JUNE 2017 FUTURE TRENDS AND INNOVATIONll1.workcast.net/10573/8311124275420960/Documents/Drapers-K3...

FUTURE TRENDS AND INNOVATION

JUNE 2017

UPGRADING YOUR REALITY AUGMENTING EXPERIENCE

SIX BIG INNOVATIONS GAME-CHANGING TECH

THE NEW INTELLIGENCE USING CUSTOMER INSIGHT

WHAT SHOPPERS WANT SURVEY OF ETAIL PRIORITIES

The technological developments you need to know about and which omnichannel areas you should be investing in

DRA P E RSON L I N E .COM

F uture success requires planning and investment today. However, taking traditional business models through a transformation is rarely easy, and neither is making the decision where to invest. Failure to take this forward-looking approach will lead businesses to stall, as consumers’ browsing and

shopping habits continue to evolve. With this in mind, Drapers partnered with K3 Retail to produce this exclusive report, Future Trends and Innovation.

We delve into some of the topics shaping the future of fashion retail, from the potential for augmented and virtual reality to revolutionise the in-store and online experience (p3-p5), to the role of artificial intelligence in transforming the way retailers analyse, predict and serve customers (p10-p13). We look at the innovations from around the world to watch (p6-p9), from beacons, to invisible payments and what Chinese messaging platform WeChat could mean for UK fashion.

We also surveyed 65 senior executives at fashion retailers and brands to ask them 13 critical questions around where they are focusing their time, energy and resources. Over p14-p18, you will see the survey throws up some interesting findings.

We hope you enjoy this report and would be pleased to hear your feedback. Please email [email protected]

N owhere is the pressure to transform being felt more acutely than by retailers that service a core base of younger customers, such as the fashion retailers. They are being pushed into quickly adapting their models to consider the ways these individuals are now choosing to interact –

which is predominantly via mobile devices. This is certainly cranking up the levels of complexity for many retailers.

It is evident from the findings of this report that the successful retailers will be those that use technology intelligently to connect and transform their ability to respond to the growing demands of the customer, and to deliver an enhanced customer experience.

Keeping ahead of technology can be demanding. The myriad innovations available today make it critical for retailers, when implementing new technology, to work with a partner that understands their needs and helps to identify the approach that will best support their business objectives.

Equally it is important to work with a partner that knows how to integrate the latest technology with industry best practice, to produce optimised processes that reduce effort and maximise output – now and into the future.

EVOLVE WITH YOUR CUSTOMERS

MEET MOBILE SHOPPERS’ DEMANDS

2 FUTURE TRENDS AND INNOVATIONS JUNE 2017

Natalie Bruins Global marketing and customer insight lead, K3 Retail

James Knowles Head of commercial projects, Drapers

Virtual or augmented reality looks set to be the next big gamechanger for retail and its widespread adoption may come quicker than you might think.

So-called magic mirrors and interactive clothing rails that introduce more progressive technology into stores are starting to gain traction in the industry and could sit alongside virtual reality (VR) or augmented reality (AR) technologies to completely transform retail as we know it.

Although some of the solutions on offer may seem gimmicky at the moment, you only need to look at how contactless payment has taken off in the last year alone to see the true potential for rapid change.

Trying on a dress without even getting changed or learning the provenance of your shirt by visiting the factory where it was made without leaving a store could be the next generation of experiential retail shoppers are yearning for. But while some say VR and AR could spell the end for high street retail, others believe it will merely lead to a stronger connection between online and offline retail, and will allow brands and retailers to better anticipate and cater to customers’ needs.

US-based Oak Labs pioneered its smart fitting room

mirror, known as the Oak Mirror, with Ralph Lauren at its Polo store on Fifth Avenue in New York in 2015. In February it launched a feature to allow customers to pay using Apple or Android Pay through the mirror.

“The last decade has seen an acceleration of mobile technology, which has continued to condition consumers’ expectations of how they interact with the physical world,” says Jenni Samuels, vice-president of partnerships and marketing at Oak Labs.

