From creative to strategic: The impact of AI on the fashion industry according to Euromonitor

Generative AI (Gen AI) has evolved from an emerging innovation to an indispensable strategic component for the fashion industry. According to the latest report from Euromonitor International, this technology is redefining creative processes and customer interaction, marking a turning point in how fashion businesses operate.

In a dynamic and competitive market, its implementation is no longer an option but a necessity for brands aspiring to lead the change. Is your business ready to take this strategic step?

Marguerite Le Rolland, industry manager for Apparel & Footwear at Euromonitor International, emphasises that Gen AI integration goes beyond simply implementing technological tools: it's about strategic transformation across the entire business operation. From product personalisation to sustainability, Gen AI is redefining how brands design, produce, and engage with consumers.

Effectively adopting Gen AI involves more than just integrating new tools. It requires a deep understanding of how this technology can enhance the customer experience, optimise internal processes, and advance sustainability goals. Le Rolland identifies four key pillars for achieving this:

• Increase e-commerce conversion rates through intuitive AI assistants.
• Ensure chatbots are functional and user-friendly, avoiding frustration.
• Implement feedback systems to enrich data and optimise the user experience.
• Maintain critical human oversight to supervise processes and prevent risks associated with bias.

Personalisation as a competitive advantage

Personalisation has emerged as a key competitive advantage in the fashion industry, where 28 percent of consumers, according to Euromonitor, seek shopping experiences tailored to their needs. Generative AI is positioned as a transformative tool, enabling brands to meet these expectations through virtual assistants, intelligent recommendations, and interactive platforms that redefine the customer experience.

In this context, Bershka introduced the 'Custom Lab', a platform that enables customers to personalise garments with their own embroidery, reflecting a personalisation-oriented strategy that strengthens the emotional bond with consumers and encourages on-demand production models, reducing waste and aligning with sustainability goals.

H&M has taken this trend a step further with its 'Creator Studio', an AI-powered tool that allows users to design personalised garments, combining creativity and technology to offer a unique co-creation experience.

Innovations in e-commerce

Major platforms like Tmall, Zalora, and Myntra are already leveraging this technology to optimise their offerings and strengthen their market competitiveness.

A prime example is Alibaba and its chatbot Wenwen, launched in September 2023. This AI-powered assistant has been used by over five million people, demonstrating its ability to significantly improve consumer interaction with the platform by offering faster and more personalised responses.

AI has also transformed advertising campaigns. Stradivarius, part of the Inditex group, recently launched the campaign for its first AI-designed collection, featuring virtual models generated with this technology. This innovation not only reduces costs but also connects with younger audiences seeking innovative and creative digital experiences.

In the realm of Spanish fashion, Desigual has positioned itself as a benchmark for innovation with its "On Demand" offering, designed entirely with AI, which now comprises four collections. This model allows for the personalisation of the customer experience while optimising resources through on-demand production, avoiding surplus stock and adapting to consumer preferences.

A sustainable future

In addition to boosting e-commerce, Gen AI is playing a key role in the transition towards a more sustainable fashion industry. By enabling on-demand production, as in the case of Desigual, inventory build-up is eliminated, and waste is significantly reduced.

This approach not only promotes a more efficient model but also addresses one of the biggest challenges facing the fashion industry, offering concrete solutions to tackle this issue. From optimising supply chains to reducing waste, this technology is emerging as an essential ally in achieving more circular production models.

Other initiatives are targeting sustainability through the use of AI. For example, Buff has implemented manufacturing systems tailored to market needs, and startups like The Fabricant design digital fashion that eliminates the need for physical samples, minimising environmental impact.

The ability to anticipate demand and optimise resources not only contributes to environmental sustainability but also strengthens the profitability of businesses in a market increasingly aware of responsible practices.

Ethical and regulatory challenges

Despite the immense potential of Gen AI, its implementation is not without its challenges. Regulation and ethical handling are key issues that are rapidly evolving. The European Union, for example, is working on the Artificial Intelligence Act, which seeks to establish a clear regulatory framework for the development and use of this technology.

Businesses must be proactive not only in complying with emerging regulations but also in ensuring that their algorithms are transparent and free from bias. Ethical responsibility is not just a legal obligation but also an opportunity to build trust with consumers and strengthen brand reputation.

Source: Gen AI: Transforming fashion retail experiences report by Euromonitor International and email conversation with Marguerite Le Rolland, industry manager for Apparel & Footwear at Euromonitor International.