The State

of Fashion
Technology
2
The State of Fashion

Technology
May 2022

This special edition is part of a series that The Business of Fashion and McKinsey &
Company are publishing to complement our annual State of Fashion report. While the
main report analyses the shifts shaping the global fashion industry in the year ahead,
the special editions focus on specific subsectors, verticals, geographies and topics. For
this edition, the authors have chosen to analyse existing and emerging technologies
addressing the industry’s biggest challenges and opportunities.
3
ACKNOWLEDGEMENTS
A special thanks to all members of The Business of Fashion and the McKinsey communities for their contributions to the research,
especially the many industry experts who generously shared their perspectives during interviews. In particular, we would like to thank
Alan Ting, Frederic Court, James Bilefield, Milton Pedraza, Natalie Massenet, Nicole Johnson, Pierre Denis, Reina Nakamura, Robert
Gentz and Sandrine Deveaux. We’d also like to thank Crunchbase for its invaluable data sharing for this report.

We would like to extend a special thanks to the core McKinsey report team, Ewa Starzynska, Made Lapuerta and Phoebe Lindsay, as
well as the following McKinsey colleagues who contributed to the report: Aimee Kim, Alex Sawaya, Andy West, Clayton Petty, Colleen
Baum, Cyrielle Villepelet, Daniel Zipser, Danielle Bozarth, Desirae Oppong, Erik Eklow, Felix Roelkens, Jakob Ekeløf Jensen, Jennifer
Schmidt, Jonatan Janmark, Karl-Hendrik Magnus, Kim Rants, Kristi Weaver, Larissa Blau, Libbi Lee, Marie Strawczynski, Megan
Lesko Pacchia, Michael Straub, Nic Cornbleet, Pamela Brown, Raoul Dubeauclard, Rickard Vallöf, Sajal Kohli, Sandrine Devillard,
Saskia Hedrich, Senthil Lingamoorthy, Thomas Kilroy, Tyler Harris, Yasufumi Tozuka and Younghoon Kang.

We’d also thank David Wigan for editorial support, and Adriana Clemens and Nicola Montenegri for external relations and
communications, and Susann Arnold, Natalia Morelli, Dora Trokan and Deborah Enning for all logistics.

In addition, the authors would like to thank Lucinda Scholey for her creative input and direction into this State of Fashion report,
report, Amy Vien for her design guidance and Joe Boyd for the cover illustration.

4
CONTENTS

INTRODUCTION 8—15
Executive Summary 8
Industry Outlook 10
Technology in Fashion: A Quick Guide 12

THEME 01. METAVERSE REALITY CHECK 16—21

In-Depth Where Fashion-Tech Investors Are

Putting Their Money 22

THEME 02. HYPER PERSONALISATION 26—31

Executive Interview Zalando: Bringing Data

Science to the Art of Fashion Retail 32

THEME 03. CONNECTED STORES 36—41

In-Depth How Luxury Brands Are Using Technology

to Enhance the Customer Experience 42

THEME 04. END-TO-END UPGRADE 46—51

THEME 05. TRACEABILITY FIRST 52—57

Glossary 58
Endnotes 59
Contacts 62

5
 CONTRIBUTORS

IMRAN AMED ACHIM BERG ANITA BALCHANDANI

Imran Amed is one of the global fashion Achim Berg is a senior partner in Anita Balchandani is a senior partner
industry’s leading writers, thinkers and McKinsey’s Frankfurt office, and leads in McKinsey’s London office, and
commentators, and is founder, chief McKinsey’s Global Apparel, Fashion leads the Apparel, Fashion & Luxury
executive and editor-in-chief of The & Luxury group. He is active in all group in EMEA and the UK as well
Business of Fashion, a modern media relevant sectors including clothing, as the Consumer practice in the UK.
company and the authoritative voice of textiles, footwear, athletic wear, beauty, Her expertise extends across fashion,
the global fashion and luxury industries. accessories and retailers spanning from health and beauty, specialty retail and
Imran holds an MBA from Harvard value to luxury segments. As a global e-commerce. She focuses on supporting
Business School and a B.Com from McGill fashion industry and retail expert, he clients in developing their strategic
The State of Fashion: Technology

University. He was born in Canada and supports clients on a broad range of responses to the disruptions shaping the
holds British and Canadian citizenship. strategic and top management topics, industry, particularly accelerating digital
Previously, Imran was a management as well as on operations and sourcing- growth and delivering customer-led
consultant at McKinsey & Co. related issues. growth transformations.

CARLOS SANCHEZ ALTABLE HOLGER HARREIS SAGA AF PETERSENS

Carlos Sanchez Altable is a partner in Holger Harreis is a senior partner in Saga af Petersens is an engagement
McKinsey’s Madrid office. Carlos helps McKinsey’s Düsseldorf office, and manager in McKinsey’s Stockholm
Apparel, Fashion and Luxury clients co-leads McKinsey’s data work around office, specialising in Apparel, Fashion
transform their digital and analytics the globe. He helps organisations and Luxury. She works with fashion
capabilities at scale to support the rapidly implement transformations, and luxury companies across Europe,
acceleration of current business models with groundbreaking levels of adoption on topics such as business strategy,
and the development of new businesses. and impact, working with clients to marketing and transformation.
In his work, he helps clients transform solve business-critical issues and create
their digital journeys, accelerate data positive impact and defendable barriers
and analytics strategies, undergo core IT of competitive advantage through data,
system modernisation, and implement analytics and technology. While he is
agile ways of working at scale to address working across industries, his focus lies
clients’ most pressing initiatives, on retail, with a particular passion for
such as e-commerce acceleration and apparel and fashion, telecommunications
personalisation. and banking.

6
ROGER ROBERTS  JANET KERSNAR MANUEL HURTADO

Roger Roberts is a partner in McKinsey’s As executive editor at The Business of Manuel Hurtado is an engagement
Silicon Valley office. Roger helps clients Fashion, Janet Kersnar has a multifaceted manager in McKinsey’s Madrid office,
conceive and apply technology solutions content role. With more than 25 years specialising in technology solutions,
to enhance innovation and productivity of experience as a business and finance IT strategy and digital and data
and serves clients primarily in the retail, journalist at leading global publishing transformation in retail. He serves
consumer and technology sectors. houses, Janet is a member of BoF’s Apparel, Fashion and Luxury clients in
Increasingly, his work is focused on digital senior leadership group and is part of the Europe, helping them to develop and
customer and employee engagement launch team of BoF Insights, a think tank implement digital and analytics strategies
as well as application of advanced providing research and analysis on key and solutions at scale.
analytics to new business problems and topics for the fashion industry.
opportunities. Roger serves a mix of
leading brands and retailers as well as
established and emerging technology
providers to the sector.

