New York's Fashion World Discusses Technology Disruption

This week’s Decoded Fashion conference revealed that New York’s fashion designers are increasingly savvy users of technology, especially for creating engaging customer experiences -- but the industry faces more wrenching change in the future.

Organized by former journalist Liz Bacelar, the event at the Lincoln Center was billed as “the first Fashion and Technology Forum connecting the world’s best startups and most noteworthy technologies to the fashion, beauty and retail industries to accelerate innovation and increase the bottom line.”

The event attracted an eclectic (and well-dressed) collection of fashion designers, entrepreneurs, investors, and technology experts.

The packed agenda featured hot technologies and fashion startups, covering every aspect of the fashion experience from social discovery to streamlined checkouts. Topics discussed included the best-practice use of new content platforms, social curation tips, fashion analytics, customer-powered design, size scanning technologies, and the latest developments in interactive video and augmented reality.

A better experience–and better business–through social media

Much of the day’s focus was on using technology to augment existing customer relationships. "Fashion is about the experience, the feeling of putting on a new item and getting goosebumps," said Clothes Horse CEO Vik Venkatraman.

“Social media is not just ROI, it's about creating the world of your brand. Fashion is like storytelling, and social media is another way to tell that story" explained Stacey Bendet of Alice+Olivia.

A presence on multiple social platforms is now considered essential for designers.

“Brands that do not engage using social media will not be here in ten years to talk about it!" predicted Ari Goldberg, CEO of Stylecaster. "In old media, content is king, but in new media, conversation is king."

Melisa Goldie, EVP & Chief Creative Officer of Calvin Klein, said the company was putting 23% of its advertising budget into interactive and online media this year, up from just 1% in 2009, because “there's no longer such a thing as a one-way advertising conversation.”

Designer Nicole Miller noted that the changing priorities had had a direct effect on staffing. "We're probably putting more people on social media than assistant designers."

The challenges of social fashion

FactoryPR explained that customers have high expectations of social sites. “If you aren't putting out content that makes people feel, you aren’t a fashion brand.”

Designer Rebecca Minkoff explained that brands and retailers have to be careful to balance brand awareness and return on investment. “Social media should be personal. If it seems like you’re trying to sell something, it won’t work.”

Carla Dunham, Senior Director, Social Media of Saks Fifth Avenue noted that dealing with commenters on social media can be difficult, but that it “keeps you intellectually honest and authentic because response is so quick”.

Designers were also quick to outline the limits to social engagement. “Crowd sourcing is about allowing fans to participate and contribute rather than them designing for or with you” said Miller.

The rise of social media also means that companies no longer wholly own their brands. According to Goldie, “Branding has entered the world of social media, and the world of Don Draper is over”.

What’s the best social media platform for fashion?

Of the different mainstream social platforms, Instagram was most often cited as the designers’ personal favorite. Amy Cole, head of Business Operations, explained that the company (recently acquired by Facebook for a very chic $1 billion) was a natural fit for the fashion industry.

Bendet revealed that she uses the platform to test new designs, by posting a picture and tracking how often it’s “liked” by the brand’s followers. Deborah Lloyd, President and Creative Director of kate spade new york said she appreciated the image-focused, real-time approach.

David Karp, founder and CEO of blogging site Tumblr, reeled off some of the site’s impressive statistics. The site experienced 900% growth in 2011 and now has around 140 million users posting 600 times a second, and global traffic has now overtaking domestic US traffic. He noted that Twitter and Facebook drive more traffic to the site than Google.

Karp positioned Tumblr as a site primarily designed to help creators of all kinds showcase and share their work, compared to Pinterest’s  focus on curation.  He said that fashion now represents around 20% of Tumblr content, and the company has just hired a new fashion director to increase focus in this area.  Brands like Vogue already have a presence on the site, and Calvin Klein took advantage of the event to launch the brand’s Tumblr Blog.

Tumblr has announced that it will start allowing sponsored content on the site, and provide tracking tools for brands and advertisers. Lauren Indivik of the social media news site Mashable pointed out that Karp was quoted as saying it would “it turned his stomach” to consider advertising.

