Digital Fashion Summit 2019 – How to reach the next level of digitalization?

by Annette Weidler, Sabine Lankau, SAP SE

Consumers are increasingly driving fashion companies into digitalization. And more and more fashion companies understand that digitization is there to stay and crucial for survival. Companies of all sizes are already exploring new business models and technical possibilities, but most of them are still in the warm-up phase.

The digital transformation in the fashion business is still one of today’s big challenges. During the second Digital Fashion Summit of TextilWirtschaft, retailers, manufacturers and IT companies were discussing the most pressing questions about digitization in the fashion business.

We are solution managers and are responsible for Go-To-Market for SAP’s Fashion solutions within the Industry Business Unit Retail of SAP and were delighted to be part of the second Digital Fashion Summit, taking place at Frankfurt’s Marriott hotel in Germany. With this blog, we want to share our impressions and key learnings of this event.

Experience Matters

Consumers not only search for products but also search for experience. It is not enough to offer a great product. Fashion companies start preparing themselves to meet the trend and to get closer to their consumers, knowing them inside and out. During the summit some interesting examples were presented.

Moritz Keller from Keller Sports made the bold statement that great staging and superior service can demand premium prices. The assortment is actually only one of the components. It is crucial to offer services that burn your company or brand into the daily lives of end consumers.

Therefore, they also understand Keller Sports not as a classic online shop, but as a destination, which is also visited regardless of a specific purchase intent. Keller Sports has a smart way to consumers’ smartphones with the Keller sMiles app, which rewards consumers for doing sports. You can connect your personal tracker with the sMiles app and import your activities. For each activity you earn points that can be exchanged for discounts or vouchers. If you like, you can compete with others in various challenges and earn further prizes.

Another component of the Keller Sports strategy is the so-called Brand Experience Store. About every three weeks, as part of a “store take-over”, the store in Munich is taken over by an industry partner, who then uses it as a presentation and event space.

Mammut is also about connecting products, applications and services, and ultimately delivering a unique experience that is memorable for the consumer. Here, too, was the question at the beginning: how do we connect to the consumers? What drives the consumers to climb a mountain? What are their dreams? The Mammut Connect app and the NFC chip are used to connect the online and the offline world. Through the app, the consumer can scan a product, such as a backpack for example, get additional information, watch videos on how the product is used, and receive service offerings. The consumers can upload their own pictures of mountain tours or hikes, share them with others and be inspired. They even receive current offers from the Mammut Alpine School to find the perfect tour for themselves. In this way, a whole community is created.

One inspiring case is the avalanche beacon. When buying it, the consumers can sign up for a workshop to learn how to properly use it and later experience it with a guided group or by themselves.

Kicking off an ecosystem also requires partners says Oliver Pabst, CEO of Mammut Sports Group. Mammut’s trading partners also give positive feedback. They can use the app to specifically promote events. And finally, Mammut receives much faster feedback from their consumers.

Personalization and the Age of Assistance:

One could wonder why a successful online retailer like bonprix is opening stores? The fact is that for the fashion business about ¾ of sales are still made via brick-and-mortar retailing. Rien Jansen from bonprix believes in the appeal of city centers. After all we are all “social animals”, we do not want to sit at home; we want to experience something. The image of city centers will radically change in the future and increase a lot in attractiveness, let alone by the increase of autonomous driving.

With its new innovative concept “Fashion Connect”, bonprix has just opened its own store in the city center of Hamburg to tie up digital possibilities with stationary retailing. But before the store could be opened in this format, there was a 3-year period of experimentation and learning. Now this concept is stable and is accepted by the consumers, so Jansen declared proudly. But what exactly does the concept look like? Everything works through a smartphone app. Consumers register at the entrance of the store and fill their digital shopping cart by simply scanning products they like, not wasting time searching for the right size. When the consumers come to the dressing room, the products are ready for fitting. If there are requests for advice, of course, a sales assistant is ready to respond to the consumers’ wishes. The changing rooms are large, offering a pleasant atmosphere. At check-out, there are no annoying queues and paying is done via the app as well. But of course, such a concept must also generate added value. Until the end of the year, the concept “Fashion Connect” will continue to be monitored and tested and when successful, it should be rolled out in other locations.