MARC BAIN HANNAH CRUMP

The technology correspondent at The As associate director, editorial strategy

Business of Fashion, Marc Bain reports at The Business of Fashion, Hannah
on the innovations reshaping the global Crump contributes to the execution of
fashion industry and writes a weekly tech special editorial projects, ranging from
newsletter. In his career as a reporter, case studies to in-depth market reports.
including several years as the fashion With an extensive editorial background
reporter at Quartz, he has covered all in B2B and B2C publishing, she partners
aspects of the industry, from garment with industry experts to develop, edit
workers to the runway, and in 2021 and produce data-driven research and
received an award in business journalism. analysis for professionals in the global
fashion industry.

7
Executive Summary

T
echnology has already revolutionised the these opportunities, the report aims to help leaders
way that global fashion companies do look beyond hype and buzzwords to explore how
business. The Covid-19 pandemic further technologies can alleviate real pain points and have a
cemented the pivotal role technology tangible impact on business results.
plays in the industry, accelerating e-commerce When it comes to hype, there is no shortage
adoption among consumers and further embedding in the matter of the metaverse — the interconnected,
digital tools in day-to-day workflows and decision virtual ecosystem that overlaps with or offers an
making. Though the focal point to date has largely alternative to physical reality. But it is difficult — and
been on customer-facing technologies, brands now potentially unwise — for fashion brands to ignore the
have an opportunity — born out of necessity in fact that in 2021, global spending on virtual goods
today’s volatile operating environment — to expand reached around $110 billion, more than double the
the breadth and depth of technology application total in 2015. That spend is expected to be worth at
in the industry. Fashion brands and retailers are least $135 billion by 2024. While many experiments
leaning into technology not only to become more in the metaverse at this stage are largely marketing
resilient to supply chain and other disruptions, but exercises, innovative fashion brands over the next
also to become more responsible and transparent as five years could generate up to 5 percent of their
the world seeks sustainability solutions. revenue from activities in the metaverse. Virtual
Against this backdrop, we expect fashion skins in digital worlds will be a big driver of that
companies to ramp up their investments in revenue stream, while NFTs can help to solve
technology, from between 1.6 and 1.8 percent industry pain points and bolster customer loyalty.
of sales in 2021 to between 3 and 3.5 percent by
2030. Investors, meanwhile, will pour capital into
We expect fashion companies
companies whose technologies aim to make fashion
players more nimble and more environmentally to ramp up their investments in
and socially responsible. Fashion players that fail technology, from between 1.6
to embrace these technologies will face existential
and 1.8 percent of sales in 2021
challenges, while their tech-savvy counterparts
should see measurable bottom-line benefits. to between 3 and 3.5 percent
Technology’s impact is evident in key by 2030.
business areas, such as creating exceptional
customer experience and engagement; helping to As companies lean into digital opportunities,
address sustainability issues; and upgrading internal they will look to the hyper personalisation of
processes and operations. This applies to fashion experiences to increase customer loyalty. Shoppers
players across value segments, though the solutions have learned to expect curated, personalised service
may play out differently for luxury and mass market in other industries thanks to players like Netflix and
brands to accommodate varying customer needs and Spotify, which harness AI to provide experiences
strategic priorities. specific to individual customer tastes and needs. But
This report identifies the business the fashion industry has been largely ill-equipped to
opportunities on which fashion leaders should move beyond basic customer segmentation owing to
focus their technology resources and investments, technology and talent restrictions. Brands that invest
based on executive and other expert interviews, in AI modelling and Big Data to create one-to-one,
analyses of public and private companies, market personalised shopping experiences may see customer
intelligence and consumer research. By focusing on acquisition rates and sales increase as a result.

8
 In a similar vein, executives should leverage sustainability challenge. Brands should consider
technology in their physical stores to augment the joining forces with each other, start-ups and industry
omnichannel customer experience. As brands and bodies to establish a common data standard, and to
retailers adopt and adapt in-store technologies, share data and knowledge via software platforms,
they will bridge the gap between online and offline open ledgers and Big Data technologies.
channels. For example, in-store mobile apps for For decision makers across value segments
store associates can offer a frictionless way to serve and at all stages of the technological adoption curve,
customers, while in-store customer apps engage this report translates each of these opportunities
customers and result in more time spent in store. into clear, actionable steps for brands and retailers
Meanwhile, beyond the shop floor, robotics and stock seeking to be part of fashion’s tech acceleration.
optimisation software, among other tools, can help To date, few brands or retailers have
brands and retailers set up micro-fulfilment centres, embraced technology with a truly competitive
integrating physical stores as digital nodes in their mindset. Now, fashion and technology go hand
distribution and delivery networks. Micro-fulfilment in hand to enable companies to expand into new
technologies can increase efficiency and reduce markets, win deeper levels of customer loyalty,
fulfilment costs by up to 90 percent, while also and establish data-driven strategies and decision
improving customer satisfaction thanks to faster making. As fashion leaders seek further digital
delivery times. transformations across their organisations, they
Behind the scenes, technology is set to impact will need to prioritise technology and align their
internal processes along the value chain, from companies’ talent and resources accordingly.
demand forecasting to transport operations. While
many parts of fashion companies’ value chains are
already digitised, a challenge for many players is
that digitisation has happened in siloes, creating
bottlenecks and other inefficiencies when it comes
to sharing data and knowledge between functions.
As a result, fashion executives believe integrating
digital processes throughout their organisations will
be among their top-five areas for digitisation as they
look ahead to 2025. The benefits of such integration
include increased speed to market and full-price sell
through rates, as well as lower manufacturing costs.
Digital connectivity of the supply chain
is important in another key area for fashion:
sustainability. Traceability software — which helps
brands identify, monitor and manage products across
entire lifecycles and in different parts of a supply
chain — is essential for the industry’s sustainability
efforts, while seeking to address demands from
regulators, investors and customers for greater
transparency around brands’ environmental and
social impact. These traceability efforts cannot work
in isolation, given the enormity and urgency of the

