The Future of Fashion: From design to merchandising, how tech is reshaping the industry

Fashion has always been at the forefront of innovation — from the invention of the sewing machine to the rise of e-commerce. Like tech, fashion is forward-looking and cyclical.

The fashion sector is also one of the largest industries in the world, estimated to be worth more than $3T by the end of the decade, according to CB Insights’ Industry Analyst Consensus.

And today, fashion technology is growing at a faster pace than ever.

Robots that sew and cut fabric, AI algorithms that predict style trends, clothes to be worn in virtual reality — an array of innovations show how technology is automating, personalizing, and speeding up the fashion space.

Seizing the opportunity to open more revenue streams and business models, fashion companies are partnering with technology providers, snapping up startups, and even building their own tech.

Meanwhile, as the industry faces a long-overdue reckoning with its environmental and social impact, it is reexamining processes across the value chain in an attempt to reinvent itself.

In this report, we dive into the trends reshaping how our clothes and accessories are designed, manufactured, distributed, and marketed.

Table of Contents

• • Product design
    • AI becomes the design partner
    • How AI is influencing brands
  • Manufacturing
    • What fast fashion means for seasons
    • Rapid iteration & production
    • Streamlining the fashion supply chain
    • 3D printing personalized apparel products
    • New robots for the manufacturing floor
  • Inventory & distribution
    • RFID for verification, automation, & online integration
    • Blockchain in the fashion supply chain
    • Apparel distribution scales down
    • D2C fashion brands shun physical retail
    • From ownership to usership: The rise of clothing-as-a-service
    • Automated warehouses
  • Retail & virtual merchandising
    • AR/VR redefines the online and in-store experience
    • Digital stylists get personal
    • Fintech and fashion join forces
    • Reselling marketplaces proliferate
    • Omnichannel clienteling as a service
    • 3D scanning in the apparel industry

• • The push for sustainability in fashion
    • Resale platforms as sustainable alternatives
    • Demand forecasting to reduce waste
    • Recyclable garments & reinvented recycling plants
    • Back to the drawing board: New earth-friendly textiles
    • Rethinking fashion from end to end to achieve circularity

• • What’s next? High-tech fashion trends to watch
    • Wearables
    • Virtual fashion
    • Digital twins
    • 3D scanning in the apparel industry
    • Novel fabrics
    • Synthetic media
    • Cryptocurrencies
    • Livestream shopping
  • Closing thoughts

Product design

Tech is automating and augmenting the fashion designer

Fashion brands of all sizes and specialties are using technology to understand and anticipate market demand and respond swiftly with trendy designs and customizable styles.

Artificial intelligence will reshape brands’ approach to product design and development, with a focus on predicting what customers will want to wear next. But algorithms aren’t taking the place of human designers any time soon. If there’s anything that fashion houses’ experiments have shown, it’s that human involvement is crucial to harnessing the insights provided by AI and translating them into appealing, wearable clothes.

Outside of fashion, manufacturers are already using AI to generate out-of-the-box prototypes for products ranging from aircraft parts to golf equipment. Generative design software is expected to be a $44.5B market by 2030, per CB Insights’ Industry Analyst Consensus.

AI Becomes The Design PARTNer

Google has already tested the waters of user-driven AI fashion design with Project Muze, an experiment it deployed in partnership with Germany-based fashion platform Zalando in 2016.

The project trained a neural network to understand colors, textures, style preferences, and other “aesthetic parameters,” derived from Google’s Fashion Trends Report as well as design and trend data sourced by Zalando.

From there, Project Muze used an algorithm to create designs based on users’ interests and aligned with the style preferences recognized by the network.

Amazon is innovating in this area as well. One Amazon project, led by Israel-based researchers, would use machine learning to assess whether an item is “stylish” or not.

Another, out of Amazon’s Lab126 R&D arm in California, would use images to learn about a particular fashion style and create similar images from scratch.

If that sounds like “fast fashion by Amazon,” that’s because it probably is. In 2017, the e-commerce giant patented a manufacturing system to enable on-demand apparel-making. The tech could be used to support its Amazon Essentials line or the suppliers in Amazon’s logistics network.

Of course, the outcomes of human-free AI design aren’t always runway-ready. Many designs created for users of Google’s Project Muze were unwearable scrawls and scribbles, while some reports on the Amazon Lab126 initiative called the design results “crude.”

Using algorithms to generate clothing has created legal as well as aesthetic issues. In 2019, for instance, it was unveiled that a number of online T-shirt vendors were deploying bots to scrape images (under which people had commented things like “I want this on a T-shirt”) and uploading them to marketplaces to be produced and sold on demand. This quickly drew criticism and allegations of copyright violation and IP theft.

Nevertheless, the gap between AI-developed designs and human-made ones is closing. In April 2019, an AI “designer” called DeepVogue placed second overall and won the People’s Choice Award at China’s International Fashion Design Innovation competition. The system, designed by China-based technology firm Shenlan Technology, uses deep learning to produce original designs drawn from images, themes, and keywords imported by human designers.

The Tokyo-based design consultancy firm Synflux has also been using AI to come up with innovative designs in a project called Algorithmic Couture. The team, consisting of designers and software engineers, built a tool that creates customized clothing in a series of steps.

First, the software 3D scans a body to capture its proportions. Then, machine learning algorithms analyze the collected data to come up with garment patterns intended to reduce fabric waste. In the last step, designers model these 2D patterns using computer-aided design (CAD) software and produce fashion patterns that can be used to sew clothing items.

An example of a dress design generated by Synflux’s software. Source: Dezeen

Synflux envisions delivering personalized designs that go beyond the typical division of small, medium, and large sizes — with minimized fabric waste, as the software optimizes the design for each customer.

More R&D is needed before brands can rely on AI-only designers. But today’s artificial intelligence is already helping brands create and iterate their designs more quickly.

How AI Is Influencing Brands

Since purely AI-based design has at times missed the mark, fashion retailers have adopted a new mindset of viewing AI systems as creative partners rather than independent designers.

In 2018, Tommy Hilfiger announced a partnership with IBM and the Fashion Institute of Technology. The project, known as “Reimagine Retail,” used IBM AI tools to decipher:

• Real-time fashion industry trends
• Customer sentiment around Tommy Hilfiger products and runway images
• Resurfacing themes in trending patterns, silhouettes, colors, and styles

Knowledge from the AI system was then served back to human designers, who could use it to make informed design decisions for their next collection.

Such a use case is no longer novel today. Heuritech, for instance, offers an AI platform that analyzes millions of images to spot hues, cuts, shapes, and thousands of other fashion elements to predict how trendy they will become up to 1 year in advance. It might, for example, forecast the popularity of a certain color in the US next season. Brands like Dior use Heuritech to validate their intuitions about upcoming trends, while manufacturers like Wolverine Worldwide use it to gauge whether or not consumer demand is rising for specific products.

“With machine learning, you can predictably know where to take up to 80% of your collection. You’re left with 20% of the collection to know what you can innovate. There’s now so much more white space for the design team to be more creative.” — Brad Lacey, global design director in lifestyle footwear at New Balance, a Heuritech client

Stitch Fix is already at the forefront of AI-driven fashion with its “Hybrid Design” garments. These are created by algorithms that identify trends and styles missing from the Stitch Fix inventory and suggest new designs — based on combinations of consumers’ favorite colors, patterns, and textiles — for human designers’ approval.

The company details how it works (shown below) in the “Algorithms Tour” on its website.

Source: Stitch Fix

The company has said that the AI-designed pieces perform comparably in “keeper” sales to the garments from its fashion-brand suppliers. That’s likely because Stitch Fix has vast troves of customer data informing its AI, thanks to its subscription-based, feedback-focused business model.

“We’re uniquely suited to do this,” says Eric Colson, chief algorithms officer at Stitch Fix. “This didn’t exist before because the necessary data didn’t exist. A Nordstrom doesn’t have this type of data because people try things on in the fitting room, and you don’t know what they didn’t buy or why. We have this access to great data and we can do a lot with it.”

Design isn’t the only area where Stitch Fix is putting AI and machine learning (ML) initiatives to work. Along with 5,000 stylists, the company employs a team of almost 150 data scientists to oversee ML algorithms that are used to inform everything from client styling to logistics to inventory management.

According to Colson, the company is already seeing ROI from its AI investments, including increased revenue, decreased costs, and improved customer satisfaction. Stitch Fix reported net revenue of $581M in the first quarter of its fiscal 2022, up 19% year-over-year (YoY).

However, Stitch Fix’s success is not only attributable to its machine workforce.

For all the initial fanfare about AI, Stitch Fix has found that the more humans got involved in training ML models, the more customers they won over. While the startup mentioned the word “algorithm” 76 times in a 2017 listing document, its executives mentioned it only once during an investor call in summer 2021. Stitch Fix doubled its number of human stylists from 2017 to 2021.

