Fashion industry to double down on tech investment to stay competitive
Last week Bored Ape Yacht Club, a non-fungible token (NFT) collection built on the Ethereum blockchain, sold the biggest metaverse NFT project to date, with over 320 million dollars of assets sold in one mint.
The news comes as fashion companies are set to invest record amounts in technology, nearly doubling their stake from 1.6 percent in 2021 to 3 percent of sales by 2030.
According to the latest Business of Fashion and McKinsey report, The State of Fashion: Technology, the fashion industry and world at large will see the biggest technological progress in the next decade than has happened over the past 100 years.
The industry’s entire value chain will see great technological advances from streamlined multi-channel shopping to e-commerce software solving online sizing issues and minimising returns. Investments in technology related tools is soaring, with the top 50 investments soaring to 16.2 billion dollars in 2019, according to data from Crunchbase.
Online shopping has seen the bulk of tech investment, taking 55 percent according to the report. As consumer shopping habits shifted new payment solutions came into play, like buy and pay later, as well as the rise of social commerce and re-sale market. The metaverse is a new frontier for digital fashion that also has investors at the ready.
The data shows that companies investing in technology will ultimate reap the benefits in revenue. Savvy operational upgrades, like retailers putting more data and analytics behind their merchandising and pricing decisions, will be strategically placed for seeing returns on their investments.
Are industry segments, from fast fashion to luxury, from online to brick and morter, are being revolutionised. As digital touchpoints are putting the power in consumer’s hands, brands have found new ways to communicate, from customer service via clienteling apps, to embracing new social channels and content strategies. Luxury companies have been using AI to offer highly personalised digital shopping experiences, one that conveys their unique codes and allows customers to see content specifically relevant to them.
The rise of virtual fashion
Probably the most exciting technological breakthrough is the metaverse and the potential of the digital universe. According to report estimates, brands could generate up to 5 percent of revenues in the next two to five years from metaverse-related opportunities.
Achim Berg, Senior Partner and Global Leader of Apparel, Fashion & Luxury at McKinsey, said: “Last year, fashion companies invested between 1.6 and 1.8 percent of their revenue in technology. We are convinced that this figure will double by 2030 because technology can help brands gain a competitive edge both in customer-facing activities – where companies have mostly focused to date – and increasingly in operations. Even more importantly, technology can support companies in addressing sustainability issues.”
Embracing technology is a differentiator that shows companies can easily be seen as either leading or lagging. With a focus on operational efficiency and customer-centric service, adapting new practices is the only way to stay ahead.
To see the full report visit McKinsey.com.Article source: The State of Fashion: Technology by The Business of Fashion and McKinsey & Company