9
 INDUSTRY OUTLOOK

Get Ready for the Great

Tech Acceleration
In 2021, fashion companies invested increased fashion customers’ digital interactions
between 1.6 and 1.8 percent of their revenue in with brands, with 72 percent of customers reporting
technology, on average.1 By 2030, that figure they interacted with brands online in 2021. In the
is expected to increase to between 3 and 3.5 year ahead, this is expected to stabilise at 66 percent
percent.2 Indeed, after a steady, decades-long on average.10
technological ramp up focused on the digitisation Companies that leaned into technology to
of customer-facing interactions, fashion technology weather the pandemic and other recent challenges
advancements are now accelerating across the learned valuable lessons for excelling in today’s,
entire value chain. With widespread automation and tomorrow’s, digital ecosystems. Those
and sharper AI-driven analytics, technology that have embedded AI technologies into their
is eating fashion — from internal processes to businesses to increase operational efficiencies
The State of Fashion: Technology

customer experiences.3 and improve customer engagement could realise

Why is this happening now? As experts a 118 percent cumulative increase in cash flow by
point out, in the next decade we will witness more 2030. For companies just starting on this journey,
technological progress than in the past 100 years.4 implementing AI-driven initiatives between now and
By 2024, AI-generated speech could 2030 could generate a 13 percent increase in cash
power more than half of all human interactions flow. Laggards with no such initiative before 2030
with computers, while 50 percent of work across should expect a 23 percent relative decline.11
all industries could be automated by 2025, both Now, fashion executives must lean into
with deep repercussions for the skills companies technology to not only grow their businesses and
will need.5 Meanwhile, more than 75 percent of optimise profitability and cash flow, but also to
enterprise-generated data will be processed by address the industry’s most pressing challenges
cloud or edge computing,6 improving website — from hitting ambitious sustainability targets to
and app loading times and enhancing customer de-risking their supply chains.
experiences. By 2030, more than 80 percent of the Thus, while a significant proportion of the
global population is expected to have access to 5G industry’s investment in technology up until now has
networks,7 enabling faster connectivity and data been directed towards e-commerce, digitisation of
transfer across Internet of Things devices. internal processes is now also moving into focus. The
Meanwhile, fashion consumers’ digital top-three areas in which fashion executives plan to
adoption, which was cemented by the pandemic, make digital investments between now and 2025 are
is set to endure. On average, people spent nearly personalisation, store technologies and end-to-end
4 hours per day on the internet on their mobile value chain management.12
phones in 2021.8 Of the customers who made the Brands from across segments are increasing
move from offline to online shopping channels in investment in AI and machine learning for processes
2021, 48 percent said they did so because of the such as demand planning and pricing.13 14 15 Inditex
Covid-19 pandemic, 27 percent cited convenience, committed to invest €2.7 billion (approximately
11 percent cited product availability and a further $2.9 billion) in online capabilities and technology
11 percent cited promotions.9 The pandemic also solutions under its 2020-2022 plan,16 while Nike is

10
accelerating its transformation by investing in digital fails to be adopted by employees. Thus, technology
capabilities such as demand forecasting, insight investments need to be made wisely, and directed
gathering and inventory management.17 Meanwhile, towards company change management as much as
LVMH has partnered with Google Cloud to use towards the core technologies themselves.
cloud-based AI and machine learning technologies to Whatever the investment approach,
enhance demand forecasting, inventory optimisation executives will need to understand their companies’
and personalised services.18 appetite for change, creating an environment that
Moves such as these are creating a new enables a new digital culture, from factories to
paradigm for fashion, whereby the science of Big shop floors. For those that embrace change the
Data, advanced analytics and digital workflows competitive advantages are clear.
are augmenting traditional creative processes.
This transition will need to be underpinned by
new talent capabilities, as brands seek to hire more
data scientists, engineers and analysts, while also
pursuing partnerships and acquisitions.
As fashion executives consider where to focus
their attention and direct their resources, we explore
five technology-driven imperatives for the industry
in this report:
• Metaverse Reality Check: Virtual goods and
extended reality
• Hyper Personalisation: Data- and AI-led
marketing and e-commerce
• Connected Stores: In-store customer
experience with mobile apps and
micro-fulfilment
• End-to-End Upgrade: AI-powered value chain
integration
• Traceability First: Blockchain and tracking
technology for sustainability

Decision makers need to prioritise technology

investments to seize these opportunities in ways
that align with their business goals while preparing
their organisations for a hyper-connected, fast-
evolving era of the industry. But integrating new
technology can be resource intensive, especially if it
is not a good strategic fit or lacks useability and thus

11
 Technology in Fashion:
A Quick Guide
As fashion and technology become ever more entwined, the lexicon of fashion is evolving
rapidly. This quick guide introduces technologies influencing the industry today, which fashion
professionals can deploy to develop use cases and strategies for adoption.

Applied artificial intelligence (AI) recognises patterns Computer-aided design (CAD) digitally produces
in data and interprets those patterns to produce product models and designs. In fashion, creatives can
insights. Machine learning (ML) is a subset of AI, giving sketch and design in 3D CAD programmes, reducing the
computers the ability to “learn” without being explicitly number of physical prototype and sample adjustments,
programmed. Deep learning (DL) is an advancement of increasing development speed, optimising costs and
ML that analyses data using a logical structure called a supporting sustainability by reducing or eliminating
neural network. AI, ML and DL can be applied across the materials waste.
fashion value chain, helping decision makers to analyse
complex data sets, streamline operations and improve
productivity.
Computer vision, also known as image recognition,
is a subset of AI that enables machines to derive
information from images, videos and other visual
Big Data refers to data sets that are too large and inputs. In fashion, it allows users to scan visual data
The State of Fashion: Technology

complex to be stored and processed using conventional to identify patterns or styles. For example, a company
methods, thereby requiring a strong data backbone can review e-commerce images to assess competitor
or core network and bespoke architecture. In fashion, products. The technology also automatically tags
insights from Big Data enable companies to offer images uploaded to e-commerce sites with keywords
customers personalised communication and predict to facilitate search for customers.
their preferences.

Digital workflows are a range of internal company

Blockchain is a type of distributed ledger technology. processes that are converted to a digital format — for
It is a decentralised, transparent system of records, example, with enterprise resource planning software
validated with an irreversible signature and shared or internal communication platforms. Going digital can
by multiple users. Once added to the blockchain, drive time and cost effectiveness. In fashion, digital
information cannot be amended. In fashion, blockchain workflows are being implemented across all parts of
technologies support rising demand for sustainability- value chains.
driven traceability, supply chain transparency and
product authentication at resale.