With more rigorous, human-led training, AI “assistance” programs will continue to advance and become more accurate. The insights they generate will help brands make smarter strategic decisions around product development and new business lines.

3D design platforms like CLO also make it easy to tweak designs on the fly through real-time garment simulation. These allow brands to use real-time AI insights to modify fashions right up to the minute they hit production.

Below, we illustrate how tech is automating fashion design as styles become more personalized and influenced by digital signals.

Similar to Amazon’s Lab126 initiative and Google’s Project Muze, scientists from UC San Diego and Adobe have outlined a way for AI to learn an individual’s style and create customized computer-generated images of new items that fit that style.

The system could enable brands to create personalized clothing for a person based solely on their engagement with visual content.

At a more macro level, it could also allow a brand to recognize broader fashion trends much earlier based on data from its user base. The data could be used to guide the design of a product or an entire label.

True Fit, for example, partners with retailers to facilitate capabilities like AI-powered fashion discovery and exact-fit clothing and shoe recommendations. With over 180M registered users, the platform uses transaction data to determine customer preferences that “better personalize all touchpoints of the consumer journey” for brands, according to CEO William Adler.

Virtusize, another company capitalizing on the smart fitting trend, enables online shoppers to buy the right size, either by measuring the clothes in their closet or by comparing specific brands and styles to their own.

Virtusize claims that, by removing uncertainty around size and fit, it can increase average order values by 20% and decrease return rates by 30%. The Japan-based company counts Balenciaga and Land’s End among its clients, as well as Zalora — a leading online fashion store in Asia.

The confluence of AI, 3D scanning, AR, and computer-generated imaging will usher in the next era of fashion, which is all about personalization and prediction based on consumer preferences. With more and more data, algorithms will become trend hunters — predicting (and designing) what’s next in ways that have never been possible.

Manufacturing

Fast fashion has created an instant gratification mentality 

Since World War II, fashion has been broken up into seasons: Spring/summer lines debut on runways in early fall, while autumn/winter lines debut in February.

The staggered timeline is designed to give brands enough time to gauge the interest of retail buyers and customers. In the time between when fashions are introduced and when they arrive on store shelves, brands assess demand so that they can manufacture the right number of garments for the season.

Fast fashion, in which designs move quickly from catwalk to store shelves, has upended that model.

Brands like Zara and H&M built their businesses on speed and agility. Once these retailers spot a new trend, they can deploy their hyper-rapid design and supply chain systems to bring the trend to market as quickly as possible.

This allows fast fashion brands to beat traditional labels to market. Garments and accessories that are strutted down runways in September and February get replicated by fast fashion brands before the originals even hit stores.

With a nearly real-time ability to get the newest styles on shelves, fast fashion brands can push out broader varieties of clothing styles to cater to the preferences of smaller, more targeted segments of customers. They can also push smaller runs to test the waters for customer demand, or sell collections for hyper-short lifespans.

And cheap alternatives to high-fashion items remain hot consumer commodities. Even amid the retail slowdown — and the economic uncertainty of the Covid-19 pandemic — Zara’s owner, Inditex, reported over $23B in revenue in 2020, beating analyst estimates. H&M also posted a profit in 2020, thanks to a rapid rebound in business.

What Fast fashion Means For seasons

The rise of fast fashion is decimating the biannual seasonality that has long structured the fashion industry. In order to keep up, traditional apparel brands are now debuting around 11 seasons a year.

Fast fashion brands, on the other hand, may issue as many as 52 weekly “micro-seasons” per year. Topshop, for example, used to introduce around 500 styles per week on its website before its parent company, Arcadia Group, went bankrupt. Zara produces 20,000 new styles in a year.

Social media is accelerating this cycle. Influencer marketing and other social media strategies help new trends travel fast, creating rapid consumer demand for cheap fashions.

Shoppers act on that demand instantly, thanks to “See Now, Buy Now” tools on platforms like Instagram and Pinterest. Adept social media strategies on TikTok have translated to strong sales for companies like Fashion Nova, PrettyLittleThing, and Shein.

Fashion Nova is one example of a fast fashion e-commerce brand that has successfully leveraged social media to build its customer base and its brand. The company has 21M followers on Instagram, as well as more than 3,000 influencers, known as #NovaBabes, promoting its clothes. It reportedly spent $40M in 2019 on influencer marketing alone.

Fast fashion brand Boohoo has seen significant results by investing in influencer marketing, saying that its profits doubled after paying celebrities to promote its products on Instagram to 16- to 24-year-old fans.

Shein, in particular, has grabbed fast fashion market share from legacy players like Zara and H&M. The Nanjing-based shopping site has grown into the world’s largest online-only fashion business, “measured by sales of self-branded products,” according to the market research company Euromonitor.

Fast fashion brand Shein is taking on legacy players with fast deliveries and low prices. Source: Shein

Shein aims to take only 3 days to produce designs. By comparison, Zara owner Inditex takes an average of 3 weeks to move designs from drawing board to store.

And customers are flocking to Shein, attracted by low prices and a constant stream of fresh design. It adds around 1,000 new styles a day to its site. In May 2021, Shein surpassed Amazon as the world’s most popular shopping app.

Yet fast fashion has a dark side. Many fast fashion brands manufacture low-cost, low-quality apparel in factories with questionable working conditions, relying on workers who receive low pay.

Cheaply made apparel can also cause environmental damage since rapid production runs of low-durability clothes promote excessive textile waste. According to the Environmental Protection Agency, some 12.8M tons of clothing are sent to landfills annually.

The global fashion industry emits 2.1B metric tons of greenhouse gases annually, according to McKinsey. This represents about 4% of total annual global greenhouse gas emissions — more than international flights and maritime shipping combined. It’s estimated that the fashion industry is responsible for up to 10% of global CO2 emissions, 20% of the world’s industrial wastewater, 24% of insecticides, and 11% of pesticides used.

While the sustainability issues within fashion — and fast fashion in particular — are not new, what’s changing is how the industry’s most influential customers are starting to respond. (We dig into this in “The push for sustainability in fashion” below.)

Rapid ITERATION & PRODUCTION

The costs of starting a fashion brand have gone down significantly, thanks to technology and e-commerce.

Manufacturing marketplaces, for one, can leverage AI to give feedback on whether designs are feasible and provide estimates on cost and production time, potentially eliminating months of back-and-forth with suppliers.

Further, the dawn of the Etsy online marketplace made it easy for anyone to start an online shop and build a following. Now, decreased production costs make it feasible for small or emerging brands to manufacture small runs of products at reasonable margins and build up online audiences from there.

In years past, fashion labels would have to manufacture hundreds or thousands of items in order to produce them at a reasonable price.

“In mass production, more product equals more money. Vendors tend to be less responsive to small-quantity orders unless they are specifically set up for that scale.” — Eric Schneider for the American Society for Mechanical Engineers

Now, startups like Sewport make it simple for small labels to find small-batch manufacturing partners that can meet their needs at scale, with transparent standards around pricing and sourcing. Emerging brands can weave small-batch runs (and transparent production standards) into their marketing.

NYC-based menswear line Noah, for example, produces ultra-small batch clothing lines — sometimes comprising as few as 12 or 24 items — and often sell out of these items quickly. The launches include detailed blog posts about the items’ sourcing and purpose.

Source: Noah

Manufacturing marketplaces are gaining traction not only among small businesses but also among influencers trying to start their own fashion lines. Pietra, launched in 2019, is a platform that helps creatives with finding suppliers, as well as with order fulfillment and setting up e-commerce channels.

Large high-end brands are also evolving their approach to production to better compete with fast fashion retailers.

Tommy Hilfiger makes the fashions in its TommyNow line available instantly — all around the world, in-store and online — as soon as they sashay down the runway.

That means TommyNow items hit stores 3 times faster than traditional collections, with just a 6-month window between product ideation/design and release.

“It’s about delivering on the instant gratification that consumers are really seeking,” says Avery Baker, chief brand officer at Tommy Hilfiger. “Closing that gap between the visibility of a fashion show and the moment of purchase.”

The Hilfiger brand has gone all in on making the Now line experiential and immediate.

The first TommyNow collection — a collaboration with model Gigi Hadid — launched in 2016 with a 2-day Fashion Week extravaganza that supported a huge social media push. The event livestream was made “shoppable” for Facebook Live and was supplemented with instantly buyable product debuts on Pinterest, Instagram, and Snapchat.

Many other brands aim to follow TommyNow’s example, but this is no easy feat. Shortening an 18-month production window into just 6 months required the Tommy Hilfiger brand to overhaul its entire design, manufacturing, and distribution ecosystems.

Yet plenty of technologies are emerging to make scalable, sustainable production more feasible, at a faster pace.

Streamlining the fashion supply chain

Some brands are “internalizing” production to quicken the pace of manufacturing and meet consumer demand more rapidly.