“These expectations are outpacing what we’ve been able to provide in the physical retail space to date.”

She says the tech takes away some of the greatest pain points of shoppers, enabling them to change lighting, request items or help from a sales associate without leaving the room, and pay directly by tapping their phone to the mirror.

Oak Labs, which also works with Rebecca Minkoff and Gerry Weber, says it offers various benefits for retailers.

“Shoppers using the mirror spend 59% more than those who don’t, 84% of customers engage with the technology, and we have brought in an unprecedented level of insight into what “happens” in the fitting room that is definitely resounding well within fashion brands,” says Samuels.

UPGRADING YOUR REALITYVirtual reality and augmented reality are adding innovative interactive and payment dimensions to the shopping experienceWords by TARA HOUNSLEA


All in order: the smart mirror in Polo Ralph

Lauren’s New York store allows customers

to order items from the changing room


CHANGING ROOM WITH A VIEWBuilding on this theme, Gap introduced a pilot app called the DressingRoom by Gap earlier this year, which allows shoppers to “try on” clothing using a smartphone and was developed in association with San Francisco-based app developer Avametric and Google. Shoppers can select a product to try on one of five body types on a device with VR technology Google Tango and, if they like it, they can buy it online.

“Gap has been working on the fit of our products to better match the way customers are shaped, instead of just looking at ‘fit model’ sizes,” explains vice-president for global strategy and business development Gil Krakowsky. “One of our top priorities is continuing to improve our technical knowledge around how fabric stretch, drape and feel impact the sensation of fit,” he says, adding that the app is just one element of Gap’s longer-term strategic plan in this space.

Gap is exploring how the pilot app will work for its customers and stores, and how it can be used to improve the browsing and shopping experience.

Terry Betts, head of business development at men’s personal stylist website Thread, sees plenty of opportunities in virtual or augmented reality, ranging from sizing to providing real-time advice over mobile, personalised images, and in-store navigation and recommendations.

“I’m sure we’ll see a virtual reality-only retailer within the next few years as costs come down,” he says.

Betts points to the furniture industry, which is offering solutions to show how a sofa or table will look in your own home. “Soon the customer expectation will be that

through VR, they’ll be able to turn their home into the store and see how all of those items look in their own personal space.”

But technology cannot just be used for technology’s sake. Betts particularly liked The North Face’s partnership with cinematic VR company Jaunt to give shoppers an immersive tour of California’s Yosemite National Park and the Moab desert in Utah in 2015.

“That felt true and honest to the brand,” he says.Betts expects tech to gain rapid traction rapidly once

it takes hold: “Conversations about driverless cars, iris-scanning technology and being able to see in VR how a coat fits you are commonplace – these things weren’t really being discussed even a few years ago.”

However, cost is the most prohibitive challenge at the moment: “Once we see these start to come down, the speed of implementation will become rapid. For retailers, having a true tech team or dedicated partner that is able to be fully focused on these projects, and have the autonomy to iterate and experiment once results start to come through – this is the critical part.”

SILICON SEARCH Trillenium is one of the foremost tech companies engaging in VR and AR for fashion retail. It made the headlines in 2015 when Asos Ventures, the etailer’s venture capital arm, invested in the London-based firm.

Its technology allows shoppers to “try on” products in front of the mirror before they buy in the comfort of their own homes.

“Before you purchase the shoes, you can point your camera to a mirror and see yourself in the mirror with the


Watch this space: Gap’s DressingRoom allows shoppers to virtually “try on” clothing on their device

Customer expectation will be that through VR, they’ll be able to turn their home into the storeTerry Betts Thread



The advances in augmented and virtual technologies are blurring the lines between physical Matthew Drinkwater London College of Fashion’s Fashion Innovation Agency

Fit for purpose: the London College of

Fashion has teamed up with virtual fitting

room app firm Pictofit

new shoes on,” says chief executive Steve Hrvoje Prpic. “If you swipe the screen, you will see new shoes on you and you can carry on until you see the pair you like.”

Users view the sole of the shoe, as well as see more details by bringing the phone closer.