Extended reality (XR) is an umbrella term that includes

virtual reality (VR) and augmented reality (AR). VR
Cloud computing is the delivery of computing services
immerses a person into an alternative world using
over the internet, including servers, storage, databases,
hardware such as headsets, while AR adds a virtual
networking, software and analytics. In fashion, it can
layer to a person’s view of the physical world, for
support flexible scaling, enabling companies to increase
example with a smartphone filter. In fashion, AR enables
or decrease computer usage according to their needs.
customers to virtually try on clothing and accessories,
Edge computing is the practice of capturing and
while VR supports the creation of digital fashion in
analysing data locally and in real time, significantly
virtual worlds and gaming as well as virtual showrooms
reducing latencies. This can help fashion companies
and runway shows. XR spans digital and physical worlds,
accelerate production cycles and speed to market.
helping customers express their ideas and creativity in
Edge computing supports Internet of Things systems
virtual spaces.
by enabling connectivity with devices such as mobile
phones. Quantum computing harnesses quantum
physics to represent and process information much
faster than traditional computers. In fashion, it could be
used to scale AI use cases, however the technology is in
early development.

12
 Internet of Things (IoT) describes networks of physical Robots are autonomous machines that perform tasks
objects (hardware) connected to each other through without human intervention, while cobots (such as a
built-in sensors and IoT applications (software). robotic arm) collaborate with humans. In fashion, robots
These increasingly available and affordable devices and cobots are used mainly in garment manufacturing
can connect with other devices and systems. IoT is and warehouse management. They handle precise,
enhanced by 5G (fifth generation mobile network), repetitive and sometimes dangerous tasks, such as
which offers faster data speeds and a lower cost of data sewing, managing textiles and spraying. Automated
transfer than previous generations. In fashion, IoT is guided vehicles (AGVs) are mobile robots that follow
associated with wearables (for example, smart watches sensors embedded in the ground or use vision, magnets
and smart glasses) and sensors that are embedded or lasers to autonomously navigate themselves.
in products. IoT sometimes uses RFID to enable the Other robots and cobots can be mounted onto AGVs.
exchange of information about products such as In fashion, they are most often used in industrial
materials, origins or maintenance. applications, warehouses and dark stores. Robotic
process automation (RPA) is software that programmes
the execution of repetitive digital tasks, which in fashion
can accelerate routine tasks across the value chain — for
Radio-frequency identification (RFID) uses radio example, organising and structuring data, scheduling
waves to automatically identify and track objects and assigning daily tasks, or creating high-quality
with an RFID tag (a small transponder carrying design renders using a predefined set of rules.
information) and a reader (a device that receives
signals from the tag). Similarly, but covering a smaller
distance than RFID, near-field communication (NFC)
transfers data wirelessly between devices such as Zero trust security is an approach to IT security that
smartphones and tablets containing NFC chips. requires every user or device trying to access a system to
In fashion, both technologies track products and prove they are authorised to do so and are not hackers.
orders in real time, helping companies address pain The approach is useful in fashion due to the increases
points like counterfeiting or improve recycling and in remote working and cloud environments, volumes of
inventory management. sensitive customer and company data, and regulatory
and customer expectations addressing data privacy and
cyber risk.

Exhibit 1:

Key technologies for the fashion industry

Core technologies deployed in the fashion industry

Underlying technology enablers that will accelerate fashion industry use cases

Bubble size = Market size (2019-2020)

High
Fashion industry adoption (2022)

Digital workflows

Radio-frequency
Distributed Big Data identification (RFID)
cloud & edge
computing
Robotics Applied AI (including
Computer-
hardware machine & deep learning)
aided design Near-field
(CAD) communication (NFC) 5G
Zero-trust security

Extended
Reality
IoT
(XR: AR & VR) Computer vision
applications
Distributed ledgers
Quantum computing (e.g. blockchain)
Low
0-10 10-20 20-50 100+
Estimated market value growth (% CAGR 2019-2025)
SOURCE: MCKINSEY EXPERT INTERVIEWS

13
The State
of Fashion:
Technology

Fashion players now have an opportunity to expand the

breadth and depth of technology used throughout their
businesses as tech advancements accelerate. Brands and
retailers are leaning into technology not only to become more
resilient to today’s volatile operating environment, but also
to become more responsible and sustainable. This report
highlights five technology-driven imperatives to help fashion
executives understand where to focus their investments to
solve some of the industry’s most pressing challenges.
14
THEME 01 Fashion companies
focused on metaverse
Metaverse Reality Check innovation and

>5%
commercialisation
The marketing value of digital fashion and NFTs may now
could generate more
be clear, but fashion brands will need to separate hype than 5 percent of
from the concrete opportunities to generate sustainable revenues from virtual
revenue streams presented by growing consumer activities over the
engagement with the metaverse. next two to five years

THEME 02
71 percent of global
Hyper Personalisation consumers want
companies to
Brands have access to a growing arsenal of personalisation deliver personalised
tools and technologies to upgrade how they customise and communications
personalise their customer relationships. The opportunity and products, and 76

71%
for executives now is to harness Big Data and AI to provide percent are unhappy
when this is not offered
one-to-one experiences that build long-term loyalty.

THEME 03

Connected Stores Customers who

x4
engage with in-
The inexorable rise of e-commerce has forced fashion store technology
players to rethink the role of physical stores. Fashion spend up to four
executives can address consumer pain points by using times longer
in-store mobile apps to enhance the experience and shopping than
micro-fulfilment technologies to leverage their physical those who do not
retail networks for the quick-commerce era.

THEME 04
More than 60 percent
End-to-End Upgrade of fashion executives
believe creating
Digital tools and analytics have transformed key parts of
the fashion value chain, but these optimisations are often >60% integrated digital
processes throughout
their organisations will
siloed within organisations, limiting the potential for
cross-functional improvements. Brands should embark be among their top-five
areas for digitisation as
on end-to-end value chain integration to create more
they look ahead to 2025
efficient and more profitable ways of operating.

THEME 05 More than 50

Traceability First percent of fashion
decision makers say
Traceability systems powered by tracking software traceability will be a
and Big Data will help fashion brands focusing on top-five enabler to

>50%
sustainability to reach far into their supply chains reduce emissions in
to understand the entire lifecycle of their products. their supply chains

15
01.
METAVERSE
REALITY CHECK
The marketing value of digital fashion and NFTs may now be clear,
but fashion brands will need to separate hype from the concrete
opportunities to generate sustainable revenue streams presented
by growing consumer engagement with the metaverse.

16
KEY INSIGHTS

• Global spending on virtual goods reached an estimated $110 billion in 2021, more
than doubling the total in 2015, with around 30 percent attributed to virtual fashion.
• Fashion companies focused on metaverse innovation and commercialisation could
generate more than 5 percent of revenues from virtual activities over the next two to
five years.
• Digital fashion and virtual skins in gaming environments are clear opportunities to
generate sustainable revenues in the short-term. NFTs used for authentication or
loyalty tokens are likely to be most relevant for fashion players in the future.