In April 2018, Gucci launched Gucci Art Lab, a 37,000-square-meter product development and lab testing center with in-house prototyping and sampling activity for leather goods, new materials, metal hardware, and packaging. The project’s aim is to bring the Gucci supply chain closer to home — ultimately giving the brand greater control over product development, sampling, and material development.

Vertical integration has helped companies from Peloton and Apple to Netflix and Tesla drive growth.

The Covid-19 crisis has also highlighted the risks of single sourcing. Companies saw production come to a complete standstill as the pandemic swept through China, where many multinationals source their items.

But in cases where supplier diversification isn’t possible, AI is becoming increasingly critical for supply chain monitoring.

AI companies are leveraging natural language processing (NLP) to scour news, government databases, trade journals, and more to monitor for supply chain disruptions, including natural disasters or factory mishaps. Machine learning is also being used to generate risk scores for vendors based on their supply chain network.

For example, startups like Interos and Resilinc curate databases on vendor business relations and use machine learning to evaluate risk scores based on their supply chain networks. We dive deeper into how manufacturers can use AI to lower risk in sourcing and procurement in this analysis, as part of our client-only AI in manufacturing series.

3d printing personalized apparel products

Brands are exploring how 3D printing can help them produce goods on demand and create new avenues for customization.

Performance professional apparel brand Ministry of Supply unveiled an in-store 3D printer that creates customized knitwear (and can produce a customized blazer in just 90 minutes). Printing the garments reduces fabric waste in production by about 35%.

Meanwhile, in May 2021, Adidas partnered with 3D printing and design company Carbon to release 4DFWD, a running shoe made to help the wearer move forward when their foot hits the ground. This is possible thanks to the shoe’s midsole, which uses a lattice structure with bowtie-shaped holes — a design that would be extremely difficult to produce without 3D printing. Adidas has invested in Carbon at multiple points through its Hydra Ventures arm.

In October 2020, Adidas unveiled STRUNG, a prototype for a new 3D-printed running shoe. The STRUNG sneakers can be customized to fit an individual athlete’s foot and are promoted as being more eco-friendly. Adidas plans to develop a range of STRUNG sneakers for various sports, with a launch date scheduled for 2022.

Adidas’s prototype 3D-printed running shoe called STRUNG. Source: Adidas

New Balance and Reebok have launched similar initiatives. New Balance teamed up with HP in January 2020 to print personalized insoles based on scanned biometric data. In March 2018, Reebok released the limited edition Liquid Floatride Run shoe, the first product to market out of the company’s 3D printing concept, Liquid Factory. The shoe features 3D-printed “laces,” Liquid Grip on the sole, and the company’s new Flexweave material.

“Footwear manufacturing hasn’t dramatically changed over the last 30 years,” says Bill McInnis, head of future at Reebok. “Every shoe, from every brand is created using molds — an expensive, time-consuming process.

“With Liquid Factory, we wanted to fundamentally change the way that shoes are made, creating a new method to manufacture shoes without molds. This opens up brand new possibilities both for what we can create, and the speed with which we can create it.”

new robotS for the manufacturing floor

As with pretty much every other industry, automation and robotics are coming for fashion manufacturing. They’re already in the warehouse: Many brands use automated storage and retrieval systems (ASRS) for stocking and transporting inventory.

Using robots in garment manufacturing, however, has been more challenging.

Robo-cutting fabrics has been possible for years, but sewing presents a challenge, as robots have difficulty working with pliable, elastic fabrics.

Advances in soft robotics will infiltrate garment-making in the future. In the meantime, startups are combining hardware and software to create automated sewing systems.

SoftWear Automation, for example, developed Sewbots equipped with robotic arms, vacuum grippers, and specialized “micromanipulators” that can guide a piece of cloth through a sewing machine with submillimeter precision.

Sewbots use specialized cameras and computer vision software to track individual threads at 1,000 frames per second. (In one contract, the startup brought a supplier’s T-shirt manufacturing costs down to just $0.33 a shirt.)

In February 2019, SoftWear announced Sewbots-as-a-Service, which allows manufacturers, brands, and retailers to rent the fully automated sewing workline. The program is intended to enable US-based companies to source and manufacture in the US at a lower cost than outsourcing, with greater predictability and quality.

Robotics startup Sewbo has tackled the issue from a different angle. It temporarily stiffens fabrics so that a robot can manipulate the pieces of cloth — pick them up, run them through a sewing machine, and put them together. In this way, a robot is able to sew together a T-shirt without the help of human hands.

Source: Sewbo

Robots have long been used in shoemaking, but Nike doubled down on robo-manufacturing with its 2013 investment in Grabit, a robotics startup that uses electroadhesion, which works using static electricity, to help machines manipulate objects in novel ways.

Since then, Nike has started using Grabit’s technology to assemble a sneaker’s “upper” — the flexible part of the shoe that sits atop the foot. The upper is highly technical to manufacture and has typically been an area where human intervention is necessary.

Meanwhile, Adidas opened 2 robotic “Speedfactories” — one in Germany and one in the US — in 2016 and 2017, respectively. However, it has since announced it would stop production and turn over the tech to its suppliers in Asia. The Speedfactories faced a couple of major challenges: First, they had to limit production to shoe designs with certain types of uppers the robots could assemble; second, it proved more difficult to abruptly change production lines in robotic factories vs. human-powered ones.

Nevertheless, by integrating manufacturing systems that rely more on machines and less on humans, fashion brands are looking to speed up production and minimize concerns around labor conditions in their facilities.

Inventory & distribution

Tech makes inventory in the fashion industry more transparent and traceable

As fashion enters its next era, goods produced using hyper-rapid manufacturing systems will be tracked and distributed using next-gen inventory management tools.

Brands are increasingly deploying a combination of sensors, scanners, and cloud-based software to monitor and maintain inventory. Radio frequency identification technology (RFID tagging) is one approach likely to see widespread adoption.

Source: Macy’s

RFID FOR VERIFICATION, AUTOMATION, & online integration

RFID tags are cheap, battery-free smart stickers that can be used for digital cataloging. Unlike barcodes, the signals from RFID tags can be read from some distance away, decreasing the time it takes to manually log items.

After failed attempts by Walmart and JC Penney to deploy RFID at scale in the early 2000s, a number of companies have successfully integrated the technology.

Since starting an RFID initiative in 2009, it took Macy’s around 8 years to get 100% of all items in every store tagged. The retailer is working with suppliers to tag merchandise at the assembly site, enabling better tracking to reduce lost inventory and out-of-stock incidents.

“With an increase in the inventory accuracy, out-of-stocks are significantly reduced,” said Bill Connell, Macy’s SVP for store operations & process improvement. “And by cutting the out-of-stocks, item availability is increased, which can lead to substantial and measurable sales increases.”

Some of Macy’s suppliers — especially luxury brands — have also been using RFID to fight counterfeiting, as well as to analyze where garments are purchased.

Italy-based luxury label Moncler, for example, outfits its products with RFID chips (shown left) that customers can authenticate via an app or website — creating a tangible way to distinguish Moncler goods from knock-offs. Brands like Benetton and Salvatore Ferragamo have pursued similar programs.

RFID technology also helps streamline warehouse processes. Rent The Runway, a fashion rental startup, has sewn RFID tags into 1.5M items. The company washes returned clothes, and employees used to have to manually sort them into 26 bins for different wash cycles. Now, items pass through an X-ray machine that detects objects left behind in clothes, as well as an RFID scanner that assigns them to the correct bin for washing. They are then sorted by robotic arms.

Automated stocking with RFID is also making fast fashion even faster: Zara’s RFID system encodes each garment on the manufacturing floor, allowing for the highly targeted tracking of item sales, stocking, and availability.

Each time a garment is sold off the rack, Zara’s system prompts the stock room to send another item out to the floor. The granularity allows online window shoppers to check if an item is in stock at a local store before making a purchase.

The ease of scanning RFID tags also makes stores more efficient: Zara reports that associates who used to spend 40 hours per store scanning barcodes can now use RFID-reading guns to log inventory in close to just 5 hours.

Zara’s approach to RFID aligns with a larger trend around shelf monitoring for retail merchandising. Startups like Repsly and Eversight use in-store cameras and RFID to help brands monitor the presentation of merchandise on store shelves and track the results of in-store promotions or displays. Using trend data and AI, their software then helps brands auto-optimize their promotion strategies.

Burberry, meanwhile, has integrated RFID tags into more than just tracking and verification, using them to make shopping in stores more experiential and engaging.

Products in Burberry’s 450+ worldwide retail stores are fitted with RFID tags that can communicate with the Burberry app, which offers users suggestions for how to wear or use them. In select stores, customers can view this “bespoke” multimedia content on in-store display screens.

Interactivity aside, most RFID-first approaches to supply chain improvement focus on tracking the movement of goods after manufacturing and assembly. Brands typically “chip” RFIDs into items at the “Made in ____” location, which is the last part of the production process.