Karp replied that he “was probably being a little bit of an idiot when I said that” and explained that the company wants to generate revenue from the site without disrupting the creative aspects, otherwise “we could just have signed up for Google Ads a long time ago.”

The other mainstream sites have now been joined by relative newcomer Pinterest, which was clearly getting traction with the attendees. Many designers including Marc Jacobs are now using the site to curate content collections.

Despite the interest for other sites, designers said Facebook was still a key platform for customer sales and engagement. Miller praised the commenting functionality that made it the best real-time consumer listening tool. Goldberg added that when it comes to the bottom line, “Twitter may be engaging but Facebook drives three times the traffic."

Industry disruption ahead – so learn about technology

There was discernable gap between representatives of the creative and business aspects of fashion. As Bendet put it: "There are definitely people in my office worrying about ROI. I just like making things look pretty.”

Investors emphasized that fashion leaders have to work to understand technology and technology best practice, not just hand it off to technical teams.

Charlie O’Donnell of Brooklyn Bridge Venture complained that many of the companies that approach him for funding are too focused on the wrong things. “People try to pitch me on the fashion. I'm the wrong guy for that, because I don’t know that much about fashion. What I care about is the business model.”

The investors believe that there are big opportunities for new and different business models in the fashion industry.

“Everything in fashion that doesn’t work will be reinvented in 5-10 years” said Lawrence Lenihan of Firstmark Capita. "If you know how to use technology, you have an enormous advantage.”He urged the attendees to anticipate future changes, rather than just be reactive. “How will YOU use technology to disrupt your industry?”

O’Donnell noted that even though 85-90% of the fashion entrepreneurs are women, they are typically introduced to his company by men. "I don’t see enough women entrepreneurs helping each other in the space... women entrepreneurs need to support each other better by introducing their angel investors to each other."

Analytics as a Superpower

Fashion companies like Burberry have slashed costs from their operations using information systems to provide an integrated view of activities. High-profile online retailers like Zappos have used integrated IT systems to support company growth.

Now this information is being used to get better insights into customers.

In a session hosted by software company SAP on fashion and analytics, Rohan Deuskar, CEO of Stylitics said he believed that “in three to four years, the consumer is going to expect an extremely personalized, curated experience -- and analytics are a new ‘superpower’ to be embraced by retailers.”

Previously, designer would "guess" at what consumers want. Now, using analytics, they can get information directly from customers, and many of the disruptions to the fashion industry will be driven by the insights gained.

Conference attendee Anthony Santagati III agreed. “This consumer behavior panel is THE most important panel for any brand today.” He explained that in his opinion many people in the fashion industry don’t understand the importance of analytics to business success. “But the longer people have worked in real-life operations, the more they get it.”

Fashion companies have to be able to combine internal and customer data with external trends. Geoff Watts, co-founder and CEO of EDITD explained that the goal of the company  is to be the “Bloomberg of the fashion and retail industry” providing fashion decision-makers with a wide variety of real-time data.

Lilly Berelovich, President of Fashion Snoops said that the industry ”no longer really needs a crystal ball,” because so much more data is now available, for retailers and customers alike.

But Watts noted that companies have to be careful about how they use their knowledge as part of the customer experience: “it can’t be creepy.”

The #1 business issue: a perfect fit = a perfect sale

Providing consumers with correctly-fitting clothes is one of the top business issues in the industry, and a key opportunity for technology disruption using better data.

Common sense dictates that good fit is key to fashion purchases, but it’s also backed up by the hard data. Customers who try on clothes in fitting rooms have a conversion rate of 67%, compared to just 10% for those that don’t. Concerns about fit is the number one reason consumers report being reluctant to purchase clothes online. Returned items is one of the biggest costs for online retailers, with return rates of 15-50% depending on the type of item, and 60% of the time that goods are returned, poor fit is cited as the reason.

Conference attendees said it’s not only about transparency and efficiency. Sizing is a delicate subject, and the way products are sized is part of a brand’s image.

Customers prefer to buy clothes with smaller sizes on the label, and this has lead to rampant size inflation over the years. A woman’s size 10 is now 4" wider than in 1975 – and even men’s sizes, ostensibly marked in inches, have grown larger.

