Cloud, the edge, and 5G: when will high fashion and luxury brands embrace virtual retail?

And how can new technologies be embraced to reinvent the e-commerce experience?

During the COVID-free utopia of 2019, I read an article in the European CEO that “luxury fashion, an industry steeped in tradition, is one sector that has staunchly resisted the allure of e-commerce.”

On a related note, Bain reports that the personal luxury goods market (including luxury fashion, accessories, watches, fine jewellery and high-end beauty) was worth EUR 281 billion in 2019, but with just 12% of revenues coming from digital channels.

So why have luxury brands resisted the move to digital? Deloitte’s Head of Fashion and Luxury for Europe, the Middle East and Asia, Patrizia Arienti, believes that “more than other sectors, [luxury brands] see themselves as very different and very distant” to online retailers. “In a way, digital channels have always been seen as too popular, or mass market, if you will.”

But, fast forward just 12 months and here we find ourselves, working from home, with many stores ‘closed’ and more time on our hands to online shop than ever. Can luxury fashion brands continue to resist the inevitable “mass market e-commerce” and risk falling even further behind?

This pandemic creates profound challenges for the fashion industry

A recent McKinsey report in Business of Fashion estimates a global revenue contraction of 35 to 39 percent in 2020 year-on-year for the personal luxury goods industry. If stores remained closed for a full two months, McKinsey analysis approximates that 80% of publicly-listed fashion companies in Europe and North America will be in financial distress and expects a large number of global fashion companies to go bankrupt.” That “mass market” approach to retail isn’t looking too bad now, is it?

With the arrival of 5G and the edge computing cloud, retail brands should be asking themselves ‘are we ready?’ and ‘what can the future look like for our in-store experiences, logistics and most importantly, our customer service?’

In the word’s of Vogue’s editor-in-chief, Anna Wintour, “this pandemic has created profound challenges for the fashion industry. It seems inevitable that fashion will have to make fundamental changes to strategy, and that includes how large luxury e-commerce players operate”. It will be interesting to see how the elite segment of luxury retail evolves, and who will be left behind. For luxury retail, like many others, technology innovation very well could mean the difference between gaining a competitive edge and going bankrupt.

Despite the lag, the good news for luxury retail is that HENRYs (High-Earners-Not-Yet-Rich) are digitally savvy, love shopping online, and will most likely be the early adopters of the innovative solutions that retailers come up with to help them spend their money – and it’s big money (see below).

Luxury e-commerce sites need to embrace technology and become more than just sales-drivers

Despite wearing my current four sweaters on repeat during this work-from-home marathon (two of which are grey, as my colleagues like to point out!), I am interested in seeing the latest from the Fashion Week runways around the world. I am especially interested in how technology is enabling retailers to weather the storm of COVID-19 with innovations both in e-commerce and in communicating with their customers in new digital ways.

With COVID-19, we believe that there will be a shift in consumer behavior. More of people’s lives will be lived at home in the future. Companies will find out that productivity will not suffer as much as the old guard thought. With 5G and edge computing, retailers will need to start thinking about retail 4.0, not just from the brick and mortar customer experience side, but more around how augmented reality (AR) and the store of the future can be experienced from the comforts of one’s own couch.

Will it involve luxury brands sending AR headsets to their top customers to enable them to digitally “try on clothing” and other goods at home? Will it involve AR contact lenses that enable customers to fully immerse themselves in the front row of a runway show? What about watching as they themselves wear the newest fashions on the catwalk (OK that one is a bit more future-looking)? Perhaps it will be something in their (now less frequent) commute to the office where the billboard changes to reflect their recent designer search?

As part of my research, I signed up for a recent Vogue Global Conversatinos live stream on Zoom focused on The Future of E-Commerce and touting speakers from Vogue, of course, the British Fashion Council, FarFetch, Louis Vuitton, and Montcler. My primary goal: to see if this section of the retail industry that heavily relies on brick and mortar, high touch and highly personalized customer experience has started to change their tune about e-commerce and moving to more digital-first strategies.

Perhaps the most interesting factoid was Angelica Cheung’s (Vogue China) statement that “in China, brands and influencers have found new ways to shop, such as FaceTiming through WeChat or hosting live streams where shoppers can buy products directly from celebrities or public figures. A recent live stream had 38 million viewers and generated over $100 million in sales—including the sale of a $6 million rocket.”

Now that’s a start. Beyond live streams of models on runway shows and games with avatars (both mentioned in the live stream), what can high fashion retailers do to create a similar, high-touch and personalized e-commerce experience for their customers?

We have written on how the personalized shopping experience can be transformed with 5G, thanks to edge compute; however, we focused on the store of the future, rather than the digital store of the future. The digital store of the future will be the one experienced at home.

What all of these experiences will require is sustained low-latency performance and bandwidth to actually ensure that quality of the experience is maintained. Given the high cost of sales for each transaction in the luxury goods market and the demand for exceptional, personalized experiences by consumers, the winning strategy will be built on an extremely efficient, automated performance management process. 

For more information on how we at Accedian are helping CIOs achieve successful digital transformation outcomes, assuring their organizations’ revenue as they move towards a digital-first era, read this solution brief.

If you are on the IT team at a luxury retail brand and want to delve into how edge could be the answer, visit the Seamster community website to see how other retail brands are utilizing edge, or contact us to explore this more deeply!