Artificial intelligence is a revolution worth 275 billion

«Generative artificial intelligence could add 150 billion dollars, conservatively, and up to 275 billion dollars to the operating profits of the clothing, fashion and luxury sectors», as highlighted in a report that McKinsey shared with MFF, which analyzed the potential that generative Artificial Intelligence (AI) could have for fashion & luxury. Generative AI is a field of research, itself part of broader AI, that focuses on creating AI systems that can generate new data or create new versions of existing data.

Although it still is an emerging technology, experts explained that it can help fashion companies become more productive, get to market faster and offer better service to their customers. «AI has the potential to influence the whole ecosystem», they added. Industry players can use the technology to recreate best-selling designs, as well as to reduce marketing costs, personalize customer communications and speed up business processes. «AI can also reshape supply chain and logistics, store operations, organization and all-around support functions».

So far, the fashion industry has experimented with basic solutions of AI and other frontier technologies, namely through the metaverse, NFTs, digital IDs and augmented or virtual reality. «Enterprise-level solutions of generative AI, the one behind ChatGPT for instance, have been limited mainly as experimentation, although they have a lot of scope in the future», Federico Bonelli, retail, fashion & luxury practice Leader at EY Europe West, and Giuseppe Santonato, partner data & analytics lead at EY, clarified to MFF. From co-designing to accelerating content generation, generative AI will create new space for creativity, integrate all forms of «unstructured» data (text, images and video), and produce new forms of media, from scripts to realistic virtual models for video campaigns.

To give just a few examples, for merchandising and production, AI can be used to convert sketches, mood boards, and descriptions into 3D models. For supply chain and logistics, on the other hand, it can support negotiations with suppliers by researching and generating reports or customizing product return offers by individual customer. In the field of digital commerce and consumer experience, it will be able to customize the customer journey and online offers based on the user’s profile and offer and improve the virtual service experience to respond to advanced consumer requests.

And, in addition, at the level of organizational functions and support, it will be able to help salespeople to sustain successful clienteling relationships by enabling real-time recommendation, distributing feedback reports, and flagging high-value consumer profiles, or develop customized training content for employees based on role and performance.

Swetha Ramachandran, investment manager and head of Gam’s luxury brands equity fund, also agrees on what has been said so far. «There could be a number of applications where fashion brands use augmented and virtual reality technologies to engage with consumers in a new and exciting way». For example, in the recent Snapchat exhibition «Redefining the body», which was held in London, visitors could visualize themselves wearing designers’ creations, fostering a relationship between the brand and the end consumer. «In the short term, we believe that the applications of AI to the supply chain, in the form of predictive analytics for its optimization, can be useful to the fashion industry, especially in minimizing production overruns and thus markdowns», Gam’s expert concluded. (All rights reserved)