Technology is driving change and demand throughout fashion – from how products are manufactured, how customers find and buy them, how suppliers improve their margins, through to the products themselves.
A key development in fashion tech is the harnessing of energy through wearables. So-called 'solar fibres', usually photovoltaic fibres, convert sunlight into electricity. Until recently, the technology has been seen as having most traction in the outdoor markets (campers and hikers), but the materials now being developed, for example, by the Solar Fiber project based in Amsterdam, are suitable for mass-market, high street fashion.
The idea of harnessing energy through 'smart' textiles has been taken one step further with kinetic harnessing – a technology that has been deployed in watches for many years. As we walk, run, or move our limbs, we generate kinetic energy which can be converted into electrical energy to power a phone or other devices.
One of the legal issues with these new materials and embedded devices is that they could be treated as electronic equipment for the purposes of the Waste Electrical and Electronic Equipment Directive. This legislation requires retailers and distributors to provide a way for customers to dispose of the products (e.g. through an instore return service, or through joining central schemes such as the Distributor Takeback Scheme) which, of course, has an impact on bottom lines for retailers and, consequently, consumer prices.
Like any other sector, fashion businesses need to drive down cost at all times. One of the biggest costs for businesses in the sector is handling returns – from the cost of carrying stock that may not be able to be resold, the lost opportunity of a missed conversion, through to the direct resource cost of handling the returns themselves. Online retailers are particularly vulnerable to this for the obvious reason that consumers haven't been able to try before they buy.
US online retailers have reported return rates of between 20% and 40%, with the bulk of online retailers covering the cost of returns for customers. The most common reason for return cited is poor fitting, followed closely by clothing not appearing as expected when tried on – essentially online returns are the equivalent of leaving stuff you don't like in the changing room. Retailers have tried to tackle this with some success, using virtualisation technologies to map the dimensions of garments customers already own and enabling the retailer to display their garments that will best fit the customer. For example, US business Virtusize has partnered with various retailers and brands to bring the technology to the mass market. Asos has deployed the technology over thousands of SKUs. Not only does this reduce the rate of returns but a by-product of the enhanced customer experience and personalisation the technology allows is the hugely valuable data being built up about the consumers who use the technology – invaluable to retailers looking to target consumers with relevant, appealing products.
Other businesses have taken the idea one step further by developing virtual fitting rooms. Canada's Trimirror has pioneered what they claim to be "the first real-time solution in the world that allows the try-on of real clothes on real-dimensioned avatar bodies, and which allows the user to see where the garment is tight or loose and how it behaves when they move around in various ways before purchasing". The technology can be plugged into retailers' platforms, and is also targeted at assisting in the design of clothes. Virtual mirror technology (such as Zugara) has been deployed in-store and in changing rooms as well as online. These tools will only be as good as the quality of the data they are fed by retailers, with some, such as LK Bennet investing considerable resources in order to offer effective and streamlined experiences. Again, a key legal issue with these sorts of technologies centres around striking the balance between using customer data to curate relevant product recommendations and promotional messaging, and compliance with data protection laws, particularly with the forthcoming tighter rules under the General Data Protection Regulation (see our article for more).
Suits you, sir
The problem of striving to provide customers with garments that fit perfectly can, of course, be solved by manufacturing garments to customer measurements on an order-by-order basis. This model brings huge logistical problems and, usually, high costs for the consumer. Therefore, retailers finding success with this model, such as Denmark's Son of a Tailor, include those that apply the model to a very limited number of garments (in the case of Son of a Tailor, "A T-Shirt made and fitted especially for you"). Customers can either enter basic height and measurement information in order to be profiled for the right fit, or can enter more detailed measurements based on an existing garment or take their own measurements for a totally bespoke product. The downside for the customer is a longer delivery period (a few weeks), however, they receive a T-shirt that matches their measurements perfectly.
Another major cost for fashion retailers is the cost of carrying stock and, in particular, being left with unsold stock at the end of a season (thus generating the high discount sales associated with the sector), and retailers apply complex modelling to stock control, aiming for products to be stocked 'just in time' to minimise costs. The bespoke product model, while entailing longer delivery times and thus lower chances of impulsive purchases, means there is no need to carry stock, and so the level of distressed inventory is massively reduced.
Some retailers are successfully combing the two concepts of bespoke made-to-measure ordering, with stock availability to reduce order times. For example, London's Spoke has applied the idea on a semi-bespoke basis, allowing the customer to choose between a set number of different shapes or styles of a particular garment (in this case trousers), applying a hybrid model that allows for quick delivery while at the same time reducing stock costs.
