This year, the World Retail Congress (WRC) once again brought together some of the world’s most important leaders in fashion and retail, driving consumer trends and representing the current state of retail. This year’s edition of the WRC took place in Barcelona.
Experts from retail companies such as Mango, Primark, Zalando and Sephora as well as the Spanish fashion group Tendam and the Spanish concept store Wow gave important insights into the industry. Technological sustainability, stewardship as a new benchmark, artificial intelligence (AI) and the role of consumers are some of the key themes highlighted at the recent edition of this international congress.
Sustainability as a technological key
Until now, fashion companies’ discourse on sustainability has largely been linked to concepts such as proximity, ecological fabrics, circular economy, CO2 emissions and the like. However, a new variable emerged at this year’s convention: technology. Technological advances are playing an increasingly important role in responding to the environmental, social and economic challenges faced by fashion companies.
In this context, Deloitte, together with the World Retail Congress, produced a report examining how the fashion industry is using technology to achieve fast sustainability wins that can lead to long-term benefits both inside and outside the industry.
“It’s no secret that the retail industry has long been criticized for its toll on the planet, from production processes to consumer behavior,” summarized Karla Martin, Global Fashion and Luxury Leader at Deloitte DTTL.
“Progress in adopting greener practices has not been made fast enough, perhaps in part because of a lack of tools that can bring about meaningful change. However, new cloud-based technologies are helping retailers promote sustainability with best practices and the bottom line,” added Martin.
For example, Burberry has set a goal of making 100 percent of its key raw materials traceable by fiscal year 2025/26, which means greater insight into the risks and opportunities at the procurement stage. In the Deloitte report “Global Powers of Retailing 2023”, Caroline Laurie, Burberry’s Vice President for Corporate Responsibility, says that it is no longer enough to just have ambitious sustainability goals, it is now time to implement them.
It’s no secret that sustainability is a major concern for consumers, especially younger ones. The “Savvy Consumer” study by the Samy Alliance confirms this.
This growing concern has prompted retailers to seek new technologies that allow for more efficient data collection, tracking and tracing, and better supply chain visibility. In addition, retailers are also using technology to drive completely new circular business models, such as clothing rental and resale.
A good example of how technology can be used in the service of sustainability is mangoes “Sustainability Passport”. “We’re working on a passport so people can trace a product,” said Luis Casacuberta, CEO of Mango Woman, Kids & Home.
According to a recent report by Think together with Google, 72 percent of UK consumers say that when buying a product, they check whether a brand’s values reflect their own beliefs. For companies, the success of a sale can therefore depend on whether consumers can trust the statements made by their company.
Responsibility as a top priority
During the three days of the congress, the various leaders who took part in the presentations and interviews emphasized the responsibility that companies have not only towards the environment but also towards society.
When companies have a purpose beyond profit and prioritize sustainable actions that are good for the planet and people, they can engage with their customers in more authentic ways and build trust through greater transparency.
“We need to humanize products and empathize with the people who work with us,” said Selvane Mohandas du Ménil, Director of the International Association of Department Stores, at one of the numerous panel discussions at the congress.
Millennials and Generation Z continue to increase their purchasing power and influence the consumer landscape. Despite mounting inflation, 47 percent of consumers continue to choose to spend more on sustainable goods and services, despite knowing that sustainable alternatives are often more expensive. In addition, they are now demanding transparency with regard to the carbon footprint of companies.
“Consumers today expect the retailers and brands they shop from to genuinely care about sustainability and its impact on the environment. This is now becoming a non-negotiable demand. Retailers need to work towards net-zero emissions and realign their supply chains to offer more sustainable products,” confirmed WRC President Ian McGarrigle.
Artificial intelligence is revolutionizing supply chains
While artificial intelligence (AI) has been in development for a number of years, bringing it to business is one of the most disruptive changes companies are going through.
Exactly in line with these technological advances, the importance of applying AI in the supply chain with algorithms that improve processes through data-driven decisions is becoming increasingly evident.
AI is able to monitor the supply chain and provide valuable information that makes it possible to react quickly to problems – one of the most important topics for Dimas Gimeno, CEO of the concept store for Mode Wow.
AI can track shipments and pinpoint any problem that might arise. It can also predict potential problems based on past data. For example, if there is a pattern of late deliveries, AI can identify the problem and take action. It can also collect data and make predictions about demand, supply, and other factors affecting a business.
Previously, stocks were kept in the warehouse and allocated to different teams, who in turn made the distribution to the physical store, the web shop and wholesalers. But this approach no longer fits into the omnichannel world. AI can help improve demand forecasting, pricing, multi-level inventory optimization, and intelligent inventory allocation, control, and replenishment.
At the conference, Scott Galloway, a professor of marketing at NYU Stern Business School, said that artificial intelligence is the big disruptive change in global business and retail, and that companies that don’t follow it will be left behind: “AI won’t do it for you take away the job, she has nothing to do with that. The reality is that if you are not already experimenting with the potential of this technology, you will be left behind.” Galloway also predicted that AI will revolutionize merchandising and store design.
In that sense, artificial intelligence in the fashion sector is estimated to be worth more than $4.4 billion by 2027, according to The Insight Partners.
AI will also play a key role in consumers’ search for information about products and services, speeding up and improving this process. Chat GPT is already attracting increasing interest from users and represents a scenario where younger consumers no longer see Google as the sole source for information search, but where it co-exists with others such as Chat GPT or TikTok.
“The new post-pandemic retail environment is more demanding, complex and competitive than ever,” said BCG CEO Tiffany Yeh. “The vast majority of retailers overlook the opportunity to deploy AI-powered solutions. We must act today to capture that advantage and propel commerce into the future.”
Consumers before technology
Another important starting point of the event was the importance of consumers. The customer experience is an intangible value that goes beyond the purchase of a product or service and consists of countless interactions, moments and touchpoints between consumers and brands. It is also the key to customer brand loyalty.
Stuart Machin (CEO, Marks & Spencer), Ying Xu (CEO, Wumart), Jennifer Foyle (President and Executive Creative Director, American Eagle & Aerie) and Marcella Warternberg (CEO, AWWG), all agreed and represented at a panel discussion the following view: “Technology is an essential part of the success of today’s retail industry, but it cannot be introduced without verifying that a brand’s consumers are ready for it”.
Knowing the market and consumers is crucial for companies, because markets are increasingly changing and becoming more demanding, and consumers have different preferences and diverse desires. Therefore, offering value propositions that are disruptive and innovative will make the difference in the face of increasingly fierce competition.
Another variable that has been discussed when trying to achieve greater consumer engagement is the implementation of specific local actions that can also be sustainable.
With that in mind, Jumia’s former CEO Juliet Anammah told the industry how the e-commerce company was testing a small campaign targeting a specific consumer segment, where it donated money to plant a tree with every Black Friday purchase. The result was spectacular and sales grew exponentially.
Despite technology, consumers remain the fundamental pillar of success. It’s no longer just about the product. Retailers who focus all their efforts on an attractive product without addressing the needs of their customers are guaranteed to fail.
This article by Paula V.Pinuaga originally appeared on FashionUnited.es. Translated and edited by Simone Preuss.