ROI for the Fashion Industry

Source: Mashable (21 Oct 2010)

The fashion industry has deep roots in traditional business practices and has been late to adopt new technology. Nearly every aspect of the industry relies on people rather than machines — everything from hand-sketched designs to the buying process, where an individual buyer’s personal tastes can dictate an entire department store’s orders.

In the past few years, we’ve been seeing all aspects of the industry suddenly affected by new technology, increasing efficiency and providing much needed data analysis and tracking components. Instead of relying on people to analyze, project and improve, fashion brands now have the digital technologies to meet these needs in a much faster way.

1. Buying Process: Crowdsourcing Styles, Better Projections

Until recently, fashion retailers relied on the expertise of merchants and buyers to use their best judgment to identify which designs have the most commercial potential. Historical sales data never resulted in consistently better merchandising decisions, because it doesn’t add much value in making forecasts for trend-driven product categories. In fashion, what merchants and buyers require is information or data about what’s going to happen, not what already happened.

These days, companies like StyleHop are allowing fashion merchants and buyers to leverage crowdsourcing to get forward-looking, fast-turnaround, predictive analytics that dramatically improve their style picking capabilities. One collective intelligence company in the fashion space has conducted pilot research that shows, when done correctly, crowdsourcing can improve product selection by more than seven times. Leveraging collective intelligence helps retailers pick more productive inventory, leading to lower markdowns, higher profits and a better selection for fashion-hungry consumers.

2. Online Shopping: Smarter Tools Mean Fewer Returns

One of the major challenges that most online retailers face is the high percentage of returns; things don’t fit right, the quality of the material is off, or the customer just doesn’t like it. But there are a few companies in the space who are trying to solve the issue by providing more accurate measurement tools and personalized user profiles.

3. Online Shopping: Customization Yields Better Sales

When it comes to the actual shopping experience, customization and personalization seem to be the one area where fashion retailers are lagging. But companies like Amadesa are providing a set of solutions targeted at increasing ROI, or simply saving the number of clicks until purchase. From shopping cart optimization to relevant product recommendations and end-to-end testing, Amadesa is helping online retailers convert online window shoppers into actual paying customers. New technologies such as A/B and Multivariate Testing, which didn’t exist in retail stores, let customers’ online actions determine what works best. Now retailers can test images, promotional copy, offers, and a myriad of other elements to improve ROI.

4. In-store Shopping: Collecting Data to Maximize Purchases

Until now, stores had very little data about shoppers and their experiences, unless a transaction had been made. With the increasing popularity of location-based mobile technologies, retailers are able to track their customers, virtually communicate with them, and of course offer promotions. The two main players in this space offer different approaches. …

Another company competing for the personalized offers offline is ShopKick. Instead of supplying the customer with a special device, it relies on their existing mobile phones. In this case, the main implementation is done on the retailer’s side — ShopKick installs devices in-store, similar to Wi-Fi access points, and the device sends inaudible audio signals, which interact with a phone’s microphone. The offers get sent to the phone, which include the ability to earn points, FacebookFacebook currency, song downloads, and instant gift cards that can be redeemed in-store.

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