How the Fashion Industry Is Using Digital Tools to Increase ROI

The fashion industry has deep roots in traditional business practices and has been late to adopt new technology. Nearly every aspect of the industry relies on people rather than machines — everything from hand-sketched designs to the buying process, where an individual buyer’s personal tastes can dictate an entire department store’s orders.
In the past few years, we’ve been seeing all aspects of the industry suddenly affected by new technology, increasing efficiency and providing much needed data analysis and tracking components. Instead of relying on people to analyze, project and improve, fashion brands now have the digital technologies to meet these needs in a much faster way.

1. Buying Process: Crowdsourcing Styles, Better Projections



Until recently, fashion retailers relied on the expertise of merchants and buyers to use their best judgment to identify which designs have the most commercial potential. Historical sales data never resulted in consistently better merchandising decisions, because it doesn’t add much value in making forecasts for trend-driven product categories. In fashion, what merchants and buyers require is information or data about what’s going to happen, not what already happened.
These days, companies like StyleHop are allowing fashion merchants and buyers to leverage crowdsourcing to get forward-looking, fast-turnaround, predictive analytics that dramatically improve their style picking capabilities. One collective intelligence company in the fashion space has conducted pilot research that shows, when done correctly, crowdsourcing can improve product selection by more than seven times. Leveraging collective intelligence helps retailers pick more productive inventory, leading to lower markdowns, higher profits and a better selection for fashion-hungry consumers.
FashionStake is solving the same issue with a different approach. It allows customers to invest in a designer or a brand by pre-ordering the items. That way, the company allows the designers to produce to order, instead of pushing quantities that may not sell later. This minimizes the risk and allows informed planning of the produced quantities.

2. Online Shopping: Smarter Tools Mean Fewer Returns



One of the major challenges that most online retailers face is the high percentage of returns; things don’t fit right, the quality of the material is off, or the customer just doesn’t like it. But there are a few companies in the space who are trying to solve the issue by providing more accurate measurement tools and personalized user profiles.
MyShape, one of the pioneers in the space, developed a patented technology that matches shoppers with items that correspond to their personal measurements and preferences, solving the age-old problem of finding clothes that fit and flatter for millions of women. In 2009, MyShape introduced Sizeless Dressing which allows women to skip the size labels with the assurance that each piece of clothing they purchase will fit and flatter them. With vanity sizing so prevalent in today’s market, it is often near impossible to guess what size you are from brand to brand.
The newly launched Estonia-based Fits.me is getting lots of buzz these days, after launching with the retailer Hawes & Curtis. Fits.me is a Virtual Fitting Room that helps to solve the single biggest problem for apparel e-commerce: that consumers can’t try the clothes on before they buy. The site’s shape-shifting robotic mannequin takes your body measurements and mimics your shape so that you can see exactly how clothing would fit you. The site has been such a success that online German retailer Quelle saw three times the clothing sales and reduced returns by 28%.

3. Online Shopping: Customization Yields Better Sales


When it comes to the actual shopping experience, customization and personalization seem to be the one area where fashion retailers are lagging. But companies like Amadesa are providing a set of solutions targeted at increasing ROI, or simply saving the number of clicks until purchase. From shopping cart optimization to relevant product recommendations and end-to-end testing, Amadesa is helping online retailers convert online window shoppers into actual paying customers. New technologies such as A/B and Multivariate Testing, which didn’t exist in retail stores, let customers’ online actions determine what works best. Now retailers can test images, promotional copy, offers, and a myriad of other elements to improve ROI.

4. In-store Shopping: Collecting Data to Maximize Purchases



Just like Amadesa is tracking and analyzing online shoppers, other companies are taking on the challenge at the actual stores, with the help of new mobile technologies. Until now, stores had very little data about shoppers and their experiences, unless a transaction had been made. With the increasing popularity of location-based mobile technologies, retailers are able to track their customers, virtually communicate with them, and of course offer promotions. The two main players in this space offer different approaches.
Novitaz created a complete platform for tracking and managing in-store customer experience by offering a unique device with an active-RFID chip embedded into a credit card or loyalty card, which shows consumer location. It also requires a mobile phone to communicate with the consumer. The platform provides session metrics about consumer preferences, which can then be compiled into a customer profile so later offers can be tailored individually.
Another company competing for the personalized offers offline is ShopKick. Instead of supplying the customer with a special device, it relies on their existing mobile phones. In this case, the main implementation is done on the retailer’s side — ShopKick installs devices in-store, similar to Wi-Fi access points, and the device sends inaudible audio signals, which interact with a phone’s microphone. The offers get sent to the phone, which include the ability to earn points, Facebook currency, song downloads, and instant gift cards that can be redeemed in-store.

5. Media Coverage: Tracking Influence on Sales



All of the solutions above are optimizing the customer ROI, but what about tracking and optimizing media and press? Historically, media coverage has been a major catalyst of retail sales, with magazines dominating the trends for years — making or breaking items simply by featuring them on their glossy pages. Today, the landscape is more complicated, as online press and the proliferation of fashion bloggers are now just as responsible for a major spike in sales. The question is, how do brands keep track of all these media outlets and how do they measure the influence of one versus another?
Fashion GPS is addressing the issue and is truly revolutionizing the space by allowing brands to manage and track all their media connections in one dashboard. Recently, by becoming the official partner of IMG and Mercedes Benz Fashion Week, the company brought the analytics into more than 80 runway shows produced in New York last month.
By integrating bar coded invitations, Fashion GPS was able to track ROI for quality (and track loyalty) of attendees compared to the cost of show production. Brands were able to automatically track media members and the fashion shows they attended, thus keeping a record of their attendance for future reference. In the future, the company plans to add an option to also track media output per media attendee. This will help brands understand which media players are most valuable to their brand image.
This system creates a loop in the fashion show cycle by determining where the dollars should be invested: who should be invited to shows based on their value to the brand (their editorial output or publicity created) and who should receive priority both in terms of invitations and honoring sample requests in the future.
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