TECH ENABLERS

• Blockchain distributed ledgers to support NFTs and asset purchases through

cryptocurrency on virtual platforms.
• Extended reality (AR and VR) to enable customers to alter images and virtually try
on clothing.
• NFTs to serve as collectibles and customer-loyalty tokens and act as digital twins to
store information and document authenticity.
• Virtual fashion and skins to change the appearance of avatars in gaming and
online platforms.

EXECUTIVE PLAYBOOK

1 Determine a Decide whether the company will be a disruptor or follower

position in the metaverse adoption curve, based on the target
customer and the role of digital in the overarching strategy.

2 Decide where to Establish the appropriate level of engagement, ranging

engage from developing one-off digital assets and new experiences
in existing platforms to creating an entire virtual world.

3 Prepare for the Depending on their revenue goals and vision for long-term
long term investment, executives may opt to develop tech and talent
capabilities internally, acquire existing disruptors or partner
with relevant players and platforms.

17
 01. METAVERSE REALITY CHECK

Pioneers in the metaverse have shown there virtual lives and spend most of their time in the
is a business case for fashion brands to invest in metaverse, significant revenue opportunities for
virtual worlds. Granted, a fully formed metaverse fashion brands will emerge.
— comprising an interconnected, virtual ecosystem The pace of adoption will be driven by
that overlaps with or offers an alternative to technological advancement, the interoperability
physical reality — is not yet possible given between virtual environments and social
technology constraints. But brands’ experiments acceptance. Tech players as well as fashion
with metaverse principles, such as virtual fashion, start-ups and brands need to develop technologies
extended reality, gaming and non-fungible tokens that help evolve today’s unrefined virtual
(NFTs), demonstrate the impact that virtual experiences into mature, immersive realities. Mass
activities can have as marketing and communi- consumer adoption could be a significant hurdle —
ty-building tools for fashion. Global spending on 78 percent of people who have already ventured into
virtual assets reached around $110 billion in 202119 virtual worlds say they miss physical interaction
and is expected to grow at roughly the same rate as when doing so.22
the gaming market to be worth around $135 billion As a result, many players will likely hang
or higher by 2024.20 back to see evidence of commercialised use cases
The State of Fashion: Technology

and a tangible ROI before investing. For others

Over the next two to five that want to capture the commercial opportunity,
years, fashion brands focused the biggest short-term revenue potential lies with
on metaverse innovation and virtual assets that can be traded, transferred or
used for payment. We identify two clear use cases
commercialisation could generate for virtual assets that have long-term potential:
more than 5 percent of revenues by
investing in virtual activities today. AR Fashion and Virtual Skins
In virtual spaces and on social media platforms, the
The next frontier for leading brands will be appetite for creating and adapting online identities
to translate unproven technologies into sustainable is high: approximately 70 percent of US consumers
revenue streams, effectively separating hype from from Gen-Z to Gen-X rate their digital identity as
reality. Over the next two to five years, fashion “somewhat important” or “very important.”23 A
brands focused on metaverse innovation and similar appetite for virtual goods can be found in
commercialisation could generate more than 5 China, where 70 percent of luxury consumers have
percent of revenues by investing in virtual purchased or will consider purchasing
activities today.21 virtual assets.24
Looking beyond a five-year horizon, some Some companies are using augmented
bullish observers expect mass consumer adoption reality (AR), to enable users to alter photos and
of virtual worlds, creating the biggest opportunity videos, and are creating digital skins to change
for the fashion industry since e-commerce. The the appearance of a user’s avatar. For example,
bears predict that the hype around the metaverse digital fashion start-up DressX, which sells virtual
will fade as technologies fail to meet expectations clothing that can be added to a photo and posted
or users prove reluctant to use virtual spaces as on social media, has partnered with brands such as
extensively as some business plans are counting on. H&M to launch digital collections.25 26 Meanwhile,
While it is uncertain whether a meaningful users on online gaming platforms such as Roblox
number of consumers will develop fully fledged update their avatars with new skins regularly,

18
even daily in some cases.27 The potential revenue Furthermore, if brands choose to partner
generation of in-game outfits and accessories can with virtual platforms, in gaming or otherwise, the
be significant. Gucci sold a virtual version of its top-line opportunity may be dampened by high
Dionysus bag for the equivalent of $6 on Roblox, take rates, which could reach as high as 50 percent
which later led to bids of more than $4,000 per bag commission on revenues.31
when resold on the secondhand market.28 29
The multi-billion-dollar gaming market will NFTs as Digital Twins and Loyalty Tokens
continue to offer opportunities for fashion — the Much of the frenzy about blockchain-based NFTs
market for gaming skins could reach $70 billion by has been centred around digital art collectibles,
2024, up from $40 billion in 2020.30 Brands will which are in some cases bought and traded for
need to turn to established gaming and platform inordinate sums, driving news headlines as some
partners to find inroads. observers scratch their heads. The compound
Still, as with any nascent technology, there annual growth rate of the value of the NFT market
are risks. For one, brands — particularly those in skyrocketed 750 percent between 2018 and 2021,
luxury — should be aware of selling “cheap” digital from $41 million to $24.9 billion.32
items that could weaken the exclusivity of their But the rapid rate of growth in NFT sales
brand image. AR technology is at a relatively early is already starting to moderate. Indeed, the daily
phase of development, where glitchy or unwieldy trading volume on NFT marketplace OpenSea fell
applications can undermine the user experience. by 80 percent between February and March 2022.33

Exhibit 2:

Brands can engage in the metaverse across five dimensions

1 Digital assets
e.g. branded virtual clothing or NFTs — key
short-term application

2 Digital experiences
e.g. concerts, exhibitions or other events
in digital worlds

3 Gaming (or gamified experiences)

e.g. online battle games such as Fortnite
and Minecraft

4 Platforms
e.g. asset marketplaces and digital-physical
gateways such as NFT platforms like OpenSea

5 Virtual worlds
e.g. games or other immersive social
environments such as Roblox and Decentraland

SOURCE: MCKINSEY ANALYSIS

19
 01. METAVERSE REALITY CHECK

NFT sceptics suggest that this could indicate the programme.34 In a sense, these NFTs are digital
bursting of a bubble in an unsustainable market collectibles, since users cannot yet wear them in
with a limited number of active customers and virtual worlds, though they could use them for
rampant hoaxes and scams. social media profiles. Brands are starting to add
However, even as the hype subsides, use more “utility” to collectible NFTs, which could
cases will emerge that address industry pain make buying one more worthwhile to consumers
points and consumer desires with applications that and translate into a long-term opportunity
support community building, product traceability for brands.
and authenticity. We see the most compelling use case
The long-term business opportunity for for NFTs as digital twins that host information
fashion brands to engage with NFTs will likely about a physical or digital product’s history,
serve more pragmatic purposes by using NFTs as authenticity and ownership — something that
“loyalty tokens.” Gucci, Adidas and The Hundreds, is especially beneficial to the luxury segment in
among others, have used NFTs to offer benefits its battle against counterfeiting. Twins enable
like early access to new NFT drops and physical products to be paired with a theoretically tamper-
products, essentially serving as a membership proof record and unlock the ability for brands to
The State of Fashion: Technology