Retailers aren’t the only ones taking advantage of RFID. Herman Kay, manufacturer of outerwear for brands like London Fog, Anne Klein, and Michael Kors, started using RFID “after Macy’s extolled the technology’s virtues in 2013.” According to CIO/CTO Rich Haig, RFID has drastically improved order fulfillment accuracy and made Herman Kay “a much better supplier.”

As end-to-end transparency becomes more important to environmentally conscious apparel consumers, a more thorough and integrated solution will be necessary.

In fact, fashion brands’ embrace of RFID may be the on-ramp for another technology: blockchain.

Blockchain In The Fashion Supply Chain

In fashion — and many other industries — blockchain tech has transformative potential.

By giving commercially produced goods a unique digital ID, or “token,” on a decentralized, distributed ledger, companies can create end-to-end digital histories for their inventories. (Find out more about how blockchain tech works in our explainer.)

As materials, garments, or accessories move through the global supply chain, blockchain tracking will create accurate transaction records based on their location data, content, and time stamps. The digital IDs can be tracked using RFID tags, QR codes, or NFC tags.

Fashion brands are already exploring how blockchain tracking can inject more transparency into the garment creation process while also making it easier to verify products. In 2019, Nike, for one, patented “CryptoKicks,” shoes that would be tracked and authenticated via blockchain technology.

The patent envisions that shoes, once purchased, would be linked to their owner using the Ethereum blockchain. Buyers would be provided with a non-fungible token (NFT) — unique digital assets that are tracked and verified using blockchain tech — which represents ownership of the shoe. These tokens can also contain details about shoe designs, colors, and other attributes. Aside from tapping into NFTs’ popularity, the ability to digitally authenticate shoes can help combat counterfeiting.

In 2017, blockchain startup Provenance piloted a project with London-based designer Martine Jarlgaard. The initiative tracked the journey of raw materials through the supply chain right up to the finished garment, using blockchain to log every step from shearing wool at an alpaca farm to spinning it at a mill to assembling it at the designer’s studio.

Upon scanning a garment’s label, consumers can view a map of the clothing’s movement through the entire manufacturing and distribution process — every step of a garment’s journey to a consumer.

Provenance also provided its technology to Woolmark Prize contestants in 2020. Each designer at the Woolmark event used Provenance to enable shoppers to check how items were made and sourcing practices.

Source: Provenance

Blockchain startup VeChain worked with fashion label Babyghost on a similar initiative for the brand’s summer 2017 collection. In fall 2018, H&M announced that it, too, was launching a pilot program with VeChain, using a wool beanie from the company’s Arket clothing line to test product data traceability in its supply chain. H&M-owned Cos reportedly partnered with VeChain to track the origins of some of the retailer’s clothes in April 2020.

For now, blockchain-based approaches to supply chain management may be more buzz than substance. Yet as the movement toward more ethical, sustainable fashion grows, the potential for blockchain in the space is significant. Fashion may follow in the footsteps of the food and fishing industries, which have begun using blockchain to provide visibility into the environmental and labor conditions in their procurement and production processes.

Textile Genesis, a blockchain-based traceability platform for the apparel industry, traces each step and supplier in garment production, including factories and the farms that provide the raw materials. In June 2021, it announced it had successfully traced the viscose — an estimated 30% of which comes from endangered forests — in 23,000 garments provided by its project partners, Bestseller and Kering. Traceability is an essential first step to securing and verifying more sustainable sources of the material.

Apparel DISTRibution scales down

As the retail landscape shifts, many fashion goods won’t land in a traditional retail store at all.

The fashion sector has already witnessed the demise of the mall as consumers embrace online shopping, and e-commerce continues to ravage department and apparel stores alike. The global e-commerce market is worth over $8T, according to CB Insights’ Industry Analyst Consensus.

Brick-and-mortar fashion companies are feeling the pain of this transition, which was largely accelerated by Covid-19. Mall-based retailers reportedly saw earnings plunge 256% in Q2’20, according to Coresight Research. And over 12,000 US stores closed in 2020, according to real estate company CoStar Group, up from 10,000 stores the year before.

Some of the most high-profile mass closures (or announcement of mass closures) in recent years include:

• Barneys New York filed for bankruptcy in 2019 and sold its intellectual property to Authentic Brands.
• Forever 21 filed for bankruptcy in late 2019 and withdrew from 40 countries.
• Papyrus said it would shutter all 254 stores in North America in January 2020.
• In 2020, JC Penney said it expected to close about 240 of its 800+ US stores, but has since reduced this number to about 170 store closures.
• In 2020, Ascena Retail, which owns Ann Taylor and Lane Bryant, said it would close more than half of its stores — 1,600 out of 2,800 locations.
• In 2020, Pier 1 announced that it was closing all 540 of its stores and going out of business. However, its brand was eventually bought by new owners and was relaunched as an online store.
• In August 2020, Stein Mart announced it would be closing all of its 279 stores.
• In 2021, fast-fashion online retailer Boohoo acquired Debenhams, but only its brand and website. The last of Debenhams’ chain of physical department stores closed in May 2021.
• ASOS bought Topshop, Topman, Miss Selfridge, and HIIT in early 2021, closing down those brands’ websites and consolidating them on the ASOS platform. A few months later, Nordstrom bought a minority stake in the 4 brands and announced it would sell their apparel in its department stores.

As retail spaces have closed up shop, subscription boxes have given fashion brands one new avenue for distribution.

Services like Stitch Fix (which went public in Q4’17) and Trunk Club (acquired by Nordstrom in Q3’14) ship product assortments to members on a monthly basis. Clients can purchase the items they want to keep and send back the ones they don’t.

As subscribers interact with styles online, share information about their preferences, and give feedback on items they do or don’t want to buy, the recommendation algorithms improve over time — like Netflix suggestions for your wardrobe.

Source: Stitch Fix

Early on in the Covid-19 pandemic, some subscription brands suffered waves of layoffs as consumers — their direct customers — faced financial troubles. However, many have since bounced back, with some even reporting higher-than-average subscription sign-ups.

Subscription boxes help brands get their goods in front of targeted groups of consumers likely to want their wares, and also represent an avenue for shoppers to explore new products without leaving their homes. But unless a brand launches its own box, it’s always competing against other labels to be the “keeper” every month. The subscription box hype has also faded since its heyday, as consumers combat “subscription fatigue.”

And since subscription boxes reach a much smaller audience than traditional department or apparel stores, they’re still no replacement for big retail chains’ enormous distribution power.

Pop-up shops are another example of a newer distribution channel brands are leveraging. Brands and designers are increasingly renting or leasing empty store spaces for short-term use, typically in well-trafficked urban areas.

Pop-ups pose benefits for brands both large and small:

• For big-name companies, pop-up shops’ smallness makes it possible to connect with shoppers in a more creative and intimate setting, which can help drive loyalty.
• For emerging fashion brands, pop-ups’ experiential nature can help create media hype and brand awareness.

Both large and small companies can use pop-ups to gauge consumer interest before investing in a full production launch or entering a new fashion vertical.

Like sample sales, pop-ups also create a special sense of urgency that motivates consumers.

The results bear out in sales and engagement: In 2019, pop-ups accounted for 10% of the furniture retailer Lovesac’s annual sales. And more than a third of shoppers in pop-ups opened by athletic apparel retailer Lululemon Athletica are new to the brand, showing that the pop-up approach could be a fruitful way to engage more customers.

Flexible formats like pop-up stores grew in popularity during the Covid-19 pandemic as a cheaper, more mobile solution for retailers looking to connect with shoppers in a safe outdoor setting. (We look at how Covid-19 forced a reimagining of physical space in our 2021 Tech Trends report here.)

Pop-up stores are also beginning to shift from big cities into neighborhoods to meet customers where they are. For instance, one brand saw just a tenth of its usual traffic in New York City but raked in a whole month’s revenue in a week by opening a temporary location in the Hamptons, per The Lionesque Group.

Pop-ups first emerged in response to the late-2000s US economic crash, but they’ve grown into a global trend, even infiltrating elite fashion markets like Milan: Italian brands Furla, Genny, and Paula Cadematori are among the latest European labels to invest in temporary shops.

Several startups have emerged to help companies explore new distribution strategies. Bulletin, for one, is pioneering a WeWork-like model for retail, offering flexible options to brands that want space for their products in existing physical stores. The company divides its store locations into different sections of varying sizes (sometimes as small as a bit of shelf space). Each section can then be rented out by different businesses on a month-by-month basis.

With pop-ups and other flexible formats gaining momentum, hosting short-term brick-and-mortar events could help generate excitement for direct-to-consumer (D2C) fashion brands.

D2C fashion brands Shun PhySical retail

For D2C brands, pop-ups, rental spaces, and traditional stores are simply the physical extensions of an online-first strategy.

