HOW WILL WE BUY CLOTHES IN THE FUTURE?
https://www.uniqlo.com/us/en/stores-details/?StoreID=10200083&source=stores
Jetlore, an AI-based prediction company, was founded by three people including Montse Medina, who was our guest speaker. Their prediction systems have been integrated with big retailors in the world such as eBay, Paypal and UNIQLO. [1] Retailors are always facing difficulties in forecasting the demand of their customers since if they miscalculate it, they will have to deal with unsold inventory. For a long period, retailors have relied on their expertise to predict the needs, but now this situation is changing due to Artificial Intelligence, which improves the accuracy of demand forecast using Big Data. [2] Among such retailors, the apparel industry is particularly eager to introduce the technology. Actually, UNIQLO, one of the biggest apparel companies, is a customer of Jetlore.
Apparel companies have quite long supply chains for their products. They normally start producing clothes several months before these items are in sale, predicting the future trends, designing seasonal clothes, producing them massively in developing countries far from market countries. And they ship them and deliver items to each store and sell them to customers. Because of such a long-term process, it is quite difficult to predict the trends because customers’ preferences can be changed easily even after their decision for the next season. So Inditex and H&M, the two largest apparel companies, have been trying to make their leading time shorter to be more flexible in terms of the market trend. However, due to AI and Big Data, even though they might not manage a short leading time, they can predict future trends more precisely. A bunch of data collected in physical stores and online shopping help retailors meet the needs of their market.
Compared to Inditex and H&M, UNIQLO gave up seeking unstable trends and have been taking a different approach in the mass-production of basic clothes. As they also face the emergence of new technology, they started to adjust their business model to the new era. They have been working on Ariake Project to digitalize their customer experience. The key of this project is personalization using technology. Nowadays many things in the apparel industry is not personalized and customers cannot be satisfied. UNIQLO tries to make a change in that situation using the advanced technology and potential of physical stores. Especially, in China, their O2O (online to offline, offline to online) business has been succeeding to personalize their customer experience. For example, when one customer visits the online shop, and looks at a yellow T-shirt, this behavior will be stored as customer information. When this information accumulates, AI will calculate features of the customer and reflect it on their online shopping page. In addition to online service, offline stores are becoming digitalized as well. Right after customers order an item, they’ll be able to pick it up at any stores.
Even though UNIQLO managed personalization of advertisement, there remains many things to do. They still struggle to predict future trends with digital marketing. Additionally, personalization of clothes is still going to take a long time. But the day is said to be coming soon when we buy clothes which perfectly fit us and that get delivered to our home in one hour.
[Resources]
[1]http://www.jetlore.com/about/
[2]https://apparelmag.com/big-data-big-insights-how-apparel-industry-can-benefit-ai
[3]https://apparelmag.com/nordstrom-rack-and-uniqlo-use-prediction-platform
[4]http://stitchdiary.com/artificial-intelligence-apparel-industry/
[5] My experience as an intern at UNIQLO
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9 comments on “HOW WILL WE BUY CLOTHES IN THE FUTURE?”
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Very interesting post. The impact of this disruptors is having a significant impact of course on the companies that haven’t evolved but also in other areas such as shopping malls and transportation companies.
Shopping malls are emptier than ever and you could argue that eventually they will disappear with more people buying online and taking advantage of the benefits of shopping without queues and hassles. Arguably, cyber Monday will take over the whole black Friday “tradition” and reshape this industry.
Regarding transportation and logistics, the new shopping trends is putting an unprecedented amount of work to the typically carriers (UPS and FedEx) to the point that Amazon for example now has a big fleet of trucks, planes and last mile carriers delivering their product. As a former employee myself, it was well known that this was the biggest risk to the long term sustainability of the company given UPS and FedEx basically tapped out on them and told them they didn’t have move capacity for them. A combination of this with the implementation of the digital tracking of drivers (restricting the amount of hours per day and week they can drive) will create a new dynamic of scarce transportation which eventually will inflate costs, although, it is safe to say that these will just be passed to the customers.
Hi Atsuki,
I really enjoyed this post, as I am personally interested in the retail industry and future of retail as well. As you mentioned, Inditex and H&M have long supply chains and release new lines very frequently (sometimes even every 2 weeks), to try to stay on top of market trends and increase sales. I know structurally, these companies are vertically integrated as well to speed up the process from design to production. Now that they have better prediction tools, like AI, I wonder if they will change their vertically integrated structure or go longer between new clothing releases.