He says Trillenium is in early conversations with Ted Baker, Adidas and Net-a-Porter, in addition to its relationship with Asos. But the biggest challenge is investment and Prpic now is looking for backers in Silicon Valley.

“We believe AR shopping will significantly increase the ratio of sold shoes online compared with the bricks-and-mortar stores. AR shopping can increase the quality of online shopping on a different level, and the shoppers will reply with increased sales online compared with offline.”

However, while the technology is ready for eyewear, handbags, watches and jewellery, Prpic advises that clothing is much more difficult, and could take between five and 10 years to complete.

Another burgeoning area for AR and VR technologies is during fashion shows, allowing an audience to interact with garments in the virtual world. The London College of Fashion (LCF) joined forces with womenswear designer Sabinna and virtual fitting room app firm Pictofit to create a mixed-reality experience for London Fashion Week in February.

“We scanned Sabinna’s collection using 64 DSLR cameras and turned that data into a 3D mesh before dropping it into a Microsoft HoloLens headset,” explains Matthew Drinkwater, head of the college’s Fashion Innovation Agency. Wearers of the headset could then view the collection as a hologram and interact with it.

“The advances in augmented and virtual technologies are blurring the lines between physical and digital, and will eventually transform the way that we interact with and consume fashion,” says Drinkwater.

He believes the way that designers and brands create, showcase and ultimately retail their collections are going to be significantly impacted by these technologies and that consumers are more than ready to experiment.

“Improved depth-sensing on mobile devices are going to lead to more immersive AR experiences and there will be huge opportunities for brands to reach consumers in exciting new ways.”

LCF also launched a virtual try-on app with app developer Meshmerise and scarf brand Emma Shipley last October that used facial tracking, which Drinkwater says provides a hint of what may be possible in future.

Scarfi is primarily based on face landmark tracking and detection, and tracks the user’s jaw and neck in real-time on a mobile device. Users can try on different designs on their phones, creating images to share on social media, and the app also has ecommerce capabilities.

Natalie Bruins, head of marketing at retail solutions provider K3 Retail, says that VR and AR technologies can potentially open the door to a new target market.

“Virtual reality is a refreshing way for brands to directly engage with consumers,” she adds, but points to the challenges of a lack of AR hardware for consumers and a limited pool of skills in this market.”

However, both look set to change in the near future as companies scramble to stay ahead of the game so slipping on your headset to try on that dress could be a reality very soon.



Look a little closer: Microsoft’s HoloLens T

he digital revolution of the past few years has put the fashion industry through immense change. As technology continues to evolve, retailers are faced with endless options and a plethora of digital tools that promise to help them navigate

through oceans of big data and achieve that holy grail of a customer experience that is seamless, lightning-quick and, of course, personalised.

With so much choice on offer, retailers need to focus on the end-goal of increasing efficiency and delivering a second-to-none customer experience, says Natalie

Bruins, head of marketing at retail solutions provider K3 Retail: “Customisation and personalisation are top of the charts. In order to be successful, retailers know they need exceptional customer experience so getting a handle of all that customer data is the field of change and where we’re seeing innovation coming through.”

Bruins argues that most of the new technology trends for 2017 are based on concepts already in the market – like beacons and visual tracking technology. But the way in which retailers are using the data they are gathering has evolved and that is where the real innovation lies.

As technological progress marches on, some developments are more likely to have an impact on fashion retail than others – so what are they?

THE INNOVATIONS TO WATCH OUT FORWords by JILL GEOGHEGAN


“Retailers are getting sharper and they are using better tools to track their customers. It is about getting a single vision of your customer and using that to understand them better and forecast what they want,’ says Bruins. “A lot of retailers are using artificial intelligence and bots to gather data, but personalising the experience using technology is still a big conversation to be had.”

For Chris Vincent, global CEO at multichannel retail consultancy Practicology, tools that will help businesses expand their international reach are a top priority for retailers.

“There is a big move to capture the international shopper, and there is so much potential for UK retailers –from fast fashion to luxury – to take on new technology to allow them to do this,” he says.