Technology has changed the meaning of “direct to consumer.” It’s not about catalogs or TV commercials anymore: Top D2C fashion brands like Everlane, Bonobos, and Allbirds create their own markets by growing loyal followings of customers and leveraging effective SEO, social media, and online marketing strategies.

Source: Allbirds

D2C brands often put a premium on ranking high in Google’s search results, turning Instagram followers into advocates, and using Facebook engagement (as well as highly targeted ads) to continually expand their reach.

D2C brands then use e-commerce tools and exclusivity-based marketing tactics to launch promotions and drive digital sales:

• Highly visual platforms drive interest, and “See Now, Buy Now” buttons drive immediate sales conversions.
• Items are often made-to-order, with customers selecting from different options or adding personalized touches.
• Luxe packaging and brand desirability make shoppers eager to share their purchases on social media — driving a network effect of engagement.

The D2C model is also highly efficient.

The risk of over-manufacturing is reduced since there’s no chance of bulk ordering from buyers — the buyer is the individual who will wear the product, not a retailer middleman.

Brands also don’t need to fight for product placement in stores or worry about setting up and monitoring in-store promotions. Supply chains are also streamlined since there are no intermediaries between the brand and its audience.

Those benefits create additional advantages that can help D2C brands appeal to modern consumers:

• The brand isn’t fighting for retail buyers’ interest. The only audience a D2C label has to please is the one it organically created.
• There’s less need for D2C brands to shift their look or style to suit passing fads or trends. Instead, they can align their brands with the values of their target consumer.
• D2C brands own their customer engagement data, which allows them to understand demand and sentiment in precise, targeted ways.

This helps create a digital feedback loop as brands produce new product lines and choose new color palettes. They have close relationships with consumers and can use social media signals, customer service interactions, and prior e-commerce behavior to inform decisions about what to design next.

By keeping supply chain complexity to a minimum and focusing on quality, D2C fashion brands can also maintain higher sales margins and shift pricing strategies as they please — creating more ways to make money from marked-down inventory.

Everlane, for one, built its thriving business around supply chain and pricing transparency: An infographic about the cost of manufacturing a designer T-shirt (and how much cheaper Everlane’s was) helped the brand attract 200,000 user-members in just a year.

A key piece of Everlane’s e-commerce strategy is also its annual “Choose What You Pay” event, which allows members to select from different “recommended” prices for past-season styles. Depending on which price you select, Everlane breaks down where your money is allocated across production, overhead, and company growth.

Source: Everlane

With some conventional apparel retailers closing up shop and D2C brands taking off, traditional fashion brands like Tommy Hilfiger are now following the cues of early leaders and becoming more D2C-focused.

FROM OWNERSHIP TO USERSHIP: THE RISE OF CLOTHING-AS-A-SERVICE

The advent of the internet disrupted traditional models of ownership across a number of different product categories. Consumers have traded CD collections for Spotify subscriptions, DVD shelves for Netflix memberships.

Now, the shift from ownership to usership is coming for fashion.

What’s driving the change? A growing consumer desire for variety, sustainability, and affordability. The average consumer today buys 60% more items of clothing than they did 15+ years ago — but consumers keep that clothing for only half as long as they used to.

One in 7 consumers said they consider it a fashion faux-pas to be photographed in the same outfit twice, per a survey of 2,000 respondents. Plus, sustainability is a growing concern among shoppers — as is, of course, cost.

Clothing rental concepts offer consumers an avenue to continually refresh their wardrobe, while also protecting both the environment and their wallets.

Rent the Runway is a fashion rental service that allows members to rent designer fashion items, either on a per-piece or monthly basis. The company achieved unicorn status in March 2019, but then the pandemic hit and business dwindled. It ended 2020 with around 55K active subscribers, less than half the number in 2019, along with a revenue drop of almost $100M.

Even though the startup went public in October 2021, it’s still struggling to recover. The price of shares in Rent the Runway have plunged by nearly 70% from its IPO, as of March 2022. Some investors blame the company’s struggles on steep overhead costs for washing, dry cleaning, and delivering clothes, as well as updating stock with the latest designs.

Those same expenses drove China-based YCloset to close in July 2021 after 6 years of operations, despite having claimed to reach 20M users and being backed by a roster of seasoned companies and VC firms like Alibaba, SoftBank, and Sequoia Capital.

Despite these challenges, startups are betting on the potential of the $1.8B online clothing rental market, which is predicted to grow at a CAGR of 10.5%.

Bucking the trend, UK-based rental platform By Rotation more than doubled its user base from 12,000 to 25,000 between March and September 2020. It incorporates elements of social media such as liking and commenting to strengthen its user community. By Rotation has since grown to more than 150,000 users.

Meanwhile, Gwynnie Bee is taking a size-inclusive approach to the rental trend, offering fashion brands that are inclusive of all sizes (0-32), including Calvin Klein, Adrianna Papell, and others.

Established brands are starting to explore the trend as well.

Banana Republic, Urban Outfitters, Bloomingdale’s, Vince, American Eagle, and Express have all introduced subscription rental programs that allow subscribers to rent items for a monthly fee.

Vince, Express, and American Eagle have partnered with the same third-party vendor, CaaStle, to implement its “clothing-as-a-service” model. CaaStle bills itself as a “fully managed service for retailers” that complements existing retail channels.

The B2B rental tech platform has also expanded its services in the UK, working with menswear retailer Moss Bros. to launch a subscription rental service called Moss Box in 2021.

Automated warehouses

Retailers are turning to automation and robotics to improve warehouses amid the pandemic-fueled acceleration in e-commerce sales.

For instance, India-based Reliance Industries, the owner of online fashion retailer Ajio, took a majority stake in Addverb Technologies, a robotics startup that automates processes in factories and warehouses, in January 2022. One month later, Reliance placed an order worth roughly $1B for robots from the startup.

Meanwhile, Decathlon, a France-based sporting goods retailer, teamed up with the logistics specialist DHL Supply Chain to deploy a number of robots in its Sydney warehouse. These robots autonomously move goods to help human workers ship more customer orders, minimize manual labor, and reduce errors. Decathlon Australia CEO Olivier Robinet says that the company needed an affordable and automated way to more effectively manage 15,000 SKUs in its fulfillment center. Per Robinet: “The solution was automation.”

Labor shortage is another factor driving the rise of automation technologies. Uniqlo, a Japan-based clothing retailer owned by the Fast Retailing group, has struggled with hiring enough workers for its warehouses. Japan is an aging society with a low birth rate, and the labor shortage issue will only get worse in the decades to come.

To overcome this challenge, Uniqlo has automated around 90% of its main warehouse operations in Tokyo. The retailer has also installed a 2-armed robot developed by robotics startup Mujin that could help automate the remaining 10%. The robot is capable of picking up T-shirts and boxing them before they’re shipped to customers — a tough task for robots since it involves being relatively delicate and using intricate movements.

Uniqlo uses a Mujin robot that can box T-shirts and prepare them for shipping. Source: Mujin

Retail & virtual merchandising

Tech transforms what it means to try and buy products

As large retail spaces close around the country, smaller stores are shuttering too, even in urban shopping hubs.

But physical retail isn’t going away — its purpose is just evolving.

As fashion brands continue to tailor their lines to smaller, more targeted customer audiences (and use D2C strategies to reach them), they no longer need to stock vast lineups of inventory in standalone shops or large department stores.

What many brands do need are stores that help build or strengthen a connection between the customer and the label, creating a sense of excitement or urgency.

AR/VR Redefines The Online and In-Store EXPerience

Augmented reality and virtual reality tech are increasingly being deployed to create digital experiences in stores and “in-store” experiences online. Global spending on AR/VR retail showcasing is expected to grow at a CAGR of 138.7% through 2023. In the fashion industry, retailers and social media platforms are the forerunners in creating immersive shopping experiences.

Several startups are helping brands enter a new era of experiential shopping. 3DLOOK provides technology for mobile body-scanning, the first step in the virtual fitting process. 3D visualization tools like Perfitly create digital avatars modeled after the customer’s body shape and size and suggest clothing sizes for virtual fitting.

Other startups offer tech to bridge physical and virtual shopping. Obsess, for example, helps labels use AR or VR in 3 key areas:

• E-commerce: Increase conversion by letting online/mobile shoppers see products in 3D in context in front of them.
• Physical retail: Use AR in-store to let shoppers access digital media on in-stock merchandise.
• Marketing: Create virtual or augmented experiences that “delight consumers” — like an AR pop-up, interactive catalog, or VR recreation of a store or boutique.

Fashion houses with deep pockets have made moves to bring AR/VR tech in-house. In 2021, Gap bought Drapr and Walmart bought Zeekit — 2 retail giants snapping up startups that offer 3D virtual fitting technology. Gap made the acquisition 2 months after announcing it would close all its brick-and-mortar stores in the UK and Ireland to concentrate on e-commerce.

