The fashion industry is at a turning point – both in terms of its business model and in terms of perception. From sustainability concerns and inclusion challenges to the interchangeability of most of today’s brands, fashion retail needs a major overhaul. But what could that look like?
Why the current retail business model needs an update
The fashion business is big – with an impressive global turnover of 1.53 trillion US dollars (about 1.41 trillion euros) in 2022. But the price for the shiny world of endless possibilities and styles is high: fast fashion demands enormous production volumes, which ultimately lead to could end up in landfills. “The fashion industry and its supply chain is the third largest polluting industry after food and construction. It emits 10 percent of global greenhouse gas emissions and releases 1.2 billion tons of carbon dioxide annually, more than the shipping and aviation industries combined” – according to a report by the Environment- orient platform Earth.org from the year. It’s not just our planet and people in other countries that are suffering; the consumption of fast fashion harms us all. In fact, there are already enough clothes today to dress the next six generations. Nevertheless, new collections are launched every month.
Inclusion and diversity have also long been missing from the fashion industry and progress is very slow. First were Black and People of Color (BPoC) Models and representatives, then plus-size and older role models sparsely involved in campaigns and alignments. Inclusion must now focus on including everyone in a representative way – BIPOC, people with disabilities, non-binary people and all other minorities who have long been absent from public fashion discourse. Pioneers like Victoria Jenkins aim to change the way people with disabilities are perceived and represented, and to encourage their inclusion in the fashion discussion. This must also be taken into account in all steps of the fashion retail process – from design to window. Just as new consumers want more diverse representation, they also demand diversified brand representation and immersive brand experiences that go beyond a standardized look and feel. The shopping streets in most cities are now as interchangeable as most of the fashion stores on those streets. Websites and online shops are designed for maximum user-friendliness and ease of use. Most fashion brands and retailers have lost their emotional spark, their core values and their close connection to their original target groups in the pursuit of more sales and profits. That strategy is beginning to reverse as inner cities become increasingly deserted, high street retailers and brands are closing, and a seemingly endless string of bankruptcy announcements are dominating the fashion industry headlines.
Sustainability, inclusion and brand values
At the heart of this discussion should be sustainability in all its facets – from ethical business practices to transparent supply chains, from renewable and circular materials in business to inclusive access and products. More than any other industry, it is important that the fashion industry is able to respond to these urgent needs of the markets. But more importantly, brands need to focus on their core values, their “why” according to Simon Sinek, in order to have a sustainable brand presence. In times of interchangeability, it is more important than ever to clearly define what a brand stands for, what really differentiates it from its competitors and who the target audience really is. The old marketing motto “If you talk to everyone, you’re talking to no one” has never been truer than it is today. Brands without clear differentiation from the competition will become obsolete in the medium to long term.
And that’s a good thing!
Fashion brands and retailers need to seize the opportunity presented by this difficult situation and redefine what they stand for and how they see themselves in the future. A clear alignment on their core values and who they target opens up a world of new possibilities and long-term success. Content, campaigns and media formats have the opportunity to present themselves in a laser-sharp way and create a loyal customer base and community.
AI opens up new possibilities for product optimization
Artificial intelligence (AI) could help deliver on that promise by providing efficient ways to design, manufacture, and market products that perfectly match one’s target audience. A human-machine symbiosis, in which AI takes over the role of software that is based on the creative abilities of designers, but does not replace them, is the aim here. Products are then not only based on creative ideas, but on a generative summary of customer information. Individualized customization on a large scale and tailor-made options for returning and reusing products would also be conceivable. Store design and organization could also be optimized with the help of AI, eliminating inefficiencies that cost time, money and valuable resources. But business today is more than just a sales channel that needs to be optimized.
Staging and connection for the future
Alongside the need to rethink supply chain, management and production standards, there are three key developments that will help brands meet the challenges of sustainability and retail interchangeability.
First, retail and urban spaces today are less about sales. Online shops have perfected the process of convenient shopping. The need for millions of garments delivered to stores has decreased as stores are primarily used for immersive brand experiences. Customers come to the stores to experience what the brand stands for, meet a like-minded community, and educate themselves through workshops and talks that help create a brand world. These programmatic brand deals are becoming the norm, helping brands differentiate themselves, create a distinctive brand identity, connect with their perfect customers, and build long-term loyalty.
Second, fast retail is gradually being replaced with visual merchandising that is set up, taken down and thrown away on a monthly basis. Being “on brand” but also acting sustainably is no longer a dichotomy – it will soon become the new norm. Customers are more likely to buy from a brand that acts responsibly, diligently communicates their efforts, and can back it up by tracking key metrics. As stores need brand and community updates, visual merchandisers and agencies should be aware of this new and important pillar of sustainable retail and adopt it incrementally.
Third, metaverse and digital fashion are still very relevant. Big fashion and lifestyle brands have already invested money in this new medium, which is still a playground for which the rules and boundaries have not yet been established. Nevertheless, there are immense opportunities for fashion companies. Digital fashion enables brands to let customers try out their styles virtually without actually making them. Accurate analytics in the background can provide the data that enables decisions to be made on which styles to produce and at what scale – reducing overproduction. Digital fashion also enables influencers, creators and users to use different styles in digital communication without actually buying them and later having to dispose of them or resell them. The most amazing part of digital fashion and the Metaverse is the possibility of brand experience, as the digital world is not governed by the physical laws of our world. Brand worlds can be different and really showcase a core identity that is more engaging and relevant than in the real world. The possibilities of integrating community and e-commerce functions as well as infotainment connect the physical brand stores and communities with the digital and mobile brand worlds – the possibilities are endless. This is just the beginning, and brands need to see the full picture of how and where their customers can experience the brand. Fashion retail is at an inflection point to meet the needs of a new generation of customers and a new generation of technology. It’s a great opportunity to make an impact and set sail for success.
About the author
Mathias Ullrich is Managing Director at LIGANOVA, the innovation leader in the area of brand & retail experiences in the phygital space and is responsible for the area of experience solutions. His main task is to transform the business models of LIGANOVA’s customers – global premium brands from the luxury, sporting goods, automotive, fashion and retail sectors – and make them sustainable. The industrial engineer previously worked, among other things, as CDO for the Dutch bicycle manufacturer Pon Bike and as Director Retail & Consumer Goods at Strategy&.