“Since Brexit became a reality, we are having serious conversations about technology and how to target the Asian and Middle Eastern markets in particular. Before, it wasn’t top of the agenda for retailers, but they are now seeking us out and planning for it.”

In addition to attracting new international shoppers, Vincent warns that retailers also need to focus on building loyalty with existing customers.

“A lot of businesses are still addicted to customer acquisition, but aren’t as strong on retention. As shoppers’ pounds become more difficult to get, retailers will need to start focusing on how to get more loyalty out of those customers, as it is much cheaper to reacquire than to acquire new ones.”

The ability to build loyalty and deliver a high level of customer service is crucial when deciding where to

invest, says BrandAlley chief executive Rob Feldmann: “Technology is changing so fast that there is a risk that retailers that don’t change and adapt will be left behind and will no longer be relevant. It’s not just the product that has to be right – the whole customer journey has to be perfect to meet today’s very high expectations of shopper experience.”

SIX INNOVATIONS TO WATCH ON-DEMAND CLOTHING MANUFACTURE Although 3D printing has been used in the fashion industry for several years, the concept has taken a giant leap forward with the development of on-demand clothing manufacture.

On 18 April Amazon was awarded a patent for an on-demand manufacturing system that allows the etailer to produce clothing quickly, only after the customer has placed an order. Amazon holds the fabrics, and a 3D printer, cutters and an assembly line will make basics, such as T-shirts, to order, meaning that every step from manufacture, to purchase to delivery could happen in one day. The patent says the orders would be made in batches based on customer delivery location to increase efficiency.

Two of the inventors named in the patent are co-founders of the 3D printing start-up Mixee Labs, Aaron Barnet and Nancy Liang, who went to work at Amazon in 2015. The start-up cost of such an endeavour would be prohibitive for most companies, but Amazon will be able to invest and trial the system, which could revolutionise the manufacturing supply chain.

The traditional method: could on-demand

clothing manufacture revolutionise shopping?


It is about using a single vision of your customer to understand them better and forecast what they wantNatalie Bruins Head of marketing, K3 Retail


INTERACTIVE HANGING BEACONSBeacon technology in stores has been tried and tested by numerous retailers to improve customer engagement and to capture data. In 2015 Ted Baker’s Westfield White City shop in London installed beacons in its mannequins, as it piloted mobile technology communication. Other retailers, including House of Fraser, Gieves & Hawkes, Oasis and Hawes & Curtis quickly followed suit.

In Pepe Jeans’ new Regent Street flagship store, meanwhile, radio frequency identification tags in clothes allow screens in the changing rooms to suggest other items that go best with the pieces being tried on.

A new development in beacon technology aims to link up the in-store and digital experience for shoppers once they leave the store. Devices capture data and track customers’ movements in store, then send information about the items they look at, but do not purchase, to their phones so they can buy online later. In a market where retailers are striving to deliver a seamless experience, beacon technology could be one solution.

WECHATWeChat – the Chinese social, instant messaging, commerce and payment services app first released in 2011 – has become one of the largest standalone messaging apps. It has accrued more than 889 million active users in five years.

So far, WeChat has stayed within the Chinese market, but that may be about to change, says Vincent: “WeChat could blow up quickly here. UK retailers have only really started looking at it over the last couple of months.

“The desire to grab Chinese customers in the UK is huge and WeChat is really focusing on how to roll the platform out overseas. If it can crack a few things, it will change everything over here.”

In terms of its transactional functionality, WeChat is head and shoulders above any other social platform. WeChat Pay is a digital wallet service incorporated into WeChat, which allows users to perform mobile payments and send money between contacts. Last year it had more than 300 million users worldwide.

Vincent says other social networks, including Facebook, are in talks with WeChat to see if they can incorporate its technology. In recent years Facebook has been exploring how to encourage shoppers to spend via the platform, so a link-up with the Chinese superpower could be a game changer.