Exhibit 3:

The metaverse can offer sustainable revenue streams even if

achieving a fully alternative world is uncertain
Stage 4
Uncertain
Stage 3
>5 years
Stage 2 Living in the
2-5 years metaverse
Stage 1 Immersive
0-2 years virtual world
Sustainable
business-building
Marketing &
experimentation

Key drivers Growth of gaming Growing and diversified Selected use cases with Interconnected platforms
audience realistic immersion e.g.
NFT collectibles hype Widespread social adoption
immersive events
Industry collaboration of metaverse principles and
Gen-Z digital engagement
High cryptocurrency cryptocurrency
Technological advancements
adoption

Fashion revenue One-off marketing and Sustained sales of virtual Sale and resale of virtual A channel of equal importance
opportunities customer engagement goods goods at scale to e-commerce
projects
NFTs beyond collectibles Meta-worlds created by Redefined business models
fashion brands and organisational structures

Estimated revenue
from metaverse 0-5% >5% >10%
activities1

1
For companies pursuing one or more metaverse-related activities, such as experiences and asset sales
SOURCE: MCKINSEY ANALYSIS

20
Exhibit 4:

Sales of NFTs saw a paradigm shift in 2021

NFT SALES, USD

$24.9b

750%
CAGR
2018-2021

$41m $142m $338m

2018 2019 2020 2021

SOURCES: NONFUNGIBLE.COM (NON FUNGIBLE TOKENS YEARLY REPORT 2020), L’ATELIER BNP PARIBAS, DAPP RADAR

collect royalties from resale. A host of start-ups limited-edition scarf with the Chinese virtual
and industry initiatives such as Aura Blockchain influencer Ayayi.36
Consortium, Lablaco and Arianee are aiming to • Build their own capabilities by recruiting
make blockchain-based digital twins commonplace. talent with tech-related skills alongside a
Lablaco is working to link its digital IDs to virtual deep-rooted understanding of the metaverse
versions of garments, so that customers can engage and its communities, as Balenciaga is doing by
in augmented reality experiences such as try-ons. creating a “metaverse business unit” dedicated
to metaverse marketing and commerce.37
Partner, Build, Acquire • Make acquisitions, along the lines of Nike’s deal
While a few disruptors, such as marketplaces for to buy virtual fashion studio RTFKT in 2021.38
digital fashion, will solely focus on virtual goods, Like the early days of e-commerce, some
most tech-savvy, innovative brands will tap the metaverse-related ventures are likely to fail
opportunity to diversify revenue streams and outright or need rapid iteration. However, fashion
target Gen-Z and Millennial consumers. Players is well placed to capitalise on the engagement with
that want to experiment in the metaverse but lack virtual worlds and the metaverse, owing to its
the requisite in-house capabilities can: connection to self-expression, status and creativity.
• Partner with gaming or tech companies, as Executives should consider metaverse strategies
Gucci did in its tie-up with Zepeto, a social based on their companies’ digital ambitions and
network and avatar simulation app, to produce customer targets.
paid-for digital skins,35 or as Burberry did
when it partnered with Tencent to launch a

21
IN-DEPTH

Where Fashion-Tech Investors

Are Putting Their Money
Capital is flowing into technologies that make fashion commerce more nimble, more sustainable
and more engaging to shoppers. And, of course, there’s no escaping the metaverse.

by Marc Bain and Carlos Sanchez Altable

Customer uses smartphone to browse e-commerce website. Qi Yang/Getty Images.

22
A
ccross the varied funding taking place in Frederic Court, founder of London’s Felix
fashion tech, investors are emphasising Capital, highlighted marketplaces as an area of
technologies that make commerce more interest as well, such as those that have their own
nimble, more sustainable and more strong point of view and emphasise a curated
engaging to shoppers, whether they’re buying their shopping experience. “In a world where there is
goods new or used, in stores or online. Many are also so much choice, curation itself is a very important
making non-fungible token (NFT) and metaverse- theme,” he said.41
related moves, but they’re starting slowly in these Consumer-facing fashion tech has drawn
areas and doing their research to determine what most of the investment in recent years, and that’s
opportunities lie beyond NFTs as collectibles. still the case. Social commerce, for example, saw a
In 2021, the value of the top 50 investments jump in funding in 2021, driven largely by a $500-
in technology related to fashion grew 66 percent million raise by China’s Xiaohongshu.42
compared to 2019, reaching $16.2 billion, according At Swedish fast-fashion giant H&M,
to McKinsey analysis of data from Crunchbase, a executives are looking to e-commerce innovations
business-information platform.39 The investments that allow it to blur the line between online and
considered in this analysis went towards either in-store experiences and offer customers the same
fashion retailers or businesses selling products level of personalisation across channels. Alan
and services to fashion firms, rather than fashion Ting, the company’s head of M&A, described one
brands. E-commerce, having benefitted from potential idea where customers could log their
the pandemic-driven surge in online shopping, purchases in a “digitised wardrobe,” and then when
received roughly 55 percent of the investment. The visiting a store, the H&M app would guide them to
remainder largely comprised payment technol- products they might like based on past purchases.
ogies, including “buy now pay later” firms, social The company is also continuing its investments
commerce and resale, followed by supply chain and in analytics and AI to leverage its massive trove of
logistics companies and those working in NFTs or customer data, he noted.43
technologies like virtual reality.
Investors say e-commerce has room for In 2021, the value of the top
further growth and innovation. For instance, new 50 investments in technology
marketplace models that are “inventory light”
and help individual creators and sellers have been related to fashion grew 66
one area of focus for Forerunner Ventures, a San percent compared to 2019.
Francisco-based fund.40
“On the back end — the commerce- Supply chains and logistics continue to
enablement side, where we spend a lot of our time draw investor interest. In late 2020, Singapore-
investing — there’s been a tonne of innovation based Lyra Ventures participated in a funding
on the enabling tools and technologies powering round for Material Exchange, a centralised
anybody to be a seller, whether you are an materials database company.44 Reina Nakamura, a
incumbent brand or a creator or somebody just general partner at Lyra, said the database can help
getting going,” said Nicole Johnson, a partner at individual creators as well as brands competing
Forerunner. As an example, Johnson cited Canal, against the likes of fast fashion juggernaut Shein to
a distributed commerce platform that aims to be nimbler in production.
let individuals and companies of any size sell Because of its digitised supply chain, Shein
products on the same channels where customers has visibility into the availability of materials
first encounter them, such as YouTube or Substack. that can be whipped into orders, making it more
Forerunner has been one of the lead backers of the agile than brands relying on the traditional model
Bay Area start-up, which went live in 2021. of attending trade shows, exchanging physical