Walmart ventured into VR shopping as early as 2017 when it hired Obsess to create a photorealistic CG virtual store for Rebecca Minkoff. The experience was part of Walmart’s Innov8 VR competition and included the ability to shop racks using a headset and complete the checkout process in VR. In 2019, Obsess worked with Tommy Hilfiger to create a virtual version of a pop-up store for the brand’s collaboration with actress and singer Zendaya.

“What we’re trying to show here is that shopping in the future will be a combination of some elements of what physical stores have today, like visual merchandising and curated pieces, but then they have all of these other things that are not possible in physical stores.” — Neha Singh, founder and CEO of Obsess

VR stores may take off as the tech continues to get cheaper and more immersive.

For example, brands could ship headsets to high-end, repeat customers, or have headsets on hand in smaller stores to walk buyers through an entire collection. VR fashion shows are already being streamed by Victoria’s Secret, Tommy Hilfiger, and other labels.

Meanwhile, augmented reality is turning marketing materials into 3D experiences: Maggy London, for example, worked with Code & Craft to create an AR catalog for mobile. Created using 3D scanning and Apple‘s ARKit, the catalog lets users put a mobile phone up to items and view them as realistic, virtual 3D products.

3D scanning and AR are also reinventing the fitting room — at home and in stores.

Source: Uniqlo

Uniqlo’s Magic Mirrors let customers see how apparel they try on in-store looks in different color options. Neiman Marcus has introduced similar technology in some of its stores, partnering with MemoMi Labs to install 58 of the company’s Digital Mirrors in 37 locations in 2017.

In 2019, Neiman Marcus unveiled its first Manhattan location in Hudson Yards, and with it a vision of what a tech-enabled retail experience of the future might look like. Technological innovations featured in the 188,000-square-foot location included:

• Over 60 screens that broadcast promotional messages and real-time content across the store
• Memory Makeover mirrors that let shoppers record beauty demonstrations and makeup tutorials to be texted or emailed to them for future reference
• A smart fitting room experience powered by AlertTech that allows customers to customize their lighting, communicate with store associates, and check out directly from the fitting room
• A voice-controlled customer service platform by Theatro that uses artificial intelligence to help optimize associates’ time on the floor

However, Neiman Marcus closed its Hudson Yards location in July 2020 following its bankruptcy filing.

Meanwhile, in footwear, the AR-powered Converse Sampler app allows users to select any shoe from the Converse catalog and see how it will look just by pointing their phone at their feet. Allbirds uses similar AR tech to offer at-home try-ons via its app.

Amazon’s fashion plans also include virtual try-ons. A few months after its 2017 acquisition of 3D scanning startup Body Labs, the e-commerce giant applied for a patent for a “blended reality system” to create an AR mirror for at-home try-ons.

The patent was granted in January 2018. If commercialized, Amazon’s mirror invention would place users in virtual clothes and in virtual settings, allowing them to see what a dress would look like on the gala floor, or see a new swimsuit at the beach, before completing a purchase.

Source: USPTO

However, the company didn’t mention these mirrors when it announced it would be opening its first-ever physical fashion store, Amazon Style, in 2022. Its press release only described fitting rooms equipped with touchscreens customers could use to have more styles or a different size brought over.

The VR- and AR-powered shopping experience has made its way to social media, with the likes of Snapchat and TikTok strengthening their positions as shoppable platforms. In January 2022, Snapchat parent Snap updated its AR Shopping Lenses to include a real-time display of a product’s price, product details, and shopping links — all appearing alongside the image of the customer “trying on” the item. During a 2-week beta test of the upgraded Lenses, Ulta Beauty saw 30M product try-ons on Snapchat and gained $6M in incremental purchases.

DIGITAL STYLISTS GET PERSONAL

AI-based digital stylists and chatbots, which can give feedback on outfit choices or suggest alternatives, are also taking off.

In 2017, Amazon launched the Echo Look, a device that would take full-body photos of your outfit and suggest clothing for new looks, but discontinued the product in May 2020. Much of the functionality was integrated into Amazon’s Alexa assistant, which can now suggest apparel for customers through the Amazon Shopping app.

Amazon has also introduced StyleSnap, an AI-powered feature that lets customers upload photos or screenshots of fashion items they like. The system then gives recommendations for similar items listed on Amazon. StyleSnap also considers price range, customer reviews, and other factors when suggesting items that match the uploaded photos.

The retailer’s personal styling AI will also be deployed in Amazon’s upcoming physical store. As shoppers walk through the store, they can scan the items they like on the Amazon app. Based on these items, the algorithm will recommend other products they might like.

Other tech giants have developed similar smart styling technologies. Google Lens, for instance, enables users to upload photos of fashion products they like and then displays similar products found online. And Facebook has experimented with an AI system of its own called Fashion++. The software uses AI to analyze a person’s outfit and suggest subtle alterations that it thinks could improve the look, like rolling up the sleeves or removing an accessory.

ASOS, meanwhile, launched a “gifting assistant” chatbot on Facebook Messenger for the 2017 holiday season. The chatbot helped customers pick out presents for loved ones by asking questions like, “What item would most likely fall out of their bag?”

Even luxury brands are testing digital stylists in select markets: Prada, for example, has introduced a “personalized concierge” chatbot for its relaunched Chinese website.

Digital assistants have lots of personalization potential in fashion. As visual search and recommendation systems improve with AI, users will be able to send bot stylists photos of items they like and get suggestions for similar items.

Source: Syte

Israel-based Syte is one company working in this area, offering retailers and brands a camera button that can be added next to the search bar on a mobile website or app. Shoppers can upload images of their favorite styles through the button, and then see looks “inspired” by those images on the brand’s site. Syte counts a number of high-profile brands among its clients, including Tommy Hilfiger, Myntra, and Kohl’s.

UK-based company Snap Vision offers a range of visual search tools for publishers, retailers, and influencers, including Snap SDK, which allows clients to turn their iOS and Android apps into visual search tools, and the Snap the Look widget, which lets customers “steal” looks directly from photos.

Along these lines, Singapore-based startup ViSenze AI offers “Shoppable User Generated Content,” a visual recognition tool that “understands and tags user-generated contents, making items within images easy to discover, search, and purchase.” ViSenze counts prominent brands including Myntra and Urban Outfitters among its clients.

Thread Genius, which developed similar technology for use in fashion, art, and interior design, was acquired by Sotheby’s in 2018. In the year following the acquisition, Sotheby’s reported a 16% increase in sales, thanks in large part to the strong growth of the company’s online business.

And some shopping apps are integrating social media components. The Yes, for instance, is a shopping app that lets users invite friends to view and rate their list of liked items, called “Yes lists.” Friends can use emojis to rate individual items, including a thumbs-up and a thumbs-down, and users also get notified when their friends like other products. Over time, the app learns user preferences and builds a personalized feed.

Source: YouTube

If it sounds fanciful and highly conceptual, that’s because circularity in fashion is at an extremely nascent stage, despite it becoming a buzzword. Sustainability initiatives and experiments across design, production, distribution, and retail may contribute to creating a viable circular system in the future.

What’s next? High-tech fashion trends to watch

A look at the catwalk of the future 

Just as tech is touching every aspect of the fashion supply chain, it’s also being integrated into the features of the clothing itself. The era of “connected apparel” is already here and moving out of the novelty realm.

Wearables

Wearable technology has been on the market for some time, from the earliest days of the Fitbit to the latest iterations of the Apple Watch. Now, fashion leaders are merging form and function to make wearables more stylish and functional.

Wear OS — Google’s smartwatch operating system — is now live in watches from brands like Michael Kors, Tag Heuer, Montblanc, ZTE, Asus, Huawei, Fossil, and Diesel. Formerly known as Android Wear, Wear OS has undergone a number of updates and changes since 2017, including new features, more standalone apps, and a better user experience for iPhone users.

Finland-based Oura makes a smart ring that tracks wearers’ activity, including sleep quality, heart rate, body temperature, and more. The discreet size of the Oura Ring lends itself to overnight wear, a major design challenge for many wearable manufacturers.

Fashion brands and startups are also partnering up to create connected bracelets, rings, and necklaces. Past collaborations have included Tory Burch and Fitbit, as well as Swarovski and Misfit Wearables.

Beyond jewelry, the latest fashion tech innovations embed app-connected hardware right into our clothing.

Since 2017, Levi’s and Google have teamed up on a line of smart denim jackets that can recognize gestures and perform various acts such as playing the next song in a playlist or declining an incoming call. Users customize their gesture controls in a companion app.

The jackets rely on a material Google developed called Jacquard Threads, the “first full scale digital platform created for smart clothing.” The threads are made with hyper-thin conductive metal alloys, which can be woven into natural and synthetic fibers and integrated with embedded sensors. They’re even machine-washable.

