There is a conviction among many behind the predicted growth in technology that technology could create a competitive edge িতে in customer-oriented activities, where companies have mostly focused on debt and, increasingly, in operations, ”McKinsey said in a press release.
Technologies such as robotics, advanced analytics and in-store applications can help streamline processes and support sustainability as well as create an exceptional customer experience.
Fashion companies invested 1.6-1.8 percent of their revenue in technology in 2021, and by 2030, that number is expected to rise to 3-3.5 percent, according to McKinsey’s State of Fashion Technology Report 2022, whose analysis shows artificial intelligence (AI) – produced. Speech could power more than half of human interactions with computers by 2024.
In 2021, people spent an average of less than four hours on their mobile phones, including about two and a half hours of scrolling on social media.
Of the fashion consumers who switched to online-shopping channels in 2021, 48 percent cited epidemic causes, 27 percent cited benefits, and 11 percent cited product availability and promotion.
The epidemic has also boosted digital brand ties, with 72 percent of consumers reporting that they interacted with online brands in 2021. In the coming years, digital interactions will stabilize at an average of about 66 percent, due to easing restrictions in some geographic areas.
By 2024, more than three-quarters of enterprise-generated data could be processed by cloud or edge computing. It provides a more flexible, measurable basis on which brands can potentially build their technical offerings.
By 2030, more than 80 percent of the world’s population is expected to have access to 5G networks, enabling fast connectivity and data transfer to Internet of Things devices, among other things.
The operational potential of the technology is becoming clearer. McKinsey’s analysis shows that fashion companies that have now embedded AI in their business models will see a 118 percent increase in cash flow by 2030. By contrast, they will lag behind in investing in digital technology – and may see 23 percent Relative collapse.
Over the next three years, potential key areas where fashion executives can invest digitally are personalization, store technology, and end-to-end value chain management. These are areas where digital performance can make a real difference, the report said.
McKinsey and Business of Fashion have identified five key themes that can help the industry meet some of the most pressing challenges, as well as unlock potential opportunities: Metaverse Reality Check, Hypersonalization, Connected Stores, End-to-End Upgrades, and Traceability First.
The marketing value of digital fashion and non-fungible tokens (NFTs) may be obvious now, but fashion brands need to separate the concrete opportunities from the hype to create the sustainable revenue stream presented by the growing consumer engagement with Metaverse.
Brands have access to a growing arsenal of personalization tools and technology to upgrade how they customize and personalize their customer relationships. The opportunity for executives now is to provide one-on-one experiences using big data and artificial intelligence to create long-term loyalty.
The relentless rise of e-commerce has forced fashion players to rethink the role of the physical store. Fashion executives can address consumer concerns using in-store mobile apps to enhance the in-store experience and microflument technology to take advantage of the store for the fast-paced era.
Digital tools and analytics have transformed key parts of the fashion value chain, but these optimizations often shut down within companies, limiting the potential for cross-functional improvement. Brands should start end-to-end value chain integration to create a more efficient and more profitable way of operating.
Traceability systems powered by traceability software and big data will help fashion brands reach farther into their supply chain to understand the entire life cycle of their products, a key enabler for sustainability roadmap.
Of particular interest is the virtual world, also known as metaverse, among all the technology-driven evolutions affecting the fashion industry, the report said. Global spending on virtual goods reached more than $ 100 billion in 2021, more than double the total in 2015, accounting for about 30 percent of the revenue accounted for by virtual fashion assets.
Between the demand for products like Virtual Fashion and NFT, fashion companies focused on Metavers innovation and commercialization could generate more than 5 percent revenue from virtual activity in the next two to five years. Work for decision makers, however, will focus on specific opportunities.
In parallel with personalization, the coming year will probably see many brands investing in in-store functionality and experience, bridging the gap between online and offline channels — and moving away from single technologies like Magic Mirror, attached hangers and interactive holograms.
While in-store mobile ‘clientling’ apps can offer store partners a non-abrasive way to serve customers, in-store mobile apps can help increase engagement, reduce customer pain points, and increase browsing time.
More than 60 percent of fashion executives believe that creating an integrated digital process across their organization will be among the top five areas of their digitization as they look to 2025.
More than half of fashion decision makers say traceability will be the top five enablers to reduce emissions in their supply chain, but many brands currently only have visibility on direct supplier relationships.
McKinsey sees brands increasing their focus on traceability through their supply chain, helping them meet the demand for greater transparency from regulators, investors and consumers. As they seek to reduce emissions and meet their environmental, social and governance (ESG) goals, brands can benefit from a common data language to enable comparability, as well as new labeling standards and tracking software.
The report added that brands could consider joining forces with peers, start-ups and industry organizations to establish a common data standard and share data and knowledge through software platforms, open lasers and big data technology.
Fibre2Fashion News Desk (DS)