Monthly Archives: September 2019

How AI is Revolutionizing the Fashion Industry

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AI & Fashion: An Unlikely yet Perfect Pair

 

At first glance, fashion – which is primarily driven by art, intuition and creativity- seems like an unlikely match for a clinical, analytical and logic-driven technology like Artificial Intelligence. 

 

However,  AI holds incredible promise for the fashion industry due to the massive data sets  around historical style trends, sales patterns, market swings and customer preferences. For instance, did the global recession in 2009 impact people’s fashion sense and purchase behaviour? How about the Cold War? These are analysis that could yield interesting results and better yet, predict future behaviour and sales in response to global events. 

 

Brands like H&M, Nike and Tommy Hilfiger are leading the way in leveraging AI-powered technologies to optimize the supply chain, enhance the in-store experience, and improve the overall customer experience. Merchandising teams are increasingly relying on data from stores, websites, mobile apps and loyalty programs to tweak designs and layer it with insights from social media, customer reviews and fashion forums to refresh the entire stock every few weeks.

 

According to Mckinsey, while AI in fashion industry is yet to hit critical mass it’s on its way there and likely to impact everything from design to manufacturing to customer engagement.

 

In fact, the implications for AI applications in Fashion is so much that even tech giants like Google & Facebook are recognizing the massive opportunity. Facebook recently launched ‘Fashion++, an AI-powered fashion companion that helps you tweak your look. And Google teamed up with Versace to reinvent the famed JLo dress. 

 

AI-driven Innovations in Fashion Retail

 

With annual spending in AI expected to hit $7.3 billion by 2022, it’s no surprise that AI is set to become an integral part of the apparel industry. Here are top impact areas that AI will likely have on the fashion industry :

 

  • Smarter Demand Forecasting & Inventory Management

In the last 20 years, fast-fashion brands like Zara and H&M disrupted traditional apparel market by shortening the design-to-store time from a few months to a few weeks and trading quality for lower prices and fresh stocks. However, this model requisites a deep understanding of current fashion trends, customer preferences, and the ability to predict where the market is headed. If not, they run the risk of unwanted inventory, discount sales and profit loss.

 

According to Capgemini, using AI across procurement, supply chain, logistics, returns and in-store “pilferage” could generate $340 billion in cost savings across the industry by 2022

 

While demand forecasting techniques have been used to minimize the revenue loss, it was not always accurate as it solely relied on historical sales data and limited data sets. Machine Learning and AI technologies can incorporate learning from multiple sources and compute millions of data points to reduce demand forecasting errors by up to 50%.

 

  • Automated Manufacturing

The challenge so far in automating apparel manufacturing has been the inability of the robot to handle limp and flexible fabrics. However, Sewbo Inc., a Seattle-based startup found a fix by stiffening the fabric, thereby rendering it easier for the robots to handle the clothes. The startup recently launched its first robotically-sewn garment, which was crafted by a generic robotic system that was taught by Machine Learning algorithm on how to use a sewing machine. When coupled with accurate demand forecasting techniques, automated manufacturing has the potential to further shorten the design-store lifecycle down to a few hours!

 

  • Conversational Virtual Assistants

One of the major concerns for fashion brands is helping customers choose the right fit and style without having to sift through thousands of products. Enter chatbots and digital stylists  – customers can now chat/converse with these virtual assistants for getting style tips, finding the perfect dress for an occasion, getting the right fit/fabric based on their personal preferences or choosing a preferred delivery method. Expect this trend is set to take off, considering the rapid growth of smartphone and app adoption where the smaller real estate necessitates a more intuitive and faster product discovery.

 

  • On-demand Designs

Bombsheller, another Seattle-based apparel brand has started on-demand designing and manufacturing of clothes to a market of just one person. The company relies on a community of artists to submit designs using 3D modeling tools that create a photorealistic picture of how the finished product would look. The brand uses powerful software borrowed from video game engines to render the exact product as it will look even before a single stitch has been sewn.  These ‘virtual’ leggings get uploaded to brand’s online catalogue. Once a customer hits “Buy,” the printer inks on the graphic design, and a seamstress cuts and sews the leggings. The finished product is then shipped out the next day. What makes Bombsheller unique is that they don’t spend a dime until a pair of leggings is sold. That translates to no dead inventory, no guessing market trends, no warehouse clearance and no loss of profits.