HOLOLENS TECHNOLOGY Microsoft HoloLens, the first wireless augmented reality smartglasses on the market, could prove very interesting for fashion retail. The glasses project images over the user’s vision so they appear as holograms, providing them with more information or changing the space around them. At the moment, furniture stores are using the technology to allow customers to put in the dimensions of their room and to visualise if the furniture will fit, but the implications for clothing could be huge.

Shoppers would be able to view products in 360 degrees, and change the colour, style and fit of items with a nod of the head. Eye-scanning technology will allow retailers to track how long shoppers spend looking


Massive market: WeChat Pay has 300 million users

WeChat could blow up quickly. UK retailers have started looking at it over the last couple of monthsChris Vincent Global CEO, Practicology

Integrated tech: Pepe Jeans’ London flagship store on Regent Street



For an online retailer, fit is really important. If you can crack that, it will really take down return ratesRob Feldmann Chief executive, BrandAlley

at items and how interested they are in what they are looking at. As the retina expands, retailers will be able to record what customers are responding to – what colours they prefer and what fits work best for them.

Such data would not only allow retailers to personalise the shopper experience and tailor product preferences to shoppers, but it could also influence design, buying and merchandising decisions and, ultimately, stock levels and sell-through.

INTELLIGENT FITFor online players, fit and giving shoppers the right information to select the right size and reduce returns rates is always high on the agenda.

Many technology companies, including FitsMe, have proved successful for their customers by incorporating size guides based on shoppers’ measurements online. This fit-based technology is now moving to the next level by recommending products that will go best with the product selected.

Feldmann says: “It is about building entire wardrobes for your customer. From an online retailer point of view, fit is really important. If you can crack that, it will really take down return rates. But if it can suggest a Coach bag to go with the Hugo Boss dress, it has just recommended a size and then gone one better. It’s that extra element that is most interesting for us.”

INVISIBLE PAYMENTSCredit card companies, including Visa and Mastercard, are paving the way for invisible payment systems

meaning the days of entering your card details at the checkout could be numbered. Last year, Mastercard rolled out Identity Check Mobile, a payment technology application that uses biometrics such as fingerprints or facial recognition to verify a cardholder’s identity, simplifying and speeding up online shopping. Instead of entering a password, the cardholder verifies their identity by using the fingerprint scanner on their smartphone or via facial recognition technology by taking a selfie.

The same technology is now being trialled on credit cards in South Africa. Instead of requiring shopper to enter a PIN, the cards feature an area that can identify the user’s fingerprints leading to quicker and safer transactions in store.

Visa, meanwhile, is trialling its invisible payment technology in the Amazon Go store in Seattle, where sensors monitor what items shoppers pick up. As they leave the store, they are automatically charged for the products they have taken – eliminating the need for tills and queues completely.

Expanded vision: Microsoft HoloLens project images over

the user’s vision


THE NEW INTELLIGENCEThe use of artificial intelligence could provide brands and retailers with the insight required to make a measurable difference to consumer shopping journeysWords by TARA HOUNSLEA


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Never before have retailers had such a wealth of data. Traditionally shopkeepers knew their customers personally, and understanding their likes and preferences enabled them to suggest pieces they might like. Today retailers can build a

much fuller profile of their audience thanks to a wealth of information on what they’ve have been looking at but did not buy, when they like to shop, where else they like to shop and how they like to pay.

However, the sheer volume of data can be daunting, distracting and downright confusing if not acted on correctly. This is where artificial intelligence and machine learning can step in to avoid paralysis via analysis.

“Collection of data is all well and good, but you need the infrastructure and resources to be able to distil the information quickly, and analyse it so that actionable insight can be extrapolated for the business,” says Debenhams marketing director Richard Cristofoli. “To do this the business must also invest in appropriate hardware, tool sets or develop strategic partnerships to handle the data volumes being collected.”

Natalie Bruins, head of marketing at multichannel retail solutions provider K3 Retail, agrees: “While retailers increasingly recognise the power of data and have started tapping into it, many are not putting all that data to good use. Most retailers are only scratching the surface when it comes to the application of big data.”

