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Digital Transformation in the Fashion Retail

How does the digital transformation actually work? How is it affecting fashion retail? And the biggest question is, what impact does it have on customers? In this blog, we’ll look how digitalization is shaking up the fashion industry and how to stay relevant as a fashion retailer.

There are many articles, blogs and essays that interpret the status of the fashion sector today. A broken industry that lacks innovation and full with competition. The barrier of entry is low, while at the same time it is difficult to mature successfully. Companies fight to differentiate themselves and offer real added value to their customers. While a unique design has been a workable differentiation strategy for years, imitation and duplication have become too easy now.

So where to go from here? The fashion retail industry may be strong, but it’s impacted by the digital age as good as the rest of industries. Also here, the waves of technological changes will bring new competition as well as new opportunities. Still, most companies are struggling to innovate and reap the benefits of this Digital Transformation.

Digital Transformation in the Fashion Retail

So, how does digital transformation work? How is it affecting fashion retail? Nowadays, online fashion sales are the best-selling category, while ten years ago it didn’t even exist. The rise of technology changed customer behavior and fundamentally changed how customers want to interact with fashion brands. They expect to have a continuous and personalized conversation over multiple channels, mostly online. To stay relevant, fashion brands need to do more than just to have an online presence. They need to start listening.

Today, the customer relationship has outgrown the old supply and demand. Fashion retailers need to establish a two-way consumer–brand relationship: to value customer feedback, adjust processes to improve the customer experience and even to let customers participate in the design process. They need to recognize customers and be able to pick up the conversation from the last contact, regardless of the channel. In short: fashion retailers need to truly know their customer.

Woman buying clothing through a touchscreen interface

Fashion retail has been dramatically changed by the digital transformation. From passive observance to enabled dominance, the customers of today have higher expectations. More than just purchasing fashion products, they want to interact, influence belong to and be a part of fashion brands. Customers don’t consider anymore which particular brand channel they use. Because they expect their fashion brand to be everywhere - online and offline - and to receive a personalized treatment. Customers want the full omnichannel experience.

Zara store

The Age of the Customer

As customers today, we are well-informed, selective and have grown high-demanding. And yet, despite the growing number of digital channels and interactions across them, our purchase behavior is predictable. Our tastes, preferences, valuation systems, actions and emotions, are fully mappable. Each interaction can be captured with its context and be connected to our actions moments or even years prior. Fashion retailers that know how to capture, analyze and apply this data, will be able to personalize their interactions. For fashion retailers today, creating a customer online experience as if it was in-store, is now within reach with the right strategy, technology and team in place.

Of course, fashion companies can’t forget about the most important consumer currently: the Millennials generation. These young people grew up with the online breakthrough, are used to purchasing with a single click and communicate daily online. Logically, Millennials are increasingly buying via brand’s websites or brand apps. They want to interact through every channel: online purchase, pick-up in store or home delivery, and to be able to make changes and returns both offline and online. And while every consumer is looking for comfort and ease, Millennials additionally seek unique and meaningful brand experiences. Their annual spending consumer spending is increasingly going towards experiences than mere material things.

Sales in a fashion store

A clear example is the “Rebajas”. In Spain, this is a discount period when the collections of the previous season are on sale. Spanish Millennials use the following strategy: go to the store and experience the look and feel. If they see an item they like, they will scan and save it on the wish list of the brand account. Then, when Rebajas start, they can buy the product in a matter of seconds at full discount. Thus avoiding the line at check-out and saving time: easy and comfortable, while still enjoying the physical experience in the store.

The Best Customer Experience

The digital transformation means fashion brands need to do more than just being present on the new digital channels. Customers, and certainly Millennials, want to have access to all the product information and availability, to be able to physically touch and try, to receive offers that match their interests and have a choice of delivery and pick-up options. It’s not merely digitizing the shopping process, but re-imagining the whole experience.

The four components of value

So what does that look like? First, consumers have an account that eases the purchase process, from the reference scanner, to the wish list, the shopping basket and then either an abandoned cart email or a purchase history for easy return. At the moment they buy, the brand account already has all the information such as contact details, shopping preferences, the closest shops and payment methods. For consumers, this helps save at least five minutes with every purchase. Additionally, consumers appreciate the possibility of being able to review past purchases or product searches, have new product recommendations and receive promotional information, discounts, new campaigns and collections.

Big fashion brands are working hard to transform themselves digitally. Zara for example, from Grupo Inditex, launched a temporal shop in London that’s specialized in making and picking up online purchases. Equipped with tablets and mobile devices for specialized staff, automated pick-up points and innovative systems for payment and support, among others, Zara tries to give a unique purchase experience that’s mostly digital.

Shopping with your smartphone out

The Benefits of Digital Transformation

Embracing the Digital Transformation creates value. Foremost, for the customers, so as a fashion retailer you stay relevant and in business tomorrow. Secondly, for the brand itself. It increases sales, creates and engages relationships with customers, ensures loyalty and improves stock management by surplus elimination through sales in other channels. The technological and organizational changes required to do omnichannel, also allows retailers to reduce their design and production costs and improve their sales processes. To fully transform digitally, a clear digital strategy is needed that encompasses both business and customer. Every process of the value chain can and should be embraced and improved with technology.

The biggest pitfall of digital transformation is introducing new technology just for the sake of new technology. At the end, it’s all about business, right? Retailers need to know where their company can improve, where to focus and to discover which opportunities they can pursue. Osudio, with years of experience, helps companies that seek a new business model based in data and innovation management. We understand what works and what doesn’t within this dynamic, competitive and changing business environment. To find out more about digital transformation, and how to drive it on your company to be successful, contact us here.


Digital Marketing & HR Spain

Ask Begoña

March 28, 2018


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