The Future of ‘FashTech’: Which Trends Are Really Making a Difference?
Whether it’s the way they shop, what they buy or how they pay, fashion consumers expect retail technology to be focused on enhancing their experience.
Merchants looking to gain a foothold in lucrative apparel markets, secure a larger slice of the online channel, reduce churn and boost customer loyalty are increasingly turning to technology to deliver experiences that set them apart and solve specific challenges.
New research from global payments provider Klarna and Censuswide from the U.K. shows that while a majority of fashion retailers want to invest in high tech features such as augmented reality (AR) and virtual reality (VR), four in five shoppers say they wouldn’t be interested in using it. The research, part one of Klarna’s Global FashTech Research Series, surveyed 2,000 shoppers and 50 decision makers in fashion retail throughout the U.K. It shows a clear discrepancy between what shoppers want in the future and what retailers plan to deliver.
According to the research, fashion retailers are investing in the latest technology trends, while they still find the fundamentals a challenge. A fifth of these retailers admit they're struggling to get the basics right when it comes to digitization, and 42 percent are so focused on getting online right that in-store technology is not a priority.
This contradicts what consumers say they want, with almost three-quarters (73 percent) stating they value shopping in-store, as it offers a human experience that can’t be recreated online. In short, retailers shouldn’t be writing off the value that a good in-store experience can bring to their business.
Here are four emerging FashTech trends that merchants are betting on that consumers might not yet be ready for:
Experts predict that AR/VR will be a $150 billion market by 2020. Klarna research reveals that 32 percent of U.K. fashion merchants have already invested in virtual stores that can be viewed online, yet only 21 percent of fashion shoppers would like to see "smart" mirrors/changing rooms that recommend other clothes and accessories based on what they try on. AR and VR also have strong commercial benefit beyond being a more interactive and fun experience. Accessories, shoes or other matching items can be suggested to consumers, along with information on stock levels to create demand and increase spend.
The use of smart fabrics in fashion and entertainment is estimated to grow by 31.25 percent by 2023. Developments in fields such as nanotechnology, polymer development and low-power sensors are transforming clothing itself, with an increasing number integrating sensors to generate and respond to data as well as perform a range of functions such as monitoring heart rate, body temperature and even emotions. Smart fabrics have an immense technological potential, which can be utilized by designers to innovate extensively. However, according to shoppers themselves, only 7 percent would like to see smart fabrics that are connected to smartphones or wearable technology that monitors heart rate and fitness. Begging the question, how useful is this investment?
The drone logistics and transportation market is projected to reach $11.20 billion in 2022 and $29.06 billion by 2027. Drones have the potential to reduce delivery times and cut costs. It’s easy to see that this sort of "instant" fulfilment would appeal to fashion-focused millennial and Gen Z consumers.
As one of the largest e-commerce "click and deliver" markets, fashion will constitute a large part of this as it looks to improve last mile fashion distribution to consumers. Of the fashion merchants Klarna surveyed, 30 percent would be interested in introducing drone delivery. Consumers are much more reticent, with only 8 percent wanting their items delivered via drone.
Personalization and 3-D Printing
Fashion is all about self-expression, so access to personalized garments/accessories and in-store digital customization are set to be key trends within the fashion industry for years to come. Klarna’s findings indicate that more than one in four merchants would be interested in customer-customizable items, while 14 percent would consider digital patterns and 14 percent would like to explore 3-D printing. That said, only one in 12 consumers (8.4 percent) would like to see more personalization and customization through bespoke clothing. Furthermore, only 8 percent would be interested in printing items themselves, in-store or online. It’s clear that 3-D printing in the world of fashion is still very much in its early stages, but it’s certainly a trend to watch.
While there’s lots of noise in the marketplace about how FashTech will transform shopping experiences, there’s also a lot of confusion about how much of this is of actual value to customers. Are merchants getting ahead of themselves by offering the latest tech before ironing out some of the more day-to-day tech issues, in the process creating more friction for users rather than less?
We know that fashion retailers have a good track record of adopting the latest technology, however, our research shows that some work still needs to be done to ensure retailers are delivering what shoppers actually want. What we can see is that shoppers want the basics to be done better, and they don’t want their preferred fashion brands to favor fads over function through the introduction of technology that doesn’t improve their shopping experiences. Retailers can tap into important data looking at which FashTech trends are really driving sales, and which are just getting in the way.
Michael Rouse is the chief commercial officer of Klarna, a global tech bank.