldown revealed that Cami Dresses and A-Line Dresses sold particularly well at 48% and 57% sell-out respectively. Finally, specific SKUs can be identified by sorting product images to show “Most Replenished”.

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Personalised Customer Experience

Visual Merchandising

Having a unique online experience will increase exposure and attract customers. The manual process of monitoring competitor visual merchandising can be tedious and time consuming.

Omnilytics automates the capturing and archiving of landing pages and newsletters of brands, ensuring implementation of fresh ideas to avoid repetition. This module also helps the observation of brand messaging and promotional mechanics.

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Personalised Customer Experience (cont’d)

3D Rendering

Virtual samples produced in the design process can be repurposed as product displays on e-commerce channels. Brands can expedite the process by eliminating the need to wait for the final product to schedule photoshoots with models. Scandinavian brand, Carlings, successfully released a digital clothing collection in 2018, using photorealistic 3D models as product displays.

This is also the case for campaign shoots for retail websites and social media outlets. Yoox’s Instagram features Daisy, a 3D model decked in clothes from the luxury retailer. Daisy was introduced by Yoox long before the pandemic hit, preventing any disruptions to its portfolio of images. Moreover, in Carlings’ digital clothing collection, designers dress customers up virtually using images after an order is placed. A similar approach can be adopted to repurpose images from old photoshoots.

3D renders allow brands to streamline the process of preparing a product for retail and save costs spent on hiring crews for photoshoots.

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Personalised Customer Experience (cont’d)

Virtual Try-Ons

Data shows that 49% of millennials have concerns about trying on items in dressing rooms post pandemic. With their reservations about hygiene, consumers are more reluctant to ‘try before you buy’ – which is likely to impact sales.

Providing an alternative for customers with such preferences is crucial to bridge the gap between offline and online channels. Augmented reality (AR) tools help overcome this issue by enabling customers to virtually try-on items. Asos recently launched ‘See My Fit’, an AR tool that allows customers to gauge how items will look in different sizes and on different body types.

Livestreams

E-commerce livestreaming has picked up in China as a result of the coronavirus pandemic. Chinese department store, Intime, managed to brave through the pandemic by converting sales associates into key opinion leaders (KOLs) hosting livestreams on Taobao.

Brands should consider using current sales teams as livestream hosts, promoting products in real-time. These sales associates serve as perfect KOLs with their in depth knowledge of the products and current offers.

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Personalised Customer Experience (cont’d)

Collaborations

The newest version of the Animal Crossing game has taken the world by storm. Players have been organising weddings and graduations in Nintendo’s virtual world. The game also has a feature that allows players to design clothes and share them with other players.

Marc Jacobs and Valentino dropped virtual designs in early May, in collaboration with the Animal Crossing Fashion Archive on Instagram. Valentino’s virtual collection mainly featured dresses from its Spring/Summer and Pre-Fall releases. Consequently, the Dresses category saw a 55% uplift in total sell-out from April to May, with improved sell-out at full price.

Influencer collaborations also engage customers while showcasing new innovative technology. Levi’s recently partnered with TikTok influencers that used Future Finish, its 3D denim customisation technology to create custom designs. The collaboration proved successful as product views for Future Finish more than doubled.

Collaborations are an excellent way to maintain a strong customer relationship while increasing exposure to a wider base of potential customers. However, careful consideration of brand positioning and goals should be carried out to ensure consistent brand messaging.

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Conclusion

Next Steps for Brands

Integrate Digital and Analytic Tools: As the pandemic continues and with WHO expressing concerns of a second peak, the retail landscape remains unpredictable. A second round of stay-at-home measures could mean more stringent guidelines, pushing the retail industry into further turmoil.

Brands must integrate digital and analytic tools in business functions and processes to survive future unexpected changes and to adapt to the new normal. The long-term payoff of such tools outweigh the initial investment.

Digitised Supply Chain: Digitising the supply chain enables brands to observe cost savings and shorter lead times with the use of 3D prototyping. Moreover, brands can use Omnilytics data to recognise white spot opportunities in the market. Retailer analysis can help identify new channels and efficiently allocate stock to maximise earnings.

Omnichannel Experience: Now that brands have lost the physical avenue of customer engagement, the gap between online and offline channels needs to be bridged. AR technology overcomes ‘try before you buy’ customer preferences by allowing shoppers to view how the product will look on different body types. Meaningful relationships with customers can also be formed by meeting them in the virtual realm.

Brands should keep an eye on pop culture for opportunities to maintain strong customer engagement.

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Meet the Author

Ashley Looi

Ashley Looi combines her major in econometrics with her interest in fashion to help brands and retailers uncover actionable insights. She currently produces in-depth reports on the fashion industry and its changing retail scene across the United States, United Kingdom, Australia and Southeast Asia.

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