Fashion retailers will find pockets of growth, despite
ongoing economic pressures, writes Lectra’s Americas president Leonard Marano.
Each
new year signifies a time of transformation for the fashion industry with 2024
being no different. While the fashion industry has seen many changes over the
past few years due to new technologies, economic strains, and supply chain
disruptions, it remains resilient.
This
year, retailers will work to identify pockets of growth and how they can
maximise benefits, despite any uncertainties that may be looming from an
economic standpoint. For instance, AI will continue to have a growing presence in retailers everyday processes, helping to ensure the creation of selling collections, in a timely manner, while minimising waste. Retailers will continue to put a large focus on inventory management, and reducing their current production levels, while still providing consumers with immediate gratification. Sustainability and traceability will also be a big focus during the year to come as consumers demand more from retailers. Not only are consumers now looking for retailers that help express their individuality, but they must align on their societal impact. Those who realise this will succeed in retaining and expanding their customer base. As more retailers bring manufacturing closer to home this year, leveraging AI capabilities will provide them with the base to improve on inventory management, sustainability, traceability and on-demand production.From shifting consumer trends to traceability demands, here are the trends that will shape the fashion industry throughout the coming year despite ongoing economic uncertainty:1. Consumer spending should be more intentionalConsumer spending was a key driver of US economic growth in 2023, and while some changes are expected in 2024 around consumer spending patterns, spending, as a whole, is expected to continue despite the current level of economic uncertainty. In order to ensure success, retailers will want to keep a close eye on consumer spending habits to ensure they are optimising their collection both style and price wise, to help keep a steady stream of business.Consumers are looking to shift gears around how they spend, with their main goal now being securing the best deals on the market. Due to a combination of high inflation rates and less disposable income, impulse shopping is becoming a thing of the past. Instead, shoppers are willing to spend more time looking for a bargain. This may impact brands who are not willing to align their collection to consumers desires or invest in artificial intelligence to help them do just that. While budgets are tight, customer loyalty will become less important to consumers as they find themselves turning to new retailers who are offering them the best deal instead. Retailers who keep a consumer-first mindset throughout the year will end up on top – ultimately expanding their customer base and creating repeat customers.With all this in mind, competitive analysis platforms will play a large role in a company’s success by guaranteeing their pricing and assortment is in line with competitors. By using this technology, retailers are not only able to continuously track the success of competitors’ collections – providing insights into how to create a selling collection and an accurate assortment mix – but also help price items. Knowing what a competitor charges for a similar piece of clothing in your collection will help draw consumers in if you are presenting the better deal. Competitive analysis platforms can now make or break a company as retailers all fight for shoppers’ attention. 2. Inventory management could make or break retailersRetail inventory management is the process of ensuring retailers carry merchandise that shoppers want, and in turn, stock shelves with the correct quality. It can best be described as a complex balancing act – excess inventory can lead to increased textile waste and missed profit opportunities, while a shortage of stock can lead to missed sales opportunities and dissatisfied customers. Excess inventory and products sitting on the shelves for elongated periods of time not only holds retailers back profit wise, but it may delay further investments that could be made to adopt transformative technologies, ultimately playing a hand in them falling behind competitors. Therefore, tracking trends by using AI will become a necessity for retailers hoping to increase their consumer base and stay ahead of the curve.In the coming year, retailers will realise they must leverage AI to optimise their apparel inventory management process in order to create a continuously, accurately sized collection of styles that will sell. The use of AI powered competitive analysis platforms to manage stock production levels in conjunction with PLM tools, which help retailers to properly produce a production plan, will not only enhance sustainability efforts by eliminating over production, but it will ultimately increase retailer’s profitability. 100 billion garments are produced by the fashion industry every year and as much as 92 million tonnes of clothing ends up in landfills. Inventory management will be a gamechanger when it comes to these statistics.3. Traceability and sustainability are the new must-havesWhile the transformation of global supply chains was already underway in the fashion industry before the pandemic, it served as a powerful catalyst that forced retailers to reassess their operations due to longer delivery times and saturation of ports. As we enter 2024, enhancing supply chain transparency will be a main focus of retailers throughout the year as the demand for sustainable products continues to increase by consumers. A recent McKinsey survey revealed that roughly 66% of respondents consider sustainability when making a purchase.With increased demands for sustainability, retailers will need to show their customers that their sustainability efforts are truly a pillar of their business and not just all for show. Many retailers often fall victim to greenwashing, when an organisation spends more time and money on marketing itself as environmentally friendly than on actually minimising its environmental impact. In order to build that customer trust, retailers need to have the right conversations with their employees and customers around sustainability. Having these real conversations can help brands be recognised as one that truly cares about a sustainable future as opposed to just jumping on the bandwagon.In conjunction with sustainability, traceability demands will also remain of the utmost importance in 2024. Consumers want to have visibility into the entire manufacturing process of their purchased product, from start to finish. It is important to consumers that retailers now verify the origins of the raw materials used during production to ensure they come from ethical and sustainable sources. By having this insight, retailers are able to make more informed decisions regarding whether or not they want to buy from a company. The regulatory environment is another potent driver in retailers’ journey towards visibility and traceability. For instance, the current US ban on cotton from forced Uyghur labour is a prime example of why consumers interest in full visibility into what materials were used during production of their purchase has peaked. Recent advancements in technology are able to assist retailers on their journey towards a more sustainable future such as on demand production, only manufacturing an item after purchase, and competitive analysis platforms. These are just two examples of how the adoption of advanced technology is pivotal in a company’s journey with sustainability.4. Generative AI will continue to drive explosive growthWhile a number of brands just started to experiment with Industry 4.0 solutions this past year, 2024 will be focused on putting AI to work to ensure success.For instance, personalisation is a trend that witnessed explosive growth over the past few years – and is here to stay. Individuality and self-expression are of the utmost importance to consumers, and AI will be a necessity in delivering that. As of now, 73% of customers expect brands to understand their individual tastes and preferences, which is not always possible – leading them to purchase products on demand. By leveraging on demand technology, retailers produce inventory only after the order is placed, helping to appeal to customers niche interests, all the while increasing sustainability efforts by eliminating waste.Forecasting will also remain a necessity as more retailers hit the market, creating ample competition. The ones who show up above the rest, with the best collection at the best price will ultimately have the most success. Fashion benchmarking platforms help brands enhance their image by analysing competition and product positioning in seconds, providing access to real time data and by monitoring assortments, sizing and individual product characteristics in order to identify gaps in current collections and identify new trend opportunities.Overall, brands who adopt AI capabilities will reap benefits across the board. Retailers that have done their due diligence and leverage the right AI technologies in the right areas of their business will see a meaningful impact and provide a better customer experience, elevating their brand.By Just Style
