The fashion industry has been in a state of continuous transformation over the last decade: disasters such as the 2013 collapse of the Rana Plaza factory in Bangladesh and the growing public awareness of the fashion industry’s environmental impact has led brands to rethink their supply chain and orient themselves towards more ethical and sustainable practices. As reaction to increasingly digitalized customers, brick and mortar fashion retailers have in the last years started setting up online stores and transforming their physical shops to meet their customers' demand for a heightened in-store experience. The COVID-19 pandemic has only accelerated these trends in an prior to that unimaginable speed: retailers had to close their brick-and-mortar stores due to lockdown measures, global supply chains have been interrupted, fashion retail sales are in decline and customers are increasingly questioning the impact of fashion on our planet and are modifying their shopping habits. Despite these challenges, one opportunity has continued to guide retailers through this global crisis: digitalization.
The fashion industry has been one of the sectors to have been hit hardest by the COVID-19 health crisis and the consequential government measures implemented. In Europe alone, retail clothing sales dropped by 43.5% in the second quarter of 2020, and the outlook for 2021 is dependent on how long stores will be closed for during the second and third wave of the pandemic. Within the fashion supply chain, garment manufacturers have been hit hardest by COVID-19 in 2020 with new research suggesting that 86% of garment producing businesses have seen a drop in orders. But brands and retailers are also struggling: customer demand has decreased and shifted from business apparel and fancy party outfits to active and casual wear which is more suitable for yoga workouts and long days in front of video calls. Runway fashion week events all over the globe have been canceled, retail stores have been shut during month-long lockdowns and even after reopening, brick and mortar outlets are seeing consumers avoid crowded shopping streets and in-store visits to fashion stores. All this seems like a pretty dark picture for the fashion industry? Indeed – but there is always a knight in shining armor.
While physical stores remained closed for several months during 2020, eCommerce has become an essential channel for fashion brands and retailers to reach out to new and existing customers. Online shops were popular before, but the pandemic has forced old-fashioned companies to get into the digital game and has accelerated the focus on online channels. As a consequence, physical fashion weeks in Shanghai, Paris and Co. have been replaced by virtual catwalks, luxury brands have perfected the concept of social selling – using social media platforms such as Instagram to sell clothes – and virtual shopping assistants in the form of chatbots are getting implemented in more and more online shops. Sales developments reflect this transformation in the fashion industry in an impressive manner: according to the trend report "Fashion 2030" of the auditing company KMPG and EHI Retail Institute, online sales accounted for 25% of German fashion sales last year and are expected to reach a market share of 50% in only 10 years.
While eCommerce is helping the fashion industry to navigate through the COVID-19 crisis, we should keep in mind that it is harming the planet through packaging waste and transport emissions. Order returns in particular are viewed with criticism since they cause avoidable CO2 emissions and hurt retailers' margins. In order to react to consumers' growing environmental demands and economic losses caused by returns, fashion retailers search for solutions to reduce return rates in eCommerce. Digital sizing solutions are a particularly promising approach to reduce returns. They recommend online shoppers the right size based on questions, videos or pictures and use self-learning algorithms to improve the size recommendations. It is important to note that the performance of sizing solutions on the market differ widely – the technologies differ largely in their set-up, level of convenience for the user and effectiveness. The most accurate sizing solutions are based on videos of online shoppers and are, in contrast to purely picture- or question-based solutions, robust to subjective self-assessment and small changes in posture, background or clothing. Accurate sizing solutions enable online fashion shops to find the perfect size for their customers and as a result, reduce returns. This is beneficial to the climate, the retailer and the customer who does not have to risk getting infected by Corona in the queue at the post office. In addition to this, size recommendations boost users trust and therefore generate higher conversion and order value.
The fashion industry is successfully working on short-term measures to deal with the effects of the COVID-19 pandemic by making use of eCommerce and digital solutions. Only reacting to the present challenges will not however be enough for fashion companies to survive in the "New Normal" of the Post-COVID world – companies must fundamentally rethink their business models. During the last months consumer behavior, demand and shopping patterns have drastically changed. There is no going back – the generation 50+ is now used to shopping online. Consumers have learned about the environmental and social impacts of fashion, making them more selective in their purchase decisions. Moreover, certain customer groups that previously stayed away from online shops, such as elderly people, have come to appreciate online shopping. In future it will be increasingly crucial to offer consumers a personalized shopping experience – online as well as offline. This can be achieved by immediate support tools like chatbots, product customization, social shopping and personalized product recommendations based on the consumers' preferences and characteristics like body measurements. AI-driven digital sizing solutions will play an important role in this development by finding each customer's perfect fit despite no physical try-ons, visualizing fashion items on 3D models of customers in virtual fitting rooms and facilitating the production of sustainable made-to-measure fashion.
As you may have guessed, Presize is a video-based sizing solution using an AI-algorithm to provide perfect size recommendations while also reducing returns in eCommerce. Our size recommendation solution has beaten competing technologies in several A/B test and we are therefore confident that we are the best solution on the market for fashion retailers looking for support in these challenging times. Together we can cut your shop's return costs and increase revenue thanks to higher conversion rates and average order value.