The general consensus was that the future will see retailers moving away from defined “sizes” to a more general notion of “fit.” To achieve this, the industry will need better tools to gather and store the real measurements of clothes and customers.

Various companies at the event discussed their approaches to fixing the problem, and gathering "point of fit” data (who didn't buy, why, and what garment didn't fit, etc.)

Me-ality provides booths at various retail locations that can scan customers measurements using radio signals, fully clothed and in under ten seconds. A shopping guide is provided that connects the consumer with appropriate garments and retailers.

Acustom proposes a fluorescent-light based scanning solution, and proposes custom-made, co-designed clothes based on each customer’s individual measurements and specifications.

Since the notion of what is a “good fit” can be subjective, Clothes Horse takes a different approach. It provides retailers with a survey tool that customers to rate the perceived fit of other clothes they have purchased. It then combines the responses with a large database of sizing information gathered from brands and individuals and provides size recommendations.

Styku proposes perhaps the most interesting idea from a technology perspective. The company enables consumers to scan themselves using the Microsoft Kinect image-recognition device originally designed for the XBox games platform.

Styku CEO Raj Sareen says that “through the XBox, Microsoft is the largest body scanning company in the world” because 1% of the XBox user base (around 350,000 people) have used the device for this purpose. Once they have been scanned, consumers can visualize how clothes would look on a virtual model that matches their own dimensions.

Styku was recently chosen by Microsoft as one of the most innovative uses of the Kinect platform.

Omni-channel retail

“Omni-channel” retail, combining the best of online and bricks-and-mortar business techniques, was cited as another key opportunity for innovation.

Online fashion has been growing quickly, but 95% of today’s fashion sales are still in stores, and shopping for fashion goods is still a very tactile experience that can't be completely replicated by technology approaches.

For Andy Dunn, CEO and Founder of Bonobos, the largest born-online men’s fashion company, it’s about having the best of both worlds. The brand has recently gone “from online to offline” and is now opening the first “e-commerce showroom” in Boston. Dunn also announced that the company had signed an agreement to sell its products through Nordstrom.

Cool fashion technology

Fashion companies have been in the forefront of using new technologies in their advertising campaigns. Goldie talked about recent innovations including a Calvin Klein campaign that included massive QR code billboard that prompted people to use their mobile devices to see the “uncensored” content of the ad.

Other fashion startups aim to enrich the customer fashion experience with online applications, often with a social angle.

Stylitics provides an tool that lets you build a personalized outfit history and gives you a view into your own style trends. Buyosphere provides Quora-like functionality that lets you crowd-source the search for the perfect outfit. Cut On Your Bias lets people collaborate to create  their own unique garments within guidelines set up by designers.

As with other industries, all the sites are competing for attention from brands and retailers, and fighting for the critical mass of visitors that will lead to network effects.

UK-based Wirewax wowed the forum audience with a platform for creating clickable, shoppable videos for fashion retailers. CEO Steve Callanan claims it helped niche retailer Oki-ni get a 58% clickthrough rate, compared to the 0.2% typically achieved through online banner advertising.

Aurasma’s technology was another crowd-pleaser. The company provides an augmented reality platform that can be used in campaigns to bring to life static images in magazines and billboards.

General Manager Jennifer Rapp told the story of John Lewis, a large UK retailer.

Unusually, the retail chain is a set up as a co-operative, controlled by the staff themselves, and they chose to keep the stores closed over the end of year holiday season, despite lost sales.

Last year, the retailer used new technology to let passers-by point their mobile devices at store window displays, to see engaging content, and buy products online. The result was a big increase in sales over the previous year.

The event also featured a demonstration area for Perch Interactive, a company that provides interactive retail experiences. Using a combination of cameras, image detection, and projectors, the device beams out beautiful displays that let customers interact with products directly on the shelf.

Future innovation

It's clear that there is going to be lots of innovation in the fashion industry in the future, and that much of it will rely on systems for storing and analyzing data in new ways.

The organizers are hoping to follow on the success of the event with another forum in the fall – and thinking of a European version in the future.