As we move closer to the middle of the year, SMEs from across 4C Fashion & Luxury Goods Sub Sector have come together to share insights and explore the challenges the sector faces in 2023 and beyond…
Here are three key areas of growth that have been identified for 2023:
1. Expansion of circular textile and second-hand fashion
In recent times we have seen stronger scrutinization from regulators and consumers regarding greenwashing and the greater demand for transparency of a brands’ entire value chain. For instance, the EU’s Corporate Sustainability Reporting Directive (CSRD) passed in January 2023 will require stricter ESG reporting and independent audits for nearly 50,000 qualifying organisations from various sectors, including Fashion1. As a result, some brands are exploring the options of sourcing alternative textiles with better environmental and social footprints, such as bio-based textiles made from renewable and biodegradable plant blends and agricultural wastes.
Second-hand fashion retail is also expected to grow exponentially (127% by 2026) and face more stringent regulatory checks and crackdowns on greenwashing. For instance, the British Retail Consortium recently also published guidelines for second-hand retailers on how to align with circular economy principles2 while introducing a stricter quality check on pre-loved items being sold.
2. Supply Chain innovation and digitalisation
Disruptions of the global pandemic and the resulting acceleration of digitalisation have fundamentally changed the way we sell and purchase. This includes automated inventory management systems, robotic warehousing, and predictive analytics. Retailers can use predictive analytics to forecast customer demand and optimize inventory management. By analyzing historical sales data and external factors such as weather and trends, retailers can make more accurate predictions about future demand. This can help retailers reduce overstocking and understocking, improve cash flow, and increase sales.
As consumers are increasingly interested in knowing where their clothes come from and how they were made, there is also a growing need for fashion retailers to deploy digital solutions to mitigate supply chain risk and ensure better product traceability. Fashion retailers can innovate by providing greater transparency in their supply chains, including the sourcing of materials, manufacturing processes, and labour practices. For instance, digital solutions such as IoT, blockchain, radiofrequency identification (RFID), and QR codes can be used to track and assign ‘product passports’ to garments, and all the information can be securely stored through cloud. The use of technology to automate and streamline supply chain processes can help fashion retailers improve efficiency and reduce costs.
3. Personalised shopping
Social shopping and influencer culture will continue to influence consumer choice and shopping habits. As we move into era of the metaverse, Artificial Intelligence (AI) and Augmented Reality (AR) technologies will bring transformative changes to personalised and experiential shopping. Fashion retailers can use data analytics and machine learning to create personalized shopping experiences for their customers. By collecting and analysing customer data, retailers can tailor product recommendations and promotions to each individual’s preferences and buying behaviours. This can help retailers increase customer loyalty and drive sales.
AR technologies such as mobile body scanning can also allow customers to visualise garments without trying them on. This can help customers make more informed purchasing decisions and reduce the rate of returns. AI-powered chatbots can also provide personalized assistance to customers, helping customers to find the products they’re looking for, answer questions about products and services, and provide recommendations based on customer preferences. This can help retailers to provide a seamless customer experience, reduce customer service costs, and increase sales.
The demand for sustainability and transparency in the fashion industry is growing, making it necessary for brands to reassess their supply chain and explore more sustainable alternatives. Additionally, digital solutions can help fashion retailers streamline processes, improve product traceability, and enhance the customer experience. As we enter the era of metaverse, AI and AR technologies can bring transformative changes to personalized and experiential shopping. These identified growth areas can help fashion retailers stay competitive and meet the evolving demands of consumers while making a positive impact on the environment and society.