The future of the fashion industry is digital. Those who commit to data analysis and smart AI, hold the future in their hands. That is at least how Laurent Mainil, CEO of data specialist Crunch Analytics, sees it. "The whole omnichannel story is driven by digitalisation, and Covid has only accelerated this trend," he says.
Acceleration of digitisation.
Mainil is co-founder and CEO of Crunch Analytics, a specialist in big data analytics and AI applications. The company also helps retailers in the fashion industry interpret data about their customers and use it in their day-to-day activities. Mainil, therefore, has both feet firmly planted in the digital wave that is flowing through the industry faster than ever, especially in times of Covid.
"The most important trend that Covid has ignited in the fashion industry is the acceleration of digitisation. Just look at the spectacular growth of e-commerce," says Mainil. "Fashion retailers have been hit particularly hard by government regulations to curb the pandemic. This trend has massively increased the need for innovation. Retailers have to work with the massive amount of data that gets generated by digital tools in various departments of their organisation. And that will be necessary to outbalance the effects of Covid as quickly as possible once the crisis has passed."
Digitalisation and e-commerce have been a necessary choice for many fashion chains during lockdowns to keep at least one sales channel still open. But can digitisation replace the traditional retail model in the long run? "Digitalisation will not replace the shopping model, but it will change it fundamentally. Even when I go to a store I regularly visit, it is still up to me to go through the aisles to look for what I want. There must be a much better way of doing that," Mainil points out.
From push to pull model
"Those who work well digitally, and deal cleverly with the data they collect about their customers, can be much more proactive", he explains. "It allows you to approach customers directly with things you know they are looking for. You can evolve from a push model to a pull model. An online store that makes good use of collected data is much better at providing me with what I want.
"In the past decade, the retail landscape that reaches me as an individual has evolved from "20 stores near me" to "20,000 stores worldwide". The stores that know me best will be able to attract my attention in a personalised way and thus drive my purchase."
However, Mainil does not expect physical stores to vanish altogether. "Digitalisation can even strengthen a brick-and-mortar store. I also prefer to go to the store to make sure that a piece of clothing fits properly. But if it does, I don't want to carry bags home. Instead, I want to go and have a coffee in the knowledge that my purchases will get delivered to my home," says Mainil. "The idea of the branch as a department store where you try on clothes and then take them with you will be completely obsolete in a few decades."
Some observers question whether the model of fast fashion is also outdated, but Mainil sees it differently. "We should not throw the baby out with the bathwater. The opposite model, let's call it slow fashion, where you order a collection a year in advance, and then you have to hope that you can sell it, also leads to a lot of waste. In times of transparency and sustainability, you can no longer afford to simply destroy unsold items. Fast fashion still has value because it quickly catches on to what people are looking for. Thus, it leads to collections that sell out more easily. But fast fashion has to evolve, that is clear. It must be possible to make it more sustainable."
And that is where the acclaimed Artificial Intelligence or AI comes in. Which can help fashion retailers in three different ways:
"Analysis of the data allows you to identify your loyal, returning customers and, above all, what they are looking for. That allows a fashion chain to match its collection much better to the needs of its customers.
"Data analysis helps to manage stock more efficiently. A chain with, say, fifty stores will find that certain items in the collection sell better in one store than in another, and vice versa. If you analyse that data properly, you can distribute the stock much better among the stores and webshop."
"Thanks to AI, you can roll out a smarter sales strategy. We already did that for Torfs Schoenen, a Belgian shoe chain. An algorithm helped them find the ideal balance between maximising margins and the main objective: clearing stock. Because ultimately the idea is that after the sales period, the company is left with as few excesses as possible."
Mainil is clear: the fashion landscape has changed fundamentally and permanently since Covid. "Customers have discovered the online channel, and that won't disappear anymore," he says. "Fashion retailers will have to respond to this. The pressure from the online segment will increase significantly. Those who anticipate this well will be able to evolve with it and hopefully also profit from it. Those who continue to resist will end up running on the spot. They will have to fight every year to avoid bankruptcy, only to end up in failure.
RetailDetail Fashion Congress
On March 25, Retail Detail is organising the Fashion Congress. Peter De Sutter (e5 Mode), Dwayne Branch (Deloitte Belgium), Dirk Smet (WASTED Atelier) and Laurent Mainil (Crunch Analytics) will share their vision on tomorrow's fashion. Buy your tickets here.