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Leverage your data with artificial intelligence to optimise your operations in key areas in the coming year
The past year has been one of fashion’s most challenging 12 months on record, as political uncertainty, damaged consumer confidence and an ever-competitive market have tested businesses to their limits.
As the new year and a new decade dawn, the ever-changing retail environment will continue to challenge businesses. Artificial intelligence company Peak unveils the key trends it believes will shape the next 12 months and beyond, and how optimising data can prime businesses for success.
The sustainable imperative
Sustainability is a pressing issue that all individuals, and businesses, must address. Research by campaign group Fashion Revolution shows that more than one in three consumers consider social (38%) and environmental impacts (37%) when buying clothes. As more consumers switch to a more conscious way of shopping, businesses must act now to place a more responsible approach at the core of their values.
“The retail business of the future is one that is conscious of the people it’s serving, and its operations,” says Mylo Portas, head of retail at Peak. “However, it’s important for retailers to be aware that sustainability is also crucial when it comes to driving profitability.”
Smart analysis of data using AI can equip brands and retailers with the tools to optimise processes – helping to reach sustainability targets whilst driving business performance and growth.
Outdoor brand Patagonia and innovative direct-to-consumer footwear label Allbirds are such businesses, which have sustainability at the core of their values while operating successfully.
“It can be as simple as getting the right amount of the right products in the right place at the right time,” says Portas. “By using the right tools to analyse your data, you can reduce waste and cut costs, which is good for the planet, but also optimises you for profit.”
Rental and resale opportunities
The sustainability shift has led to a burgeoning rental and resale market, which will continue to expand in 2020.
The idea of renting clothes was once restricted to costumes and special occasions. Now, online businesses in the market are disrupting traditional retail models, highlighting a change in customer perceptions. Rent the Runway, for instance, has five bricks-and-mortar stores across the US, and, since June, has opened drop-off and collection spaces in 14 Nordstrom department stores.
In the resale space, leaders include Vestiaire Collective, which focuses on the luxury market and recently launched a bricks-and-mortar presence within department store Selfridges.
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Depop is also winning in this market. This platform is dominated by Generation Z, who use Depop to buy and sell clothing, but also explore trends, engage with content and form communities.
“What’s exciting about Depop is that it’s purely user generated,” says Portas. “Its users are highly engaged and able to express themselves creatively through the second-hand economy, and the app provides them an optimised, AI-driven platform for that. This requires a brand people can get behind, but also the technology to build it.”
These rental and resale businesses also represent another 2020 shift being enabled by AI, as successful businesses adopt a platform like approach.
“Once upon a time, a retailer would set up a shop, and the customers would come – it would be a one-direction conversation,” says Portas. “But that doesn’t work today. The ‘one direction’ model will end up failing.”
In 2020, customers will seek out platforms where they can like, comment, follow and engage with the brands they love at the touch of a button, and businesses that evolve into being the platform for that will reap the rewards.
The added value for brands and retailers is that, unlike the old one-directional conversation, this two-way, platform-based method builds relationships and loyalty, while enabling businesses to understand customers in a whole new way.
Customer expectations will continue to grow in 2020, as shoppers become yet more demanding, which will necessitate a single view and connected strategy to deliver a seamless, personalised experience.
“Moving into next year, retailers will need to invest in a connected strategy that knits together the different points of the consumer journey to drive new efficiencies,” advises Portas.
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Fashion businesses were once siloed, and functions such as merchandising made decisions independently of the warehouse team,
for instance. However, to deliver this seamless experience, companies will need to leverage their data to unify departments and enhance the customer journey.
Beyond Black Friday
Retailers should also steer away from placing heavy emphasis on key calendar moments in 2020, and avoid unpredictable Sales bonanzas such as Black Friday that can dent or drive sales.
“Retailers shouldn’t be so tied to things that are notoriously unpredictable, like the impact of weather on seasonal Sales,” says Portas. “Instead, they should focus on customer behaviours that can be predicted at any time of the year, on an individual basis – such as propensity to purchase or product preferences.”
He believes that by extrapolating data trends, businesses can discover a clearer view of what customers want, rather than relying on the “one-size-fits-all approach for ‘big bang’ retail moments a couple of times in the year”.
With an ever-growing number of both positive and negative forces affecting the fashion market, businesses that best understand their customer will stay ahead.
“It is AI that will power success in the future,” concludes Portas, “because it leverages a retailer’s number one asset: data.”
Contact Peak: firstname.lastname@example.org