LONDON, United Kingdom — Information technologies are radically changing the way businesses operate across industries as diverse as movies and recruiting. As entrepreneur and venture capitalist Marc Andreessen puts it, "Software is eating the world." Today, Apple and Google top the list of the world’s most valuable brands, according to Interbrand. But the value of technology-driven companies has grown at the expense of many traditional brands and businesses. Take Uber, which is eating into the businesses of traditional taxi services across the world. Could there be an "Uber moment” for fashion and luxury brands that fail to embrace technology?
This certainly seems to be the case in the retail side of the fashion industry. Just witness the rise of digital champions like Zalando, Net-a-Porter, Vente-Privée and Farfetch, which, together, have captured billions of dollars of value from traditional fashion retailers over the past decade. While the rise of technology is unavoidable, the fashion world is, for the most part, ignoring it and clinging on to old habits for as long as it can. It’s time that fashion companies change their ways and follow seven vital digital transformations to embrace the tech revolution already happening in other industries.
1. Focus marketing on digital and data
Consumers are spending more time online and less time with traditional media. The trend is accelerating with the rapid rise of mobile, the world's technology platform of choice. Marketers must follow their customers onto these new platforms and devices, as traditional ads in glossy magazines become less effective. Social media enables brands to engage directly with consumers, turn them into brand advocates and even use their content (as Louboutin is doing smartly). In addition, as all these interactions are trackable, brands have the potential to collect much more customer data than before, through their websites, their stores and social media, building a better understanding of their customers and what is selling and influencing sales.
2. Transform the physical retail experience
Fashion brands should rethink the customer experience at point of sale, starting by looking at how Apple got rid of tills, maximising selling space and humanising the transaction experience. Brands should offer multichannel experiences, including ‘click and collect,’ synchronising their online and offline inventory. They should focus on delivering an “experience” in store, with great service and the ability to upsell while having the customer present. Burberry, for example, has implemented ‘universal shelves’, arming its salespeople with iPads through which they can sell a full range of products, including items not currently in stock at their store.
3. Less wholesale, more direct
Relying on traditional wholesale for distribution presents many challenges. Few multi-brand retailers really matter in terms of brand building, and many of these distribution channels offer only a limited range from the brand, with no control on merchandising, no customer feedback and lower margins. The Internet allows brands to sell directly, stay in full control, increase their margins, present their whole collections and create a direct relationship with the final customer, wherever she may be located. Will we see the end of wholesale?
4. Change design and production
Over fifteen years ago, I was part of a bold start-up that aimed to connect designers to textile manufacturers via an online marketplace, aiming to build an online version of a large textile tradeshow. We were way ahead of the market at a time when we could only connect to the Internet via a dial-up connection. Today, in the era of “fast-fashion,” textile trade shows are still thriving but there is still no way to search for fabric and accessories on a convenient online platform.
5. Product innovation
So far, attempts to launch products blending technology and fashion have come more from the technology world, with the Apple Watch being the most ambitious initiative to date. Fashion and luxury brands have the power of their brand to leverage, plus style and design skills, which technology players are often missing. New technologies like smart fabrics, 3D Printing and Internet of Things, should be integrated to create new products, aligned with a brand’s lifestyle proposition — another option is to collaborate with technology firms, like Tory Burch’s partnership with Fitbit.
6. Create new digital brands
The most radical opportunity created by embracing technology is the ability to create new digital brands, selling unique products that are only accessible online. In the UK, Missguided has built a successful womenswear brand, growing organically via word of mouth. In France, Rad is now the 5th most liked French fashion brand on Facebook, selling its cool streetswear only on its site. Other emerging digital brands include NastyGal, Bonobos, Reformation and Warby Parker, some of whom have a few stores for the purposes of brand-building. These brands target Millenial shoppers (and younger), but over time we can expect to see more digital luxury brands launch and succeed.
7. Change the funding model
Fashion should benefit of the transformation of finance and the alternative funding now available to entrepreneurs in the fashion industry. Venture Capital is one and we have seen increasingly large amounts of money being poured into new businesses. In addition, fashion entrepreneurs can raise money through crowdfunding platforms such as Angellist, Kickstarter and Indigogo, while new platforms such as Funding Circle or Lending Club offer new means of funding working capital, at a time when banks are more cautious
My conviction is that, for fashion companies, exploring these trends and opportunities is a matter of survival. Over the past ten to fifteen years, the fashion world has for the most part ignored technology. Looking forward into the next decade, I expect a radically different landscape in fashion, principally driven by the impact of digital technologies and the designers that successfully embrace them.
Frederic Court is a London-based venture capitalist focused on digital lifestyle.
Disclosure: Frederic Court is part of a consortium of investors that has a minority stake in The Business of Fashion. He is also an investor in several companies mentioned in this article, including Farfetch, Rad and Reformation.
The views expressed in Op-Ed pieces are those of the author and do not necessarily reflect the views of The Business of Fashion.
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