The focus of Caroline Carlqvists (Zalando) presentation was on personalization and assistance in e-commerce. The personality of an individual is strongly expressed through clothing. Online shoppers should be assisted in a similar way like they are assisted by a sales assistant who knows the shopper’s preferred style and the size that fits well. “We want to be Elena“, Carlqvist emphasized and was referring to Elena, the sales assistant in her favorite store in Milan. Elena of course knows the preferences, sizes, likes and dislikes of her customers and is therefore a perfect help for the shopper. Zalando aims to reach this type of relationship through data like local size curves, return data, real fit and customers’ comments. At Zalando, a whole team is dedicated to work on perfect size fit. This service adds value to the consumers and the company. Return quota will be reduced and sustainability increased.

Also, Lars Rabe from TrueFit highlighted the power of data to drive consumers’ personalization and assistance. Finding the right product online takes far too much time. When for example searching for a pair of jeans you easily get 600 suggestions as a result. Finding the right clothes should be effortless and inspiring. The key is to intelligently combine a comprehensive data collection about the product with a comprehensive data collection about the consumer. This requires a huge number of attributes on both sides, product and consumer. Currently, most companies use very limited number of attributes like size, color, brand, cut, fit.

What will be the future of interaction with consumer?

Also, C&A presented themselves as innovative company. Andreas Hammer sees great potential in Augmented Reality (AR). This technology is continuously improving but is still not perfect. Some good examples for AR mirrors already exist in the beauty segment (e.g. L’Oréal make-up genius). But for the fashion industry, Hammer pointed out, this technology needs further improvements, for example the natural look and natural behavior of cloth when moving around.

Another technology to be observed is voice commerce. Already now, Smartspeakers (e.g. Alexa, Siri) assist online shoppers when searching for products, but interesting use cases for the fashion industry still have to be found.

Nevertheless, now is the right moment to experiment with these technologies and to learn from the results. New technologies are there to solve consumers’ issue. It is not just a gadget, but in any case, it must be accepted by the consumers.

 Intelligent Product Design – Acceleration through Digitalization

Roland Schuler from International Brand Company explained that the classic way of designing a product leads to large lead-times and inflexibility. Their idea is to simplify the product design decision process by introducing digital product development and digital processes. With so called Scan-avatars which supports the target group related fit development and the help of 3D Product Design and virtual show rooms, they need 24 hours instead of 24 weeks from design idea to production release. Currently they are running this at P&C as experimental project for a small product range. Roland Schuler closed with the sentences, that this new way will also require some changes in the culture of the company and that this new process needs a different profession than the classic one.

Cultural Change – Learning from Mistakes and Willingness to accept Failure – Humans as central Factor

Already the panel discussion at the beginning of the Summit showed how important the role of humans is in the process of digitalization. Hans Peter Hiemer of business4brands emphasized that technology often overwhelms people. Technology alone does not make a business model, and the use of digital media is not enough. In many companies there are long lists with many new technology topics, but all this requires a high degree of willingness to change. Hiemer believes companies should put a lot of effort into the middle layer of an organization when transforming into the new world.

Christoph Schröder from SAP also says that you can achieve a lot with software, but the organization must be able to digest it. Employees are the central factor in the company. Changing their role, position and way of working is usually very difficult and involves a high degree of readiness to change. Especially with the topic of omnichannel, small “kingdoms” must be torn down and responsibilities redefined. You cannot generalize, but it is important to form cross-functional teams, so that all affected employee can extract something positive from the change for themselves.

Dirk Schneider from s.Oliver has already gained quite some experience with change management in his company. He says humans prefer to start at status quo and then incrementally change something. This is not helpful. Companies must be bold and just take a fresh start without taking care about what already exists. Cultural change in a company must be carried out from A to Z and it must be very well considered how best to onboard employees. Very important in this process is that management leads by example.

As many of his co-presenters during the entire summit, Marc Ramelow from Modehaus Ramelow emphasizes the importance of simply realizing things. Thinking big does not always have to cost big money and it does not automatically mean that you must start big. “Just do things – start small” said Ramelow. We have to switch to the implementation mode, just waiting is worth nothing. Therefore, approach the solution in very small steps, try something, test with consumers. There is no longer one solution, but many different approaches. Errors hurt, but we learn from mistakes.

Conclusion

Again, this year’s digital fashion summit was a great experience, and certainly for all participants from the industry it was a fantastic opportunity for exchange with wonderful insights from fashion companies on their journey to digitalization.