4 ways innovation and technology are changing the product lifecycle in retail

Innovation is absolutely key in the retail industry. Here we explore how retailers can ensure they're staying ahead.

4 ways innovation and technology are changing the product lifecycle in retail

Everyone knows that the retail industry is facing its challenges - whether we attribute this to rapidly changing customer behaviours, external macro economic pressures or the weather - one thing's for sure, it’s more important than ever to improve your product selections and stock volumes to ensure you meet increasingly discerning customer wants and safeguard profit margins.

Because of this we’re now seeing a range of innovation in the product sourcing elements of retail. Some are driven by technology and some are driven by changes to the supply chain and the origins of where product is produced.

Near sourcing

Technological advances in automation have helped make near sourcing possible.

It’s an obvious strategy - the cheaper you can source/produce your product the greater the profit margin you can make. Traditionally the fashion industry has sourced and manufactured products in those countries with the lowest labour costs to benefit from the lowest unit prices, although the downside was that these countries tended to be far away making the stock ordering and delivery processes lengthy and unwieldy.

The growth in fast fashion retail success in recent years has precipitated a desire for retailers to be able to source products closer to their markets in order to speed up the time it takes to deliver and replace stock - this is where factory floor automation comes in. Replacing humans on the factory floor with robots has allowed the manufacturing model to move away from low-cost labour countries towards those that are geographically closer to end markets, reducing stock turnaround and delivery times.

CADs

The image of a fashion designer sitting with a sketch-pad and pencil, fabric swatches, a sewing machine and a dressmakers dummy mocking up their design ideas is more romantic than realistic. Nowadays CAD (computer aided design) is a fundamental part of the design process - speeding it up and allowing designers to visualise and adapt new designs easily.

In today’s retail climate when margins are being squeezed from all sides, fashion retailers are relying more and more on CADs to quickly test out variations of their designs. This ability to view virtual versions of finished products is cheaper and dramatically shortens the time taken from initial concept to end product enabling retailers to add more trend led pieces to their collections.

The next step in this journey is 3D CAD which look so realistic that in the right hands they entirely remove the need for sampling a product.

Sizing data

If near sourcing and improvements to CAD technology help traditional retailers compete with fast fashion disruptors - advances in sizing data technologies are helping retailers with a large online presence improve their margins.

As the volume of online shopping continues to grow - now estimated to account for around 50% of all fashion retail purchases it has exacerbated another margin impacting retail problem - returns! Online shopping with its inability for shoppers to try items on, significantly increases volumes of returns which in turn impacts retailers stock management and transportation costs.

Online retailers are now using size and fit technology solutions such as virtual changing rooms and body doubles to replicate the changing room experience for shoppers, encouraging them to select the right sized product first time and reduce returns. There is also an added side benefit as the more accurate sizing data gathered enhances the fit of future garment designs.

Pre-release product testing

Not long ago the ways to test the popularity of next seasons products with potential customers was to either showcase them to a small select focus group of customers and gauge their reactions, trust your wholesale customers to buy the right product and lead your development or run a small batch of units out of season to rank the collection.

Thanks to new platforms getting a read on customers preferences on your products before making big stock commitments can now be done much quicker and at a much larger (and more representative) scale by using new technology driven solutions such as Mallzee Insights pre-release testing solution; Product Future.

Product Future showcases pre-release products to our engaged shopping community on the Mallzee app - even at CAD stage - quickly generating tens of thousands of authentic customer opinions on your products. This opinion data is benchmarked against retailers own and competitor product offerings - leading to customer driven recommendations as to which products are likely to sell well and which are not. To date this data generation approach has seen over 3m products rated and 531m opinions provided.

This ability to add customer opinion data and supplement in-house buyers experience as part of the Product Development Process, prior to placing costly orders helps to increase retailer gross margins by 2.8-6.1%.

Therefore, whilst we might be in the midst of what the media has dubbed the ‘retail apocalypse’ for those retailers focusing on product and margins... there has never been a better time to do this. Thanks to automation it’s easier than ever before to near source, CAD developments make the product design process quicker and cheaper, sizing data technologies reduce returns and improve margins and pre-release product testing enables retailers to ensure they stock the clothes their customers will actually want to buy reducing margin erosion through future discounting.

We regularly do deep-dives on fashion trends, retail data and shopping. If you liked this article, have a look at some of our other insights:

Denim- What are the most popular denim styles on the market?

Neon- Is this bright trend still a winner, or are neon products losing popularity?

Animal Print- What prints are the most popular in which product category?

P.S.

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Tags: Fashion, Retail

Richard Magnusson

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