This year, Gucci continues to build virtual worlds, but there’s another lesser-known tech project that parent company Kering is excited about as the crown jewel.
The company has invested in artificial intelligence to better predict how much inventory it will produce and how much it will allocate to Gucci stores and distribution centers around the world. The technology has yielded results that continue to improve, the company said. Its inventory forecasts are more than 20% more accurate than previous methods. Kering also uses algorithms in its brands for tasks such as recommending products to shoppers and optimizing the boxes used for shipping.
While NFT and Roblox activations generate more hype, the majority of Kering’s technology investment is spent on these kinds of projects each year, the company said. It doesn’t follow explicitly, but leans towards the 70-20-10 model. 70% of his investments are directed towards core business innovation, 20% towards adjacent opportunities and 10% into disruptive technologies.
In 2023, that will be no different. Across fashion, a more pragmatic, less hype-driven agenda is taking shape as companies prepare for the economic uncertainties ahead. With interest rates and inflation rising and economic slowdowns expected in China, the US and Europe, businesses are facing tough times as consumers are spending less and cash is tight. Many brands and retailers are wary of repeating last year’s overstocked inventory miscalculations. Medium, shine is also worn from the NFT market.
It is a moment when many companies are under pressure to highlight projects that are likely to strengthen their foundations, especially if they are not yet profitable. Tools for better demand forecasting and connected platforms that allow brands and their suppliers to share data may not be as mind-boggling as the virtual world, but they can help brands weather the recession and the opposition. It’s a kind of technology investment that can help you become stronger on your side.
Karla Martin, fashion and apparel leader at Deloitte, said: Martin sees many brands still trying to settle.
Bigger, better data
Jonathan Kutner, an analyst at advisory firm Gartner, expects technology that enables companies to better tailor their product offerings to be a priority this year. Gartner predicts that retailers across the board will aim to reduce their inventory by 30% by the end of 2024.
“Basically, what they are doing is refining and crafting with assortment tools. [their] By making the assortment more precise and more targeted, we can lose the periphery and lose the lowest selling rate,” he said.
Advanced analytics, such as using AI to determine pricing and markdowns, could be a big differentiator in the coming months. In Kutner’s view, it goes hand in hand with a more curated assortment, allowing retailers to process more data and reach better conclusions. Companies like Levi’s are already using AI at work.
“Otherwise, you’re doing things in a spreadsheet and you say, ‘Last year, I dropped a similar style by 30% and it sold in this period.’ It’s just speculation,” Kutner said.
Kutner said clothing margins in China, the world’s largest apparel producer, could shrink by about 10% due to a combination of problems such as inflation, labor shortages and supply chain disruptions. To remain profitable in such an environment, companies need to sell at full price as much as possible.
However, a major stumbling block to many fashion companies making smarter use of their data is the lack of infrastructure to acquire, clean and analyze it. They may tend to improve it this year.
In its Dec. 28 note on key themes for 2023, Cowen’s analysts said an effective customer data platform should be “promotional and pricing actions, creative and emotional direction, and faster marketing.” It helps inform the decision of A loyalty program is a fundamental step to collecting customer data, and it becomes important, said Oliver Chen, an analyst at Cowen. Remember, however, that your brand needs a great product or service that customers want to engage with first.
“And with the privacy changes happening on mobile phones, first-party data is more important than ever, so brands need to have a methodology in place to collect it,” Chen said. says Mr.
A better way to design, manufacture and sell clothes
Businesses are not only forced to make better and faster decisions. you have to run them.
From Timberland to Hugo Boss, 3D software is gaining traction, allowing brands to digitally design and prototype their items. Integrating these tools takes considerable time and training, but reducing physical samples can help brands save time and reduce waste. For example, Kering says it’s still in the early stages of expanding its use of 3D design, but plans to continue expanding this year. The company’s brands are currently used in products such as bags, shoes, small leather goods and carry-over styles.
Deloitte’s Martin said: She also said she sees manufacturers retrofitting equipment and moving from digital samples directly to production.
Connected platforms that allow brands and their suppliers to share data are also proliferating, according to Martin. After the disruption caused by Covid in recent years, companies want to increase the visibility of their supply chains so they can pivot to meet customer demand.
At the same time, many companies are working to build a commerce system that integrates online and in-store operations to improve customers’ shopping experience. For example, shoppers can easily pick up and return online purchases in store. And sellers can see a customer’s complete purchase history, regardless of which channel the customer shopped through, allowing them to provide more personalized recommendations and better service.
Even if practicality becomes more of a priority for many companies in the near future, big brands won’t stop experimenting with technologies they think may matter in the future.
H&M is already making moves by launching a Roblox space called ‘Looptopia’ in 2023, saying in the release it will ‘continue to explore the rapidly growing expanse of virtual and augmented reality’. I’m here.
“I think we need to look at augmented reality. There are already great use cases for AR like beauty,” said Cowen’s Chen. “As processing power increases, more will come to pass.”
Tech watchers are widely expecting Apple to unveil its first mixed reality headset this year. If that happens, meeting consumer expectations won’t be easy, but it could be a big step towards AR going mainstream.
NFTs could face an uphill road as they are still looking for ways to make them more meaningful to the average shopper, said Lisa, director of consumer technology at forecasting firm WGSN. Yong said.
Still “I don’t think I can write” [them] I’ll turn it off now,” said Yong. Some fashion brands find convenient ways to deepen relationships with their most engaged customers.
For many fashion companies, getting their business off the ground in the next few months may be the first goal, but those with the resources don’t give up predicting the next few years. .