Digital transformation

3x how technology can make fashion retail more sustainable

June 5, 2024 - 4 minutes reading time
Article by Newsroom Insights

The pressure to operate sustainably as a fashion retailer is increasing. Consider the increasing influence of international guidelines such as the United Nations (UN) SDSG and the CSRD (Corporate Sustainability Reporting Directive). In addition, local legislation is playing an increasing role. The combination of these external factors should lead to a greater contribution by retailers to climate and sustainability goals. Retailers are therefore starting to become increasingly aware that sustainability is here-to-stay.

Strategy and technology

From a strategy and operations perspective, although there are different levels of maturity, we can say that the omnichannel retail strategy has made its appearance within a large portion of fashion retailers. For example, H&M, Zara and Hunkemöller. They know how to integrate online and offline channels like no other, giving them a clear picture of their consumers. They also get this picture by cleverly analyzing and using the data generated from transactions. For example, when setting up loyalty programs or making personalized offers and advice based on purchase history.

To make this possible, technology plays an important role. This starts with embracing, developing and implementing an omnichannel strategy. The most important part of this is a seamless and modern point-of-sale platform that allows data to be analyzed from transactions, at various levels and from different channels (online, store, checkout, self checkout et cetera). Combine this with AI (Artificial Intelligence), VR (Virtual Reality) and AR (Augmented Reality) to have a complete technical foundation that supports your strategy and operations.

Sustainability, strategy and technology

Sustainability is an important topic within fashion retail and finds its impact at various levels. The entire chain (from fashion designer to physical store) is increasingly being considered. However, the role and possibilities of technology within the omnichannel strategy in promoting sustainability is still underexposed by this group. To provide more support and guidance, below are three perspectives on how technology within the omnichannel strategy can promote sustainability.

1. Increase transparency and loyalty

Consumers are becoming increasingly aware of the impact of their purchases on nature, the environment and society. Fastfashion is increasingly giving way to sustainably produced clothing or shoes and platforms such as Marktplaats and Vinted are increasingly being used to give fashion a second life. Consumers also want to know more about the origin, the production process and the impact. They are increasingly taking responsibility. The use of technology within the omnichannel retail strategy makes it possible, for example, to show the impact of products (carbon footprint). A number of large Dutch retailers such as Xenos and Kruidvat already do this. Thinking about this as a fashion retailer and implementing it increases transparency to consumers. This is a sign that the fashion retailer takes its responsibility and will ultimately lead to higher consumer loyalty.

2. Reduce returns and improve the shopping experience

Returns within retail are an everyday occurrence and will never be 100 percent avoidable. However, there is a battle to be made here to contribute to the sustainability pillars. After all, returns lead to various (unnecessary) transport movements that have an impact. To reduce returns, fashion retailers can initiate a number of things from technology. For example, improving displayed product information and data online and in-store. On the other hand, new technologies such as AI, VR and AR can help enable a virtual fitting room for consumers. This allows the customer to know even before placing an order whether the garment fits and whether it meets other needs/requirements. There are several larger retailers and brands, including Gucci, that have already implemented the virtual fitting room concept. Such a concept can also be used in physical stores and benefits the shopping experience.

3. Stock optimization

Stock costs money and space. It is therefore important that it is as aligned and optimized to the season and trends as possible. By looking closely from data, linked to a warehouse management system, to see which runners and slowmovers there are, future purchases of current and new collections can be anticipated more quickly. This will lead to stock shifting or re-stocking. This could also lead to stock moving from the warehouse to a local store or being divided across multiple local stores. This ensures that the right assortment is offered through the right channel. This leads to fewer movements of stock or even destruction of clothing. Livera, as a well-known fashion retailer, has started with the ship-to-store concept in cooperation with DHL in order to better handle inventory during the sales cycle of a season.

Concrete opportunities

The above perspectives are just some of the many technological opportunities for fashion retailers that can be used within the omnichannel retail strategy to promote sustainability. They are so concrete, however, that gains can be made relatively quickly here. We expect fashion retailers to take steps to promote sustainability by embracing these angles within their omnichannel strategy.

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