Cristofoli says firms need automation and data

visualisation tools, as well as the mindset and skillset to make data digestible and provide clear insight for the business: “Artificial intelligence will ultimately help marketing deliver personalisation of customer interactions via any channel – and especially via the offline/online unifying channel that is mobile.”

Bruins explains that some of the latest technologies help everything from forecasting to inventory planning, while trend forecasting algorithms can combine social media posts and web browsing habits to work out what is causing a buzz, and ad-buying data can be analysed to see what marketing departments will be pushing.

“Brands and marketers engage in ‘sentiment analysis’, using sophisticated machine learning-based algorithms to determine the context when a product is discussed,” she explains. “And this data can be used to accurately predict what the top-selling products in a category are likely to be.”

VOLUME DATARetail technology company Edited helps companies to understand their competitors’ pricing, merchandise the best product assortments and spot key trends early to gain a competitive edge by analysing more than 550 million product SKUs across 42 countries.

“Artificial intelligence [AI] represents a new way of responding to customer demand,” explains edited data scientist Paulo Sampaio. “For retailers, it’s a

Designed by data: artificial intelligence can inform the design process

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tremendous opportunity to react to what customers want, as trends today can change at lightning speed.”

He says that by using machine learning, AI and image or text recognition technologies built into software, retailers can take advantage of customers’ shifts in interests to stock and promote the right products at the right time: “For example, we saw huge success in the massively popular activewear category, where our technology is helping global retailers quantify the importance of trend and offer the exact activewear products that customers want,” he says.

Most people agree that the technology is still in its infancy but some retailers are using the technology successfully in chatbots and conversational commerce or customer service.

Sampaio points to The North Face, which adopted AI on its website last year to help customers choose the right jacket for their needs. The brand built the product in partnership with IBM Watson, a cognitive computer system that aims to facilitate the use of AI within mainstream businesses. The North Face’s tool asks a series of questions, such as when and where they will be using it to create the feeling of a more personalised service akin to personal shopping.

Other firms working with IBM Watson on AI include Yoox Net-a-Porter Group and Shop Direct. YNAP’s online flagship stores president Paolo Mascio told Drapers that he sees some of the biggest opportunities for personalisation as coming from the rapid advances in AI. The group has been working on a series of “hackathons” and most recently, developed a tool that can make recommendations based on photos of fashion influencers sourced from popular blogs and Instagram feeds.

The YNAP team, comprising graduate product owner Sydney Smith, and developers Chris Gregori and Sam Lake, explain: “In just 36 hours, we built a convincing AI personal shopping concierge that could provide suggestions and aid creatives when they are curating fashionable looks from large product catalogues.

“If IBM Watson visual recognition is trained over time with more images and product information, this digital shopping assistant could also help personal shoppers and YNAP customers buy the celeb styles they adore with just a tap.”

TIME FOR CHATShop Direct, meanwhile, is set to debut an AI-fuelled conversational user interface (CUI) later this year. Its messenger-style app will be used for both service and sales, and will initially be text-enabled, explains group strategy and communications director Dan Rubel.

It will allow customers to ask questions in their own words within a chat environment, with the AI technology serving up the answers they are looking for – making their experience even more personalised.

“We are using AI most heavily in CRM,” he says, explaining that he believes it will eventually be voice-enabled. “I think we’re on a precipice at the moment but soon we’ll see rapid adoption of AI.”

Bruins underlines the importance of making the tech relevant to the retailers’ business and customers: “The challenge for retailers is to capture the right data, process at the right speed and take appropriate action,” she says.

James Lovell, European retail business executive at IBM Watson, suggests retailers continue to watch how


In just 36 hours, we built a convincing AI personal shopping concierge that could provide suggestionsYoox Net-a-Porter

Choice options: The North Face adopted AI on its website last year to help customers choose the right jacket for their needs


some of the newest consumers, Generation Z, use their mobile devices as this will steer progress going forward.

One of the latest releases from Amazon may signal how AI could be used to interact with consumers in a new way too. The online giant has launched a styling device to be used at home that can help users decide what to wear in the US, priced at $199 (£154).