“Gesture-sensing Jacquard Threads are woven into the cuff and wirelessly connected to your mobile phone using tiny electronics embedded inside the sleeve and a flexible snap tag.” — Dr. Ivan Poupyrev, Google engineering director

Samsung has also demoed connected tech garments that look and feel like clothes you already wear. Its Body Compass workout suit features hidden sensors that can track your workouts or wellness metrics, while its Smart Suit features gesture-controlled, app-connected cufflinks.

Startups are also tackling the wearables market: Wearable X pushed out a line of yoga pants that vibrate to cue wearers to move or hold their yoga positions; Owlet‘s smart sock monitors babies’ oxygen levels and heart rates; and Hexoskin has a line of smart shirts that track heart rate, breathing, and movement.

Advances in wearable tech will make our clothes more functional, as well. You can already buy a phone-charging jacket from Baubax, and MIT researchers have developed self-ventilating garments capable of cooling you as you work out. During the Pyeongchang Winter Olympics, Ralph Lauren equipped Team USA with app-controlled, heated parkas.

Smart shoes are also gaining traction.

Nike’s Adapt sneaker line allows wearers to control the fit of their shoelaces electronically and personalize shoe lighting from an app, while Under Armour‘s HOVR sneakers come equipped with sensors that track activity.

Lechal makes navigation-assisting shoes, which connect to a mapping app and apply gentle vibrations to your feet to guide you “invisibly but intuitively.”

Virtual fashion

Fashion is even moving beyond the world of physical retail.

As people spend more time online, virtual goods — items that you cannot touch and can only be accessed and traded in virtual environments — could represent a $190B market by 2025, according to CB Insights’ Industry Analyst Consensus.

In 2019, digital fashion house The Fabricant garnered headlines for selling a virtual dress for $9,500 through the Ethereum blockchain. The dress could only be “worn” digitally, i.e., edited onto the wearer in post-production.

Source: The Fabricant

Startups and fashion incumbents alike have begun experimenting with new virtual lines, whether it be for real people or digital avatars.

Tribute, DressX, and Replicant.Fashion are examples of digital fashion brands that tout “contactless,” “zero-waste” clothing — because their garments are virtual-only.

While in-game skins aren’t new, luxury brands are increasingly moving into avatar fashion for video games. In 2019, Louis Vuitton released a League of Legends collection, while Moschino released one for The Sims.

Gucci has increasingly bet on virtual fashion, releasing a digital collection for a styling app, exclusive outfits for a tennis game, virtual looks for Genies avatars, and sneakers for location-based mobile game Aglet.

Described as “Pokémon Go for sneakerheads,” Aglet allows players to collect virtual shoes from brands like Nike, Chanel, and Balenciaga. Users can earn in-game currency by taking steps, referring friends, or spending real money to acquire sneakers in the app.

Fashion brands are now turning to NFTs in an attempt to build new revenue streams.

Nike, for one, acquired virtual sneakers and collectibles studio RTKFT in December 2021, as it looks to enhance its digital capabilities.

Luxury players have also found common ground with NFTs — namely, scarcity and prices that tend to be driven by intangible value.

Marjorie Hernandez, who founded the blockchain platform Lukso, says that “luxury brands were behind on the e-commerce trend, so there’s now more of a willingness to experiment with new technologies like blockchain.” And many tech startups are eager to help fashion brands make the jump.

Neuno, for instance, is working with a handful of luxury brands to launch NFTs. The Sydney-based startup is developing 3D wardrobe tech that allows users to buy iconic outfits, such as J Lo’s famed Versace dress. These users can then go to social media and post photos of themselves wearing these outfits. Neumo also wants to partner with game developers to enable users to dress their avatars in the clothing they bought as NFTs.

Clothia, a luxury marketplace, is auctioning NFT-linked clothing items. The winning bidders receive real-life clothes as well as the corresponding NFTs.

Meanwhile, Arianee, a France-based startup, is developing a digital protocol that uses NFT-based watermarks to authenticate luxury items, including expensive watches, handbags, and more. In March 2021, Arianee raised $9.6M in seed funding. The company is working with watchmaker Breitling as well as the luxury conglomerate Richemont Group. LVMH, the French giant behind brands like Tiffany and Dior, is also exploring the use of NFTs as an authentication method.

Details of the Arianee NFT protocol. Source: Arianne

And as more and more brands and consumers engage each other in online worlds, the emergence of “metaverse malls” looks more realistic. These malls would be new sales channels and virtual spaces in which shoppers could talk to other shoppers, explore digital fashion items, and enjoy an immersive experience. Gaming platforms like Fortnite and Roblox offer a glimpse of how metaverse malls might look.

But creating the metaverse requires huge amounts of computing resources, engineering talent, and cash. This concept is likely a while a ways away yet, and bringing it to life will require a sustained effort by tech giants, innovative startups, and fashion brands.

Two trends are emerging as fashion moves toward the metaverse: purely digital plays and a merger of physical and virtual worlds.

In an all-digital strategy, Burberry collaborated with Mythical Games to launch an NFT collection in the blockchain-based video game Blankos Block Party. The result is Burberry Blanko, a limited-edition digital vinyl toy in the form of a shark. Burberry will sell accessories, such as armbands, within the game.

Brands are also creating collections for gaming platforms. In Roblox, players can buy and wear Gucci sneakers and play sports in Nikeland while clad in Nike gear.

As virtual worlds become more popular, brands are seeing opportunities in purely digital plays as they strive to attract their future customers: a generation of digital natives. For 1 in 3 Generation Z respondents surveyed by Pew, their online identities are their “most authentic” selves. Fashion brands are also meeting this generation’s desire to experiment with different “selves” and wear styles that might not be practical in the physical world. As gaming platforms attract more consumers, there’s a potential market for players who want multiple clothing items and closets, just like real life.

Other fashion labels are entering the metaverse with a merged-reality approach, where virtual assets can be used to buy physical goods, and offline activities (like signing up for a membership) can be gateways to online experiences.

In December 2021, Adidas launched its Into The Metaverse collection of NFTs that also serve as access tokens for digital experiences and clothing in Adidas’ virtual plot in The Sandbox. All 30,000 NFTs sold out (20,000 on pre-sale and 10,000 on sale day) for a total sales value of $23.5M. The NFTs will also be key to getting exclusive access to physical Adidas goods in the future.

By setting up shop within the metaverse, fashion brands can reach millions of consumers from a single store. One can “walk” into a virtual store, buy an item, and later claim it at a physical store. Alternatively, virtual items could remain purely digital, separate from the retailer’s or brand’s physical inventory. The market for this kind of shopping experience exists: one study found that 70% of shoppers in a virtual store made a purchase.

Naver Z is taking this a step further by combining AR, facial recognition, and 3D technology so users of its social app Zepeto can create 3D avatars modeled after themselves. With more than 300M users since launch — made up mostly of millennials and Gen Z — Zepeto has attracted major brands like Ralph Lauren, Dior, and Gucci, which have all launched virtual collections on the platform.

But fashion’s NFT craze could be at odds with its push for sustainability, given the ecological impact of the blockchain. An NFT transaction is power-hungry, particularly when it takes place on a blockchain that uses the proof-of-work concept like Ethereum does. One estimate is that it takes an average of 369 kilowatts per hour (kWh) to mint, bid, sell, and transfer a digital token like an NFT. (For perspective, if you run a microwave for an hour, you’re using 1 kWh.)

DIGITAL TWINS

Digital twins — virtual replicas of physical objects, places, and processes — help fashion labels reduce textile waste, speed up production, and increase item transparency. These replicas aren’t mere renderings or visual representations of real-life objects. They contain data based on the physical characteristics of the objects as well as the changes they undergo. In fashion, that would mean a T-shirt’s digital twin would contain detailed information on its fabric, design elements, stitching, and size, as well as the source of its materials and the factories and warehouses it passes through.

With the help of spatial intelligence companies like Matterport, digital twins are already being used to create virtual showrooms stocked with replicas of physical clothing. But it’s in the manufacturing process that digital twins can become a game-changer in fashion.

Consider a cutting machine for fabrics. The machine and the room where it’s placed are replicated virtually. They are then equipped with sensors that feed the manufacturer real-time data on many factors, including the machine’s output, health, and speed, as well as the room’s humidity and temperature. AI enters the picture to analyze these data and predict outcomes, like production volume and machine downtimes.

Manufacturers can make digital twins not just of individual machines but of entire production lines in a massive factory. When a process breaks down, the digital replica will identify exactly which machines, activities, materials, and environmental conditions were involved.

Once the final product emerges, it’ll come with data on where and when it was created and even which machines it passed through — useful for identifying whether clothing was made in cruelty-free factories. Each garment’s digital twin will also be fed data on the physical item’s real-time progress throughout the supply chain. This would make it harder to pass knockoffs as originals, as the fake goods would not have digital twins that prove their authenticity.

If digital twins become ubiquitous, they’ll yield enough global data for manufacturers to come up with more accurate sizing for clothes, says Kelly Vero, head of fashion and games at So Real, a startup that automates digital twin production through 3D scanning and conversion.