23
IN-DEPTH

samples and producing fabrics to order, according as one of several key investment targets, alongside
to Nakamura. data analytics and social commerce.50 He joined a
“This has always become the bottleneck for $2.7-million funding round for Reflaunt, a “resale-
any agile upstream supply chain to be built, and I as-a-service” technology company that supplies
think Shein has really changed the game here,” the backend infrastructure allowing brands and
she said.45 retailers to plug into a network of secondhand
Similarly, in 2021, Forerunner co-led a marketplaces and launch their own resale
funding round for Swyft, which connects shipping businesses.51
carriers with vendors to let them offer same-day Meanwhile, Lyra’s Nakamura pointed to
delivery and compete against Amazon’s logistics resale logistics companies, such as Lizee, a French
machine, Johnson said. start-up founded in 2019 focusing on logistics
Resale is offering investors both a solutions for rental and resale brands — something
sustainability play and a growing market of she said traditional warehouse-management
shoppers, particularly younger ones. In recent systems aren’t designed to do. Lizee raised €1.3
consumer surveys from BoF Insights, 65 percent of million ($1.55 million) in a seed round in 2021.52
respondents aged 18 to 24 said they have purchased While many of these investments aim to
secondhand fashion before.46 solve current industry pain points, investors are
also keeping an eye on the future. Web3 and the
Web3 and the metaverse are metaverse are inescapable topics, and while capital
is pouring into metaverse-related companies,
inescapable topics, and while investment on the fashion and retail side is
capital is pouring into metaverse- just getting started. Johnson, for instance, said
related companies, investment Forerunner is “walking before we run and thinking
about where the consumer utility is and the biggest
on the fashion and retail side is opportunities for mass consumer adoption in
just getting started. those spaces.”
But money is beginning to flow. Denis and
H&M has said it will double its investments Nakamura separately have backed Threedium,
in 2022, focusing on areas such as tech and supply whose technology lets brands and retailers
chain, renewable energy and sustainable materials. create 3D and augmented reality assets for use in
H&M’s most significant investments in fashion e-commerce and a range of gaming environments.
tech, for instance, have focused on Sellpy, the Nakamura described the company as a “backbone
secondhand site it acquired in 2019, Ting said. In of everything 3D.”
A customer shopping for secondhand fashion on a smartphone. Depop.
2021 it launched Sellpy in 20 additional countries, H&M launched its first virtual fashion
bringing its total number of markets to 24, and collection at the start of 2022. The company is
told Reuters it has invested more than €20 million working to understand what competencies it needs
($24.4 million) in the business.47 to develop — or acquire — in the space, according
Beyond H&M, resale companies including to Ting. “For sure, we’re going to need to offer our
Vestiaire Collective, Grailed and Tradesy held products in a digital fashion,” he said.
funding rounds in 2021.48 Etsy acquired the Gen-Z-
focused secondhand marketplace Depop, and more
brands now offer resale of their own goods.49
Pierre Denis, former chief executive of
Jimmy Choo and now a fashion-tech investor
based in London, pointed to the resale economy

24
02.
HYPER
PERSONALISATION
Brands have access to a growing arsenal of personalisation
tools and technologies to upgrade how they customise and
personalise their customer relationships. The opportunity for
executives now is to harness Big Data and AI to provide
one-to-one experiences that build long-term loyalty.

26
KEY INSIGHTS

• Advanced personalisation techniques are playing out across industries, setting a high bar
for fashion brands — 71 percent of consumers expect companies to deliver personalised
interactions and a similar proportion say it is frustrating when this does not happen.
• Competition for customer attention is intensifying and conversion costs are rising amid
new privacy restrictions and limits on third-party data collection.
• Players can drive customer lifetime value by pushing beyond basic segmentation and
ad hoc targeting to hyper-personalised shopping experiences across all touchpoints.

TECH ENABLERS

• Artificial intelligence to analyse complex data sets, make predictions, create

one-to-one experiences and maximise engagement.
• Big Data to fuel AI models with a continuous pipeline of real-time customer
behavioural data.
• Cloud computing to enable real-time processing of customer data collected
across channels.
• Customer data platforms to provide a single, coherent and complete view of the
customer across channels.
• Next-generation e-commerce platforms and content delivery networks to personalise
in real time and distribute thousands of unique landing and content pages.

EXECUTIVE PLAYBOOK

1 Invest in first-party Adopt first-party data enhancement mechanisms and capture

data collection further third-party data through external partnerships.

2 Connect customer data Connect data across channels and data platforms to create
with a unique ID a 360-degree understanding of the customer.

3 Develop AI models Incorporate cross-channel behavioural and transactional

data into personalisation engines to create a holistic view of
customer profiles, and align models with the brand’s vision.

4 Deliver solutions Deploy design and distribution tools across marketing and
at scale content delivery networks to deliver thousands of different
versions of landing and content pages across channels,
prioritising the touchpoints that are most relevant to the
product and segment.

5 Establish personalisation Build a personalisation roadmap to align teams — from

as a core capability data science to marketing and e-commerce — around a
central strategy.

