In 2023, US$97.9 billion will be invested in Artificial Intelligence (AI) systems globally. That’s 250% more than the US$37.5 billion spent last year. Retailers are already spending more than US$5 billion a year on AI, mostly on chat bots, expert shopping advisors and product recommendation systems. However, the wave of potential value of AI to the apparel value chain goes far beyond fashion retailing and will swell to opportunities from sourcing textiles and raw materials through to design, manufacturing and logistics.
Oceans of data are generated by our industry. Sell through information. Surging e-commerce statistics. Social media trends. SKUs and inventory levels. The customer is telling us who they are and what they want. It’s our job to capture and synthesise the data and use AI to make commercial sense of it all. Change is occurring all the time. How well we understand and act on the trends is key to the future of our individual businesses and the entire industry. For the end consumer, their fashion dream is infinite mass customisation -- to match my taste, style and budget.
Retailers answer that call with fast fashion and manufacturers go “shallow and wide” with smaller production runs and a broader range of styles. Those initiatives fuel consumer choice and satisfaction, but also add expense and complexity to supply chains. AI harnesses the massive amount of data to meet the demands of accelerated fashion cycles, ecommerce convenience and next day delivery – and reduces inventory levels and increases supply chain efficiency.
Capgemini reports that although more than a quarter of the top 250 global retailers integrate AI into their organisations, only 1% of their initiatives reach full-scale deployment. The lesson is clear: keep it simple and target realistically achievable opportunities for incremental improvement.
Consider these ways to surf the data wave to delight your end customer and reduce costs with AI throughout the value chain:
Use AI to deliver a better customer experience and service. Making marketing and sales more targeted and efficient with product recommendation engines and virtual assistant chat bots is just the start. For example, online retailer Stichfix uses AI to go beyond recommending items to matching entire outfits for customers using a mix of algorithms and human expertise. AI takes onboard the customer’s past purchases and preferences and deploys an algorithm that both understands which items go together and the outfits a customer will like.
Make the most of your own data and augment with 3rd party sources such as social media. As fashion business models evolve from B2B and B2C to direct to consumer, AI enables C2M (Customer to Manufacturer) commerce in which consumer preferences are communicated directly back to manufacturers for mass customisation. In addition to reducing research time, AI fast tracks the design process by providing direction on fabrics, details and price points.
Use AI to optimise fulfilment route plans – “just in case” is the new “just in time” in the disrupted COVID-19 era. Capgemini says potentially AI can save retailers USD 340 billion annually by 2022 with process and operations efficiencies. Globally, fashion companies are expected to invest USD 1,64 billion by 2025 in the quest for better inventory management solutions. Serai has partnered with Coats Digital to help stamp out inefficiencies, measure productivity and minimise wastage and rejects. The industry can use data in much smarter ways to mitigate the risks upstream and downstream with buyers and sellers.
For born-in-the-cloud businesses, APIs and plugins speed the process, whereas businesses with legacy systems require deeper digital transformation. Traditional brand and manufacturing companies have the opportunity to use AI to convert their vast B2B and B2C sell-through data and insights into competitive advantage. For example garment manufacturer TAL is adapting in the COVID-19 era to help manufacturers and retailers switch from in-store to online, further shorten the design-to-delivery cycle, and move to digital supply chain processes, such as virtual samples production and approval.
AI is just one of many B2B business topics on the Serai radar screen. Join our by-invitation community today to learn and share more.