In terms of in-store customer engagement, I think personalization through technology will play a big role in future retail strategies. An IKEA headquarters employee once told me they even track how customers move through their stores – including where they linger – to understand “hot spots” on the floor as well as popular products. Maybe as technology advances, retailers will even be able to track how long our eyes stay on certain products and tailor their marketing accordingly!
Thank you for your nice comment. In my personal opinion, I think that H&M and Inditex will maintain their vertically integrated structure for a while because now this supply chain is definitely their current core competence. As they are big companies, they might face difficulties inside companies when changing their business model. (a kind of The Innovator’s Dilemma?)
For the last part, I strongly agree with your opinion(and I’m a big fan of IKEA) And what you mentioned is exactly what UNIQLO is now trying to do. When you enter the store, sensors will recognize you immediately and track you on a body temperature basis. Then the “hot spots” data will reflect on the arrangement of clothes in the store.
Even though nowadays e-commerce is getting popular, retailers should think about what they can do in their physical stores. Otherwise, they would be kicked out by big Tech online companies. So your point is really important.
As a non-average shaped person, I hope buying custom clothing gets even easier. I’m seeing more and more ads in my Instagram feed every day, companies like Proper Cloth, Indochino and others. I love the track they are on, but pricing is still really high.
Thanks for your comment. I’m sure that there are so many people who have the same problem as yours. Actually, I’m one of them. When I look for clothes, I have a problem because I’m not big enough to fit American-size clothes.(too short and too thin) What I can buy here is clothes only for kids and women. So I have to buy a lot back in my country. And I didn’t know the two companies you mentioned, thanks for nice new information. In my opinion, pricing will get lower since personalization of clothes is just starting. I hope that you’ll enjoying buying clothes more in the future.
Hello Atsuki,
I find this topic very interesting. There is no question that Inditex and H&M’s supply chain is leading edge and I truly believe that is the key of their success. However, implementing AI and Big data will definitely revolutionize the industry and companies will be able to predict future trends more precisely while reducing costs greatly, so if they want to keep their position at the top as the biggest apparel companies, mid and long-term, they need to start implementing these new technologies in their stores as soon as possible.
Regards,
Lorena Cestelos
Thanks for making a comment on my post. Your point is really good and I agree with you. But the point is how to make use of Big Data which they can collect in both physical stores and online shops. Those companies all know that they have to introduce these technology asap, but they are not sure what kind of data they should collect and how to reflect these outcomes on their products and services. To put it simply, they have to be truly tech company with great literacy of technology.
As the first commenter wrote, shopping malls will most probably disappear pretty soon because online shopping has many more benefits in terms of time and convenience.
This means that companies have to focus more on online marketing, neuromarketing, and online advertising. To improve marketing eyeball-scanning sensors and emotion-reading technology already exist. Utah Valley University has a lab that is changing how Utah companies optimize advertising. This lab was opened in November 2014 and since then some of the most well-known brands have visited or consulted with them.
The lab offers companies advanced marketing technology services, including eye tracking, galvanic skin response, and electroencephalography (EEG) technologies.
Dr. Paul Dishman, UVU marketing department executive, speaks passionately about helping companies formulate better print and online ads, better websites, and even better product placement within stores.
“Eye tracking studies can show how effective a company’s ads or websites are, by tracking where a person looks as they view the ad or site. Company designers can then alter their messaging to more effectively reach their target audience.” (Daily Herald, 2015)
“Consumers’ decision-making process today is so much more sophisticated,” said Dale Jolley, director of the SMARTLab. “But we can tell businesses right up front which ad will work.”
Advertising and consumer behavior analysis is essential if a company wants to reach its target customers more efficiently.
The particular topic of this blog post caught my attention immediately. In my opinion, Social Media here has a huge role to play. Apparel companies do have quite long supply chains for their products, however I believe that with the use of Big data and AI and using these to harness data from Social Media, they can shorten the time spent on research of trends and thus shorten the time taken from transforming that research into manufacturing.
For example fashion tech startup Heuritech launched the world’s first AI service that can predict fashion trends based on the analysis of millions of images shared every day on social media.
Luxury fashion houses Louis Vuitton and Christian Dior are Heuritech’s first customers , using the service for their product development and merchandise planning.
Its interesting because the speed at which images are shared in Social Media which in turn causes changes in customer preferences is so fast, that i believe we NEED the power of big data and AI in the fashion retail space today to make the experience for the customer both relevant and personalised.