The Alexa Echo Look allows shoppers to take full-length photos and short videos using a hands-free camera that is voice-activated and has built-in LED lighting, depth-sensing camera, and computer vision-based background blur.

Users can see themselves from every angle with the companion app and can build a personal lookbook, as well as sharing photos.

The Style Check feature combines machine-learning algorithms with advice from fashion specialists, and will suggest new brands and styles inspired by the user’s personal lookbook.

Hugh Fletcher, global head of consultancy and innovation at ecommerce solutions provider Salmon, sees this as a new route to market and another step into Amazon’s “ownership of the customer interface” – spreading its influence further throughout the home.

But how quickly can we expect AI tech to hit the mainstream? Cristofoli believes it could move very fast.

“Most retailers are looking at ways to protect and grow their share, so any innovation that facilitates this quickly

and cost effectively will gain attention,” he says. “Using smart technology to do this will become widespread very quickly, as all retailers fight to adopt new routes to effectively meet customer expectations.”

However he does warn that AI risks becoming a buzz phrase, like “big data” was three years ago.

“[It could end up that] consultants and IT companies bamboozle clients into a fear of the tech rather than the adoption of it,” he says.

“Retailers’ decisions to use AI are typically driven by providing better a customer experience, as well as being able to make decisions based on data rather than intuition, which are incredibly costly if done wrong especially in today’s competitive environment,” adds Sampaio.

“At a time when traditional brick-and-mortar stores are facing closures, retail product cycles continue to shrink and customers demand a more personalised experience, we expect AI to see mainstream adoption in the near future.”

There are certainly some big numbers being bandied around: US research and advisory firm Gartner suggests that by 2020, 85% of all customer interactions will be managed by AI and US market intelligence firm Tractica predicts that the global revenue from AI will be around $37bn (£29bn) by 2025. Similarly, it is clear that it is being taken seriously by many of the biggest retailers, so it looks likely that we could be on the brink of an artificial intelligence revolution.


Retailers’ decisions to use AI are typically driven by providing better a customer experiencePaulo Sampaio Edited

Echo chamber: Amazon’s Alexa Echo can link a

shoppers’ images into style

algorithms


Personalisation and artificial intelligence, chatbots, the internet of things, virtual and augmented reality – the list of areas where fashion retailers need to invest their time and resources is endless, but budgets are not.

To gauge where fashion retailers are investing we surveyed 65 senior directors at fashion retailers and brands of different sizes to ask 13 critical questions. Surveyed during May, the findings, paint an interesting picture.

When asked which technologies will have the biggest impact on the future of their businesses (graph 3) the answers depict a multichannel approach: personalisation is the top answer (58.1%), followed by experiential in-store retail (41.9%) and a mobile-first approach (32.3%). Interestingly, smaller but still significant numbers (nearly 20%) chose artificial intelligence/machine learning, chatbots and the internet of things, indicating key areas

for future investment. For those that have already invested in it, artificial intelligence is helping inform the personalisation strategies of fashion retailers (29.4%, graph 7), while 23.5% said it increases conversion, and 11.8% said it is enabling them to predict spikes in demand.

However, challenges persist. In particular, 30% said their digital teams do not have the digital skills required to implement their digital strategy, and another 10% said they are having to actively recruit from other industries.

Therefore, investment in both technology and personnel is critical. A sizeable 16.7% are planning to invest more than £1m in technology in the next 18 months (graph 13), and a further 30% between £50,000 and £100,000. However, cost remains the biggest barrier to investment (48.4%), followed by lack of in-house know-how on implementation (19.4%) and, most worryingly, lack of innovation in the market at 12.9% (graph 12).