27
 02. HYPER PERSONALISATION

It’s no secret that fashion brands need to them tailor their service. Building a long-
make highly personalised customer experience lasting rapport with these shoppers was an
a cornerstone of their digital businesses. Their exclusive, elaborate, not to mention
customers expect nothing less. Consumers have inefficient, exercise.
had their personalisation expectations redefined by
the likes of Netflix, Spotify and Amazon. Shoppers Shoppers expect brands to provide
expect brands to provide them with product choices them with product choices and
and experiences that are tailored to their individual
preferences. Indeed, 71 percent of global consumers experiences that are tailored to
want companies to deliver personalised communi- their individual preferences.
cations and products, and 76 percent are unhappy
when this is not offered.53 Fast forward to today and brands are facing
Not so long ago, a personalised experience in a convergence of factors that make personalisation
fashion was something only very high-end, luxury a priority. Declining brand loyalty among
shoppers could receive. Luxury boutique associates customers and increased competition for attention
would lavish attention on key customers, manually from social media platforms, along with tightening
The State of Fashion: Technology

recording an individual’s personal tastes and regulations and moves by Apple and Google to
shopping habits in notebook after notebook to help modify access to third-party data, are all impacting

Exhibit 5:

Data privacy regulation has spurred advertising’s efficiency to

decrease and costs to increase
GLOBAL AVERAGE COST PER THOUSAND (CPM) ON FACEBOOK, USD

+16.7%
CAGR
2018-2021

$14.9

$12.2

$9.4
$8.8

2018 2019 2020 2021

SOURCES: ADSTAGE PAID MEDIA BENCHMARK REPORTS, REVEALBOT

28
A selection of products personalised for a customer. Stitch Fix.

the ability of brands to connect with customers Offering hyper personalisation will require
online.54 55 56 Now more than ever, personalisation companies to reimagine how e-commerce operates.
can hold the key for brands to capture market share. Search-based shopping is likely to shift to the indi-
That said, the fashion industry today vidualised discovery of products and styles offered
generally confines personalisation to marketing in the right size and fit. All customers will have a
recommendations for customer sub-segments, curated experience on their own versions of brand
based on past purchases or online browsing history, websites and marketplaces, from landing page to
held back by talent and technology constraints. payment, akin to their experience on social media
There’s scope to go further. For the first time, feeds. With this, companies will use personalisation
businesses have tools that enable them to work with technology to build experiences that drive
all types of data across channels in real time. customer engagement and, ultimately, loyalty.
This is evident in e-commerce, where Fashion retailer Zalando has taken steps
platforms powered by cloud-based technologies towards this vision. It uses data analytics to offer its
could run AI or machine learning algorithms customers millions of tailored “Zalando interfaces.”
to accelerate the processing and analysis of Big By incorporating preferences into its algorithm,
Data on customer behaviour.57 The result of product displays are automatically tailored to
these analytical capabilities would mean brands each customer, from size to their favourite brands.
are equipped to provide hyper-personalised, The retailer is also exploring 3D body scanning
one-to-one experiences — similar to those of technology to enhance size and fit selections.58
the sales associate in an exclusive boutique, but Another company embracing this
available to customers across all fashion segments, opportunity is The Yes. The fashion marketplace
from high street to luxury. has built an extensive product taxonomy while also

29
 02. HYPER PERSONALISATION

deploying machine learning and computer vision management platforms and third-party cookies
to synthesise hundreds of data points for each less relevant.
product. The algorithm then translates shopper • Solution: Brands need to maximise their
preferences into a personalised exploration feed.59 first-party data collection to enable
Meanwhile, styling service Stitch Fix tailors personalisation across platforms and channels.
products to customers’ tastes and needs and uses This can happen, for example, through loyalty
a discovery tool called “style shuffle” to help users programmes that help identify and link
indicate designers they like.60 Fast-fashion player customer purchases online and offline. In-store
Shein offers each customer a scrollable feed of apps can also track offline browsing behaviour,
products powered by a real-time recommendation and brands can create campaigns that collect
algorithm informed by myriad data points across data in exchange for loyalty points or discounts.
social media and other channels.61 In these efforts, brands need to be mindful
of adhereing to data privacy regulations (e.g.
Offering hyper personalisation will GDPR in Europe).

require companies to reimagine Creating a 360-degree customer view

The State of Fashion: Technology

the way that fashion e-commerce • Challenge: When shopping for fashion,
operates across platforms — a customers can generate a vast amount of data
across channels and platforms — ranging from
potentially complex, fast-evolving location data to website or app engagement
challenge. time. This data tends to be unstructured, in
multiple formats and scattered across different
Looking ahead in the luxury segment, databases. In isolation, this provides little or no
hyper personalisation is set to also play out in insight.
physical stores. Store associates can leverage • Solution: Brands need to establish a complete
first-party data to provide customers with a unique customer profile connected to a unique ID
experience no matter which store they enter, across data sources and channels. A customer
taking in-store clienteling to the next level. What’s data platform is needed to host all data assets
more, as technologies advance, it is feasible that and consolidate the customer view, as are
brands will be able to create digital wardrobes for rigorous data standardisation and cleaning
each customer along with personalised styling processes. The result is brands could create
recommendations. a single dataset that joins up customer
Offering hyper personalisation will require preferences and behaviours at a granular
companies to reimagine the way that fashion level across platforms, channels and product
e-commerce operates across platforms — a categories. For retailers, this could also span
potentially complex, fast-evolving challenge that data from different brands. Companies should
can overwhelm brands. This can be managed by: consult current data legislation when creating
these customer profiles.
Accelerating first-party data collection
• Challenge: Changes to data privacy laws and Aligning the ‘human touch’ and AI
restrictions on third-party data collection • Challenge: Fashion customer behaviour
in various jurisdictions have rendered data can be difficult to predict, not least because

30
 of fashion’s rapid trend cycles and the low • Solution: A company’s portfolio of design and
levels of repeat purchasing among individual distribution tools needs to include content
shoppers. Furthermore, a stand-alone management systems that can standardise,
personalised algorithm might not align with centralise and distribute digital elements to
a brand’s strategic priorities without human support marketing alongside content delivery
intervention. networks that help deliver thousands of unique
• Solution: Players need to develop advanced AI landing and content pages. Their portfolio
models, such as those that display products should also include an e-commerce platform for
and photo styles best suited to the individual their website and app, so that brands can deliver
customer, or models that use advanced size and personalisation to every customer across
fit algorithms. These models should incorporate all journeys.
behavioural data, such as login time and
add-to-cart behaviours, along with nuances A priority for executives should be to establish
relating to the brand’s market and segment hyper personalisation as a core competency. Brands
positioning. will need to invest strategically across all their data
and analytics activations, from collection to cross-
Scaling personalisation solutions channel implementation. In many cases, this will
• Challenge: A significant platform upgrade mean setting up a dedicated cross-functional team,
is required to deliver sophisticated, hyper- comprising product managers, marketing domain
personalised e-commerce content, which is experts, software engineers and data scientists.
informed by thousands of data points and Brands that set themselves up to win will hone their
delivered across multiple channels with ability