With digital twins, the fashion industry can also revamp its sampling process, making it faster, less wasteful, and less carbon-intensive. Manufacturers no longer need to create — let alone ship across the world — multiple physical samples until they get the size and style right. Instead, they can work with their clients to digitally alter the products until they’re approved.

Adobe and Browzwear, a 3D fashion design company, created a digital sampling workflow for US- and Europe-based fashion brands during the Covid-19 pandemic. As shipping ground to a halt, these brands could not easily get physical prototypes from distant manufacturers. Instead, they used Browzwear’s 3D design tools integrated with Adobe Substance, a 3D texturing app, to create digital twins of designs and tweak them until they were satisfied with the textiles, styles, design elements, and sizes.

novel fabrics

Novel fabrics made of next-gen materials may also find commercial adoption in the future of fashion.

Athlete Tom Brady apparently sleeps in pajamas with a “bio-ceramic print” that combines with body heat to produce far infrared radiation (FIR), which is meant to reduce inflammation, improve circulation, and help the body recover faster.

Fashions that change color may be coming too. While Hypercolor color-shifting T-shirts and mood rings had a moment in the 90s, the latest iterations are far more sophisticated.

MIT researchers created a system called ColorFab 3D, which 3D prints objects with “photochromic inks” that change color when exposed to certain wavelengths of UV light. The first item ColorFab created with the technology is a ring that can be programmed to change into a handful of preset, customizable colors.

The team behind Google’s Jacquard Threads is also making color-shifting possible with Ebb, a color-changing fabric technology (developed with UC Berkeley researchers) that could someday be programmed to change with your mood or setting.

“If you can weave the sensor into the textile, as a material you’re moving away from the electronics,” Google’s Ivan Poupyrev says. “You’re making the basic materials of the world around us interactive.”

And with the same kind of app connectivity seen in the Levi’s Jacquard jacket, the Ebb materials could even help you conduct many activities you currently do on your phone with color signals instead — for example, alerting you to an incoming call by changing the color of your cuff.

In January 2022, Harvard researchers even announced that they had developed soft, stretchable temperature sensors that can be integrated into smart clothing and soft robots. This is a breakthrough in wearable electronics, as sensors tend to be rigid.

Synthetic media

Synthetic media is content created using AI. Algorithms ingest voices, videos, photos, text, and other types of data to learn and then produce realistic digital content. This software can be used to mimic the looks, sounds, and mannerisms of specific individuals.

Fashion brands could use synthetic media in various ways. For example, the tech could accelerate the creation of digital content for e-commerce product pages by rapidly generating images and videos of human models wearing new styles.

With lockdowns preventing large events, Balenciaga held a “deep fake” fashion show in 2021. It featured clones of a real-life model whose face was “photogrammetry-captured and CG-scanned.” The audience was also synthetic. The clothes, however, were real.

Advances in tech like pose iteration could make these synthetic models extremely realistic. AI-generated human models could also speak in various languages and be quickly tailored to different audiences. Eventually, brands may find that synthesizing voices and videos using AI could be cheaper than hiring human models for some marketing campaigns.

Synthesia’s tech was used to generate a video of David Beckham speaking 9 languages. Source: Synthesia

Companies such as Synthesia are already showing what’s possible in this field. The AI video synthesis platform generated a video of David Beckham speaking 9 languages to raise awareness for the Malaria Must Die initiative. Companies such as Axiata Group, Accenture, and McCann have also used Synthesia’s tech in their marketing campaigns. And although synthetic media tech is still in its early stages, it’s showing enough promise that fashion brands should start paying attention.

Lil Miquela’s Instagram account shows that a computer-generated model can become an influencer — the account has 3M followers as of March 2022. The CG model wears Prada, has worked with fashion magazines, and has appeared alongside real-life models in ads. Brands are joining the trend — Dior, for instance, made a virtual version of human model Angelababy, while Prada and Balmain have created digital models.

Fashion magazines have embraced synthetic media, too. In 2021, L’Officiel Vietnam featured the virtual version of multimedia artist Nina Hawkins in a digital cover story.

The proliferation of virtual influencers is creating new opportunities for companies that produce animated characters and digital avatars. Sidus Studio X, a South Korea-based film and animation company, created the virtual influencer Rozy, who has signed more than 100 sponsorship deals and was estimated to earn at least $800K in 2021. The studio designed Rozy to look like a millennial and developed more than 800 facial expressions and movements for her using 3D modeling and CGI technology.

Virtual influencer Rozy, created by Sidus Studio X. Source: Instagram

The virtual influencer trend is leading to the growth of other AI-generated content. Lil Miquela creator Brud, which was acquired by NFT developer Dapper Labs in late 2021, wants to give the influencer’s fans the ability to create their own virtual worlds and help develop her storyline. Miquela and her ilk are getting a voice, too — Rozy, for example, now releases music as a singer. This could herald a future where brands can use virtual models to interact with fans and consumers. In fact, one can now book virtual models to appear at events through The Diigitals modeling agency.

Cryptocurrencies

Cryptocurrencies, such as bitcoin, are surging in popularity. Customers can use bitcoin to buy a Tesla or coffee at Starbucks, and some luxury brands are jumping on the crypto bandwagon as well.

Major luxury watchmakers like Franck Muller and Hublot, for instance, have offered some of their products exclusively for sale on the Bitcoin network.

Retailers can warm up to crypto communities in other ways, too. For instance, they can work with platforms such as Lolli that allow users to earn bitcoins as rewards for shopping on partner stores. Nike, Sephora, and many other brands are already part of the Lolli network. (Learn more about the emerging crypto rewards space in our 2021 Tech Trends report.)

Though cryptocurrencies are still far from being a mainstream payment option in the fashion industry, the stage is set for quick growth.

livestream SHOPPing

Livestream shopping blends social media, entertainment, and commerce. It’s effective because it helps create stronger emotional bonds between brands, products, and personalities.

In China, livestreaming is forecasted to generate around a fifth of the country’s total online sales by 2022, according to HSBC and Qianhai Securities. Kuaishou, ByteDance-owned TikTok, and other China-based live video platforms are rapidly adding commerce features.

The phenomenon is starting to grow outside of Asia, as well. In the US, livestream shopping is expected to generate $35B in sales by 2024, up more than 3x from $11B in 2021.

Example of livestream shopping. Source: Pink Coconut Boutique

Brick-and-mortar retailers like Nordstrom, Saks, and Zappos have been quick to recognize the livestream opportunity and are competing with e-commerce platforms by launching their own channels. Amazon has also begun offering livestream shopping. In November 2020, the company used a network of influencers to promote Amazon Live, a service that sellers can use to host livestreams for their customers on Amazon. Meta is also keen on making live videos shoppable. The social media giant launched Instagram Live Shopping in 2020, allowing sellers to go live and tag products their viewers can buy.

Not to be outdone, TikTok has launched its own livestream shopping feature. It held live shopping events in December 2021, complete with performances from some of its most prominent creators. The platform initially held a pilot in August 2021 that sent its users to merchants’ Shopify links, but it has since decided to contain the whole experience, from discovery to payment, within its app.

Some apps ramp up the entertainment factor of livestreaming by hosting virtual festivals and fashion conventions. NTWRK, a video shopping app, held a virtual version of Sneaker Con in 2021, featuring celebrity hosts and performances, design discussions and debates, and exclusive releases.

Other apps focus on the social factor. Popshop Live, a livestreaming marketplace backed by Hailey Bieber and Kendall Jenner, is built specifically for selling. Merchants can create accounts on the marketplace to start their own streaming channels.

Fashion shows have started integrating livestream shopping as an audience feature, too. Shanghai Fashion Week 2020 took place on Alibaba-owned Tmall, an e-commerce platform. Some outfits worn on the show were made instantly available for viewers to buy while watching.

Closing thoughts

Technology is changing the game for every participant in the fashion industry: designers, manufacturers, retailers, stylists, and, of course, consumers.

Cutting-edge technologies like blockchain and virtual reality have a range of applications in the age-old fashion world, allowing production and distribution methods to evolve just as quickly as ever-changing tastes and fashion trends.

Meanwhile, from sketchpad to store shelf, every aspect of the industry is being automated or enhanced by tech — making for faster production, more effective inventory management, and a wider range of online and in-store retail experiences.

The result of all this will be a sector that becomes increasingly streamlined while simultaneously offering more options than ever before. A wave of new manufacturing processes, distribution channels, and even raw materials and fabrics will increasingly allow brands to offer hyper-personalized products and experiences, while also catering to the consumer-led push for sustainability.

Automation could displace roles within the fashion industry. But it will also likely result in new types of roles around curation, customer service, and engineering. As tech becomes more responsive to the individual, look for more and more parts of the role of designer and brand to shift from tastemaker to taste-interpreter.

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