In the UK the Consumer Contracts Regulations, which came into force in 2014, allow customers that make purchases online, a 14 day period in which to change their mind and return products free of charge. The Regulations do not apply to "the supply of goods that are made to the consumer’s specifications or are clearly personalised", and so customers who order bespoke products do not benefit from this right. It is not clear at what point a product would be considered "bespoke". Government guidance suggests that a product is only considered bespoke for the purposes of the Regulations where it cannot be re-sold, so a t-shirt printed with someone's first and last name would be bespoke but a garment selected from a set number of pre-determined shapes / styles would be unlikely to qualify. Of course, most retailers offer a no questions asked right of return in any case, but those offering 'made to order' goods should be careful to make sure they do qualify for the bespoke exemption if they want to take advantage of it.
China is the world's largest e-commerce market and the fashion industry in China has for some time been recognised by the sector as the biggest opportunity and fastest growing fashion retail market on the planet. Rapid urbanization and increased spending power of consumers has led to enormous growth in markets for both high-end and low-tier fashion. It is perhaps the high-end where the biggest opportunity lies for foreign brands, given Chinese consumers have become extremely brand conscious and the possession of luxury products is seen as a status symbol (Bain Consulting has stated that Chinese consumers account for over 30 per cent of global luxury consumption and this will be 35 per cent by 2020). By 2020, fashion sales in the market are predicted to triple to over $200 billion. The barriers to entry have been lowering in recent years and big brands and retailers are now investing heavily in China.
The Chinese market is notoriously challenging, not least in relation to the relative lack of practical IP protection available to brands, with all products from electrical equipment to cars being copied and offered for sale there. Despite improvements in the regulatory environment, recent cases in China suggest that intellectual property issues continue to be a significant problem for most foreign companies, and although there is a framework to protect IP, infringement remains common and difficult to prevent. According to the Asia Pacific Foundation of Canada "Cultural, institutional and technological factors explain why Canadian and other foreign firms in China continue to have their IP compromised. Culturally, China’s historical traditions continue to shape attitudes toward the ownership of knowledge and information. Both Confucianism and Maoist thought do not perceive knowledge as a form of private property. Institutional factors that stem from political and legal weaknesses account for some challenges in enforcement. Although the central government introduced IP laws, the fragmentation between the central and local governments and among different ministries hinders the effective implementation of IP laws. Moreover, China’s judicial system continues to lack independence, as many judges are political appointees without the technical knowledge needed to try IP-related cases. Weaknesses in the legal system have also allowed local courts to exercise a local bias toward Chinese companies. Furthermore, damages awarded by Chinese courts are typically so low that they do not cover the costs of bringing IP cases to court, and the benefits of winning a lawsuit thus are outweighed by its costs."
All that said, the size of the opportunity for brands, particularly high-end brands, is simply too large to miss. Increasingly, Chinese consumers will want the genuine article so we may see IP infringement become a diminishing problem for high-end brands and retailers. One only has to look at Burberry, for whom China played no small role in its somewhat transformational redemption (it entered the Chinese market way back in 2010), to see the attraction the Chinese market holds.
The question for many brands, therefore, is not whether, but how to enter the Chinese market. In terms of the online market, Chinese online sales are dominated by a small number of major players – Alibaba, Tencent and JD.com being key examples. One of the more recent trailblazers to make a splash in China is Farfetch, the UK based 'unicorn' and high-end fashion + luxury platform. Recognising the need to partner with an established e-commerce platform to gain reach quickly, Farfetch recently announced a major strategic partnership with JD.com, which included a $397m investment into Farfetch. The common view is that others will follow to take advantage of the ongoing growth of the Chinese luxury ecommerce market.
One size fits all
No parent has failed to bemoan the speed with which children outgrow their shoes or clothes, or the fact that the clothes in their age group are either way too big, or way too small. An English business, PetitPli claims to have developed clothes that grow with a child, up to six times, also claiming "Petit Pli’s versatile waterproof shells are pleated in such a way that they can grow bi-directionally to custom fit a range of sizes", thus creating more sustainable clothes that in the long run are easier on the pocket. As textile innovation continues it may be that this is the first of many businesses to tackle the problem. We only hope someone comes up with a similar concept for gradually aging (and expanding) lawyers…
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