The Digital Industry is the Key to Unlocking Endless Opportunities for Brands
Ana Olkhovskaia, Marketing Lead, Seamm
May 4, 2023
Trends and technology in the digital fashion industry
Opportunities for fashion brands in the digital fashion industry
The fashion industry is undergoing a massive transformation driven by technological advancements and shifting consumer behavior, according to experts in the field. The rise of social media, gaming and metaverses has created a new paradigm in the form of the digital fashion industry, utilizing cutting-edge technology to create a unique and immersive customer experience. As a result, this sector is rapidly expanding and is projected to reach a staggering $195.07 billion by 2028, representing a compound annual growth rate (CAGR) of 187.88% from its $342.71 million valuation in 2022.
The revenue of the global apparel market was calculated to be $1.53 trillion in 2022. It is expected to grow at a CAGR of approximately 5.8% during the forecast period of 2021-2028, driven by factors such as changing fashion trends, rising disposable incomes and the increasing penetration of e-commerce platforms.
Sustainability and non-binary virtual identification are key trends shaping the digital fashion industry. Companies are exploring ways to create sustainable virtual assets, materials and economies. For example, Tommy Hilfiger is pioneering a digital showroom using 3D technology to reduce the carbon footprint associated with traditional fashion shows. Meanwhile, non-binary online identification is being increasingly adopted, providing a space for people to express themselves without being confined to traditional gender norms. Burberry, for instance, launched a virtual collection on the video game Minecraft, allowing users to get clothing for their avatars.
In addition, Web3 technology has paved the way for augmented reality (AR), offering customers a virtual try-on experience and digital ownership of unique assets, such as virtual clothing items. Gucci is offering a beautiful and realistic try-on experience for four different pairs of sneakers. Dolce & Gabbana released original NFTs, giving owners access to metaverse wearables corresponding to each of the matching looks, beginning with Decentraland. Shopping has also evolved into a co-creative and gaming experience, allowing customers to collaborate with designers to create unique clothing items. Ralph Lauren's recent collaboration with Bitmoji is an excellent example of this trend because customers can create their own Bitmoji look with the new mix-and-match wardrobe from Polo Ralph Lauren.
AI technology is being used to optimize the supply chain, predict fashion trends, and improve distribution for companies such as Adidas.
Furthermore, fashion brands can take advantage of this evolving industry to enhance their branding, monetization and promotion strategies.
By co-creating with their community of customers, fashion brands can increase retention and loyalty as customers feel a deeper connection to the brand. Customers' involvement in the design process also enables brands to create products that better meet their target audience's needs, enhancing customer satisfaction. Moreover, this approach can signal a progressive and innovative brand image, attracting new customer groups.
Fashion brands can create new revenue streams by designing digital clothing or accessories that can be used in virtual environments and combined with physical clothes to create “phygital” collections. These exclusive perks can be offered to brand loyalty program members, which could increase their customers' lifetime value and reduce costs for the production of physical samples, thus improving profit margins for the brand.
NFTs (Non-Fungible Tokens) can be leveraged by fashion brands to promote their company. They are digital assets that represent ownership or proof of authenticity, which fashion brands can use to create limited edition online-only clothing or accessories, sold to collectors or used as promotional tools on social media. This offers unique opportunities for fashion brands to shape Gen Z's fashion preferences while creating less competition.
The digital fashion industry is experiencing rapid growth, and its potential for expansion is impressive given the incredible pace at which it is developing. Fashion brands can capitalize on this opportunity by co-creating with their community, creating new revenue streams, and leveraging NFTs as a versatile tool to shape the fashion preferences of their target audience. By embracing these opportunities, fashion brands can stay ahead of the competition and succeed in the ever-evolving virtual fashion landscape.