HOW GOOD IS YOUR DATA?Drapers and K3 Retail survey identifies where tech investment is going but finds gaps in capabilities and skillsWords by JAMES KNOWLES




*Other includesReferral marketingRFID Delivery option technology

1 How would you describe the sector you operate in?

2 How would you describe your market/pricing level?

3.2%

49.2%

19%

14.3%

11%

3.2%

49.2%31.7%

17.5%

1.6%

Womenswear 49.2% Accessories 19% Menswear 14.3%

Footwear 11% Lingerie 3.2% Kidswear 3.2%

Premium 49.2% Mainstream 31.7%

Luxury 17.5% Value 1.6%

3 Which technology trends will have the biggest impact on the future of your business?

Pesonalisation 58.1%Experiential in-store retail 41.9%A mobile-first approach 32.3%

AI/machine learning 19.4%Chat bots 19.4%Internet of things 19.4%

Innovations in payment 16.1%Virtual reality 16.1%Other* 16.1%

Wearable tech 12.9%Augmented reality 9.7%

10%

20%

30%

40%

50%

60%

0

10

20

30

40

50

60

0

10

20

30

40

50

60

0%



6 Where will future online retail growth come from and what is the future of personalisation? (Rank in order of priority, with number 1 the most important and 5 the least)

4 How would you describe your position/level of responsibility?

5 Are you currently using artificial intelligence in your business?

57.8%14.1%

12.5%

10.9%

4.7%

73.3%

23.3%

3.3%

Owner/founder 57.8% Director 14.1% Head of department 12.5%

CEO 10.9% Manager 4.7%

No 73.3% Yes 23.3% Not sure 3.3%

Answer options 1 2 3 4 5Entry-level web personalisation 6 6 2 2 7

Cross-channel personalisation down to the individual shopper level

10 5 2 5 1

SEO/SEM 2 4 10 2 5

Email marketing 2 3 6 12 4

Social media advertising 5 7 5 4 6



7 What is artificial intelligence enabling you to do?

9 The use of artificial intelligence in the form of chatbots is gaining traction with fashion retailers. How important will this be to the future of your customer service online?

8 Do your digital teams have the required skills to implement your digital strategy?

5.9%

6.9%

29.4%

23.5%

27.6%

11.8%

29.4%

37.9%

27.6%

Inform personalisation strategy 29.4% Other* 29.4% Increase conversion online 23.5% Forecast spikes in demand and inform

merchandising/buying 11.8% For customer service – ie chat bots 5.9%

It is important to have, but will be just one part of our customer service offer, which will include traditional elements such as call centres 37.9%

Very – although we are not currently using chat bots 27.6% Not very – we think customers value being able to

call a customer service agent 27.6% Very – we are currently using chat bots 6.9%

Yes 33.3% No – we are actively recruiting 30% Yes – but we are investing in training internally 16.7% Yes – but we are actively recruiting 10% No – and we are having to actively recruit from

other industries 10%

10%

16.7%

10%

33.3%

30%

10 How do you feel about the year ahead?

67.7%

16.1%

16.1%

Positive 67.7% Negative 16.1% Not sure 16.1%

*Other includesForecast sales volumes on new items



12 What is the biggest barrier to investment in new technologies in your business?

48.4%

19.4%

12.9%

9.7%

9.7%

Cost 48.4% A lack of in-house know-how on implementation 19.4% Lack of innovation in the market 12.9% Lack of buy-in from board-level/CEO 9.7% Not sure 9.7%

11 What does the future hold for your bricks-and-mortar retail offer? (Tick all that apply)

Shops are still important, but must offer experiential retail for customers 48.3%Shops are still important, but we will reduce the number and focus on bigger flagships 20.7%We don’t have stores currently, but plan to open some 17.2%Shops are still important and we plan to open more 13.8%Shops are losing importance and we plan to reduce our portfolio. It is all about digital now 13.8%We don’t have shops and don’t plan to open any 13.8%Little change – there are no plans to increase or decrease our store portfolio 6.9%

10%

20%

30%

40%

50%

0

10

20

30

40

50

0

10

20

30

40

50

0%

13 How much do you plan to invest in new technology over the next 18 months?

36.7%

16.7%

6.7%

3.3%

3.3%

3.3%

30%

Less than £50,000 36.7% £50,000-£100,000 30% £101,000-£200,000 3.3% £201,000-£300,000 16.7% £301,000-£500,000 0% £501,000-£750,000 3.3% £751,000-£1m 3.3% More than £1m 6.7%


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