 

  • In-Store Analytics & Engagement 

Using deep learning, Natural Language Processing and in-store analytics, the Smart Stores of the future will offer superior in-store experience by borrowing the best of personalization, customer engagement and CX practises from their online counterparts. Smart cameras and people counters powered by learning algorithms will offer accurate store insights about visitor demography, persona, sizing, product preferences, and online behaviour to help retailers stitch together a rich customer profile and hyperpersonalize the entire store experience.  Several retail brands are experimenting with algorithms that predicts the most valuable customers who are likely to make repeat purchases based on previous in-store behaviour, loyalty earn/redemption rates and number of store visits. Other in-store applications of AI include identifying customer’s current fashion sense to make personalized recommendations , cashierless stores, monitoring shelf-life and freshness of perishables and interactive displays.

 

  • Quality Control & Counterfeit Screening

The Hong Kong Polytechnic University (PolyU) recently developed a smart fabric defect detection system, called “WiseEye”, which uses advanced AI and Deep Learning algorithms to help manufacturers instantly detect defects and anomalies in the production line. The system has been proven to reduce the chance of producing defective fabric by 90%, thus significantly reducing loss and wastage in the production. 

 

Several brands are also experimenting with Machine Learning algorithms to find and filter fakes and counterfeit products. This technology is also used by customs and law enforcement officers to verify the validity of premium products like sunglasses and purses which are frequently counterfeited

 

  • Visual Commerce

Another trend that has been picking up steam of late is visual commerce. It essentially allows customers to take pictures of clothing they like or styles they want to imitate and find the exact items for sale.  Additionally, AI-enabled shopping apps allow customers to take screenshots of clothes they see online, identify shoppable apparels and accessories in that photo, and then find the same outfit and shop for similar styles. For instance, if you have a specific patterned dress in your mind that your friend had worn at an event, AI can enable you to locate it. You can click a photo of your friend, upload it on a fashion site, and the AI algorithms will do the rest.

 

Fashion Brands Spearheading Artificial Intelligence Adoption

 

  • Nike

Nike has been the frontrunner in adopting technology to keep up with the changing times and stay ahead of the competition. In the last 5 years, the sports apparel giant spend millions on an acquisition spree of digital media, Ecommerce and analytics startups like Celect, Zodiac and Virgin MEGA to transform itself into a tech and data company that also sells fashion and apparel. When visitors walk into Nike Inc flagship store in New York and log into the app, the brand knows who they are,  their shoe/apparel sizes, what sports they play and their favourite colours. Nike has reaped the benefits of its technology investments by reducing product defects, returns, shorter lead times, and most importantly, higher customer engagement and brand loyalty. The brand recently launched an app – Nike Fit  – that offers  “hyper-accurate” sizing recommendations for its shoes by scanning your feet with a smartphone camera.

 

  • H&M

H&M was one of the many brands whose sales took a severe wallop due to the retail apocalypse. The brand is now leveraging AI and Machine Learning to claw its way out of the slump and transform its business by spotting upcoming fashion trends, reduce unsold stock, optimize logistics and improve sales. The world’s second largest fashion group has started full-scale implementation of several pilot projects that were aimed at using data to match supply and demand as closely as possible. H&M is also harvesting data from loyalty cards and sales receipt to customize merchandise for an individual store. The brand recently teamed up with Google to create ‘Coded Couture’ , a cool app that creates a personalized design for every individual by analyzing their activities and interests over a period of one week.

 

  • Tommy Hilfiger

Tommy Hilfiger partnered with IBM and  Fashion Institute of Technology to help designers create new clothing line by analyzing customer sentiment around the brand’s apparel and imagery. The project was aimed at identifying key trends in silhouettes, cuts, patterns and styles that evoked positive customer sentiments by analyzing 15,000 images of Tommy Hilfiger products, 600,000 runway images that were publicly available and 100,000 patterns. Going forward, the brand plans to augment its design process with AI-powered insights to alleviates the pressure on the designer around creating a mass appealing creation.

 

  • ASOS

In 2018, the UK-based online retailer developed an AI system to help customers find the right size of garment when shopping online. The smart fitting tool personalizes sizing suggestions based on multiple data sets like customer’s previous purchases and returns, as well as an optional set of questions based on height, weight and fit preferences. The online retailer rolled out the Fit Assistant across 200 markets and is available across ASOS collections, exclusive labels and fashion favourites. This year, the brand partnered with an AR startup to launch an augmented reality catwalk for users of its fashion app. The technology allows customers to view models as if they are walking in front of them by simply pointing their smartphone camera at any suitable flat surface and clicking the ‘AR’ button on the app.

 

  • Stitch Fix

Stitch Fix is a San Francisco-based fashion startup with a unique sales model. It combines the expertise of personal stylists with insights of an artificial intelligence system to analyze data on style trends, body measurements, customer feedback and preferences to deliver personalized apparel right to their customer’s doorsteps on a regular basis. Once the delivery is done, the customer can choose to keep all of the products or return what they don’t like or need. This input is fed into the company’s AI-powered data vaults to make the algorithms even better at determining the preferred style for each person and current trends. The brand also uses data to create its own designs known as Hybrid Designs. The system works by disassembling attributes of style such as color, arm length and neckline, etc. It then analyzes the feedback and customer sentiments available for each of these attributes and mutates them slightly to create new designs to share with human stylists.

 

Way Forward

 

While AI has proven its effectiveness in improving all aspects of fashion retailing, it’s impossible to remove the human factor from the equation.  When they work together, the results are supercharged productivity, better customer engagement and higher profits. This trend clearly indicates the evolution of AI as an Augmented Intelligence rather than an Artificial one.

F&B Trends for 2020 – Technology & Consumer Behaviour

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The F&B business is one of the toughest markets to be in.  On one hand, you have rapidly rising rental, labour and raw material costs, and on the other, fickle and highly demanding customers who expect the best dining experience every time. And to top it all off, you have aggregators eating into your already declining margins.

 

To stay afloat and thrive in this dynamic and competitive market, restaurants will need to keep up with the latest F&B industry trends by  adopting new-age technology to elevate the dining experience through faster, more efficient service, streamlined kitchen operations,  real-time customer relationship management, omnichannel engagement and innovative digital experiences across multiple formats.

 

Brands like Luckin Coffee and Dominos Pizza are leading the way in this new technology-driven, digital-first F&B business model. And the results speak for themselves: Luckin Coffee is set to increase its number of locations from 2,000 to more than 4,500 by the end of 2019. And more than 60% of Domino’s US sales in 2018 came via digital orders, and the pizza maker achieved its 30th straight quarter of same-store sales growth and saw its stock rise 22% in a turbulent market.

 

Here are the top F&B trends that you should watch out for in 2020 : 

 

  • The Rise of Eat-ertainment

Much like the transformation of retail from being a transaction-driven to experience-driven model, dining out is quickly becoming more than mere eating. Today’s connected customers expect a series of delightful micro-moments right from the table reservation (through an app or website) to leaving the restaurant. Whether they will return and become loyal customers is entirely dependent on how well a restaurant is able to craft these moments while incorporating elements of fun, surprise and entertainment. In short, serving good food is merely not enough anymore and restaurants should look at leveraging new-age technology like AR, VR and other interactive digital interfaces to create these unique moments.

 

  • Customized Food

As customers get used to personalized interactions in other industries like health care, beauty and retail, they will come to expect the same from their favourite restaurants. Brands can leverage the customized F&B trend in multiple ways like recommending dishes based on previous online/offline customer interactions, building a rich customer profile that incorporates personal preferences, allergy information etc, ‘build-your-own-dishes’, or simply personalized messages on the food using stamping or embossing techniques.

 

  • Self-ordering Kiosks

Self-ordering kiosks are being hailed as the secret to the success of QSR chains and it has already proven highly effective in improving customer experience, reducing labour costs and increasing sales during peak hours. A self-service solution is essentially a digital interface that allows in-store customers to submit orders, pay for it and skip the long waiting lines. It’s also fairly easy and cost-effective to implement as the components comprise of a tablet, bill acceptor and card swipe module. These ordering interfaces can also be synced to be your CRM to offer personalized menus/offers and also create cross-sell/upsell opportunities. However, before following this F&B trend blindly, bear in mind that a self-ordering kiosk is likely to be effective only for QSR chains where the focus on getting the orders out as quickly and efficiently as possible. 

 

  • From Lab to Table : Cell-based Meat

The Maharashtra government and the Institute of Chemical Technology have already signed an agreement with U.S.-based non-profit Good Food Institute establish a Centre for Excellence in Cellular Agriculture. The institute plans to setup a greenfield lab by the end of 2019 and expects to offer tasting tests of lab-grown meat by early 2020. Proponents of the technology list several health and environmental benefits – the meat is slaughter-free, free infections of salmonella and e coli, not injected with multiple doses of antibiotics and leaves a lot less carbon footprint. This is one F&B trend that’s set to take off in the near future.

 

  • Focus on Sustainability & Transparency

With deforestation, human rights violations and climate change grabbing headlines almost every day, consumers are increasingly demanding more sustainable and humane products and ingredients. From grass straws to drinking cups made from palm leaves, bamboo tableware and chemical-free kitchen cleaning products, several F&B brands are actively moving towards a plastic-free, sustainable living for a better future. Consumers today not only want to know where a brand’s product, ingredients, etc. are sourced from but also how the product was made, how it got there and the assurance of quality. Technology plays a vital role in mapping the entire lifecycle of a product, and communicating it in a transparent way is critical for building brand loyalty as well as word of mouth.  

 

  • The Reign of Convenience

We’re seeing a large number of restaurants — both fast-casual and fine dining — jump on the food and beverage trends of implementing new interfaces and touchpoints to engage customers and offer easy access to the brand in new ways. In addition, ordering via apps has grown exponentially. These applications have definitely changed the consumer dining experience and provide better customer convenience. Mobile apps now allow consumers to view a restaurant’s menu anywhere and place an order so that it’s ready when they arrive. And the technology has benefited restaurant owners too – giving them more time to prepare food, optimize their operations and increase table turnover. Also, since most pre-order apps have online payment features, restaurant owners can sell their meals in advance.

 

  • Personalized, Value-driven Loyalty Programs

An F&B brand’s success is heavily hinged on Average Order Values (AOV) and repeat purchases. However, a generic, one-size-fits-all reward program doesn’t cut it anymore. To boost sales and repeat visits, a restaurant loyalty program needs to be highly personalized, omnichannel and value-driven. According to Evergage, 88 percent of marketers reported noticed signified improvements through personalization and more than half report a lift greater than 10%. In fact,  Panera, the US-based bakery cafe’s loyalty program generated $1 billion in sales in 2018. Moreover, personalized loyalty programs tend to increase the average bill values and enhance guest satisfaction levels. For this reason, it’s important that F&B brands partner with vendors that can implement a unique, value-driven loyalty program that rewards guests not merely for transactions but for reviews, social sharing and referrals.

 

Stay on top of the latest F&B trends, test-drive our award-winning F&B Loyalty Program Software, Get a Demo

 

  • AI-Powered Inventory Optimizations

Restaurants deal with a highly dynamic inventory comprising primarily of fast-moving and perishable goods. To reduce wastage, predict demand and ensure great service, it’s critical for them to get their inventory management right.  An Artificial Intelligence system can connect the dots between diverse factors like guest preferences, social media engagement, brand mindshare, product shelf life, global F&B trends and even the weather to help you streamline your supply chain and prevent stockouts.

 

Way Forward

 

Technology adoption amongst F&B brands is expected to skyrocket in the coming years.  However, the key focus point in product and solution implementation should be its relevance, impact on overall customer experience and improving convenience. If not brands, run the risk of riding an expensive hype train that’s headed to no man’s land.

Improve loyalty ROI with promotional controls on Capillary Loyalty+

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For brands, having a consumer loyalty program is not an option anymore. With the intense competition faced by most, having consumer retention strategies in place is a must but ensuring these programs break even can be a challenge. While it’s important to make consumers feel valued by rewarding their loyalty, you also have to ensure that your consumers aren’t taking advantage of the loyalty program, so it delivers the maximum ROI.

Promotion control strategies can help your brand ensure consumers get rewarded but can’t exploit the program.

Limit the number of times a customer gets rewarded

On Capillary Loyalty+ , you can reward consumers for a special occassion or a favourable action, but limit the number of times such rewards would be applicable, to maintain exclusivity and increase urgency.

This strategy could be used to create rewards such as:

    • The end-customer gets 2X or 3X points on first transaction in their birthday or anniversary month
    • The end-customer gets 2X points on their first transaction through the mobile app
    • The end-customer gets 2X points on their first transaction through a particular payment mode e.g. first UPI transaction etc.

Limit the total points that a customer could earn through a promotion

A festive season sale, or end of season sale often attracts a lot of purchases. A lot of purchases often also means a lot of reward points being given out, but this could mean your bottom lines aren’t what they could have been since you’re spending on both discounts and rewards. Limiting the total points a customer could earn during a promotion season can ensure optimal rewards disbursal and loyalty ROI during this period. For eg:

    • The end-customer can only earn a maximum of 1000 bonus points during Diwali / Ramadan / Chinese New Year promotion irrespective of the number and total amount of purchases made.

Limit the total points issued through a promotion

This limit is extremely important while creating co-branded or partner based promotions. By having a limit to the total points issued through a promotion, you and your promo partner can pre-determine the total liability each of you would have during the promotion. This ensures you aren’t overspending your promotional budget during any promotions. To illustrate, let’s consider this use case: 

    • A brand runs a co-branded promotion with a payment provider where the end-consumer gets 100 additional points when they make a purchase using this particular payment provider. In that case, the payment provider could put a restriction saying total liability from the promotion to be limited to 100,000 currency. This currency can be converted into value in points to be disbursed amongst the first few end-consumers who avail the offer. Once the currency runs out, the offer is no longer valid.

Now take advantage of these promotional limits and more on Capillary. Talk to your Capillary Customer Success Manager today.

6 Reasons Why Channel Loyalty Program FaiI

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What is a Channel Loyalty Program?

 

A channel loyalty program is a critical sales pillars and a crucial element in the growth strategy of your business. Channel loyalty is focussed on transforming the relationship between a brand and its trade partners from that of a purely transactional one to a long term, emotional connect. This is increasingly becoming critical for a brand to succeed in a competitive market.

 

The most important factors in fostering channel loyalty are implementing value-driven loyalty schemes, transparent two-way communication, personalized incentives and driving emotional connects through constant engagement and experiences.

 

Why Brands Need a Channel Loyalty Program?

 

A B2B loyalty program is a powerful way to create loyal, long-lasting relationships with your stockists, dealers, influencers, resellers, and retail partners. They are critical for brands to survive in a highly competitive, globalized economy where competition is intense and multiple brands are battling it out for the attention of distributors, influencers and retail partners. 

 

A well-strategized channel partner loyalty program can positively influence the willingness, and motivation of your channel partners to recommend and sell your products and services. It can also unearth new sales and revenue opportunities as well  as function as a recruitment channel for onboarding new partners and increasing your overall distribution network

 

More than 80% of distributors confirmed that the opportunity to get rewards from the supplier is a critical factor in their purchase decisions.

 

Much like its B2C counterpart, the primary goal of a B2B loyalty program should be to elevate the relationship between a brand and its partner from that of a purely transactional one to one that of a long-term, emotional one. This can help your brand to create reliable, long-term revenue and more importantly, increase your brand mindshare amongst partners as well as your end consumer.

 

Why Partner Loyalty Programs Fail

 

Gaining the loyalty of your channel partner can be tricky but it’s not impossible. The biggest mistake most brands make with their channel loyalty programs is focussing heavily on transactional and monetary rewards.  

 

In fact, research shows that companies that implement non-cash reward and recognition programs for their channel partners record annual revenue increases averaging 10% compared to other companies which average 3%.

 

Here are some reasons for the failure of your loyalty programs :

 

Lack of commitment

 

For a loyalty program to work, it must be well planned, have stakeholder buy-in and promoted extensively. It’s recommended to have a dedicated program manager who oversees the loyalty program and reports the sales and revenue impact to the senior management.

 

Lack of personalization

 

If your brands operate a complex supply chain featuring distributors, dealers, influencers, sub-dealers, retailers etc, it’s important to customize the rewards and incentives for each segment. It is also important for brands to have clarity about the behaviour they want to encourage; it could be different for a distributor than a reseller, for instance.

 

Not setting measurable goals

 

It’s important to attach measurable goals like increase in sales, revenue or higher market share to your channel loyalty program to ensure its success. The goals should also be communicated to your sales and marketing team. Also, it’s important to get an understanding of your channel partner’s goals and motivations. This will help you to sync your own business goals with that of your partner’s and thereby create a symbiotic partnership.

 

Complex program structure

 

The success of your channel loyalty program depends on how seamlessly it can integrate into the routines of your partners. Ensure that the sign up is hassle free and you list out the rewards and other terms/conditions upfront. Also, ensure that points and rewards are  attainable; making either of them too difficult to earn will disengage partners from the process.

 

Not leveraging data  

 

A channel loyalty program with advanced analytical capabilities can help you track the overall health and status of your loyalty program. To ensure the success of a program, it’s imperative to constantly check the participation and redemption rates along with its sales pipeline contribution.  An added benefit of tracking the progress of your channel loyalty program is it can uncover potential upsell/crosell opportunities for a specific region. 

 

Launch it and forget it approach

 

Most brands treat their loyalty programs as an autonomous entity that can function on its own once it’s launched. Unfortunately, this leads to the decline and eventual failure of a program. The primary reason is that there are several brands vying for the attention of the same partner and your loyalty program needs to be exceptionally good for it to stand out.

 

Strategies for Effective Channel Loyalty Program

 

While the actual strategy will vary depending on the target audience goals and aspiration of your specific audience (distributor, wholesaler, retailer etc), here are some key things which you will need to incorporate into your loyalty program to ensure its success.

 

Understand Partner Goals 

 

This is the first step in implementing a channel loyalty program and should form the core of your strategy. Make sure you segment your audience based on their goals and offer them unique, personalized goals and rewards.  If your loyalty program doesn’t sync with your partners’ strategic goals, adoption and redemption will suffer

 

Easy Reward Redemption via Ecommerce website/mobile app 

 

Whether it’s a gift card, a holiday or an appliance, make it easy for your partners to redeem their rewards, if not your program will slowly lose traction. The ideal way to do this is to setup a dedicated B2B ecommerce app or website, where your partners can login and choose from multiple incentives in a single platform.

 

Setup Member Events

 

Constant partner engagement is critical for the success of your channel loyalty program. Try to organize localized events and meet/greet sessions where you can communicate with individual partners. This is also a great way to build a long lasting relationship with your partners and ensure lower marketing costs.

 

Personalization & Segmentation

 

No two partner’s motivations and goals are alike, therefore it’s important to offer highly personalized goals and incentives. Make sure you set clear rule structures for each partner centered around their behaviour that consistently produces business results. The personalization aspect should also flow into your communication strategy. For instance, language barriers and other geo specific cultural nuances need to be taken into consideration for effective reach and engagement.  

 

Tier-based Incentives 

 

Tier-based incentives have been really successful in the B2C context and works very well for partners as well. This structure essentially aligns with the aspirational mindset that is core to human behaviour.  Start from a base tier for signups and offer higher incentives as the partner moves up the tier based on their sales and purchase volumes.

 

Leverage Gamification 

 

Gamification concepts like  Leaderboards, Spinwheels, Engagement Trackers and sporting event (IPL , World Cup) related activities can help boost engagement levels of your loyalty program. For gamification to be successful, it must sync with the user journey, your business goals, and communicated clearly to the partners through multiple channels like emailers, app notifications, SMS and sales visits.

 

Benefits of Channel Loyalty Program

 

Boost Sales & Reach 

 

A channel loyalty program directly impacts the sales and revenue growth of your brand by motivating influencers and retail partners to sell more of your products. 

 

Gain Channel Insights 

 

Data from your channel loyalty program can offer you insights into product sales and customer preferences in specific geos. These insights can be leveraged to gather best practises and optimize your inventory and supply chain in the long run.  

 

Real-time Partner Engagement

 

Advanced channel loyalty program software lets you engage with your partners in real-time. This can help boost brand mindshare, loyalty and ultimately sales and conversions.  

 

Efficient Channel Management

 

Get insights on the product preferences and sales across multiple channels and leverage it to identify bottlenecks, crosell/upsell opportunities and potential new markets. 

 

Lower Acquisition Costs

 

By encouraging existing partners to refer to new partners, an efficient channel loyalty program can significantly reduce your cost of acquisition.

 

Long-term, Profitable Relationships

 

This is the ultimate goal of a channel partner loyalty program and can have a major impact on your sales and brand loyalty.

 

Start increasing sales & partner engagement with Capillary’s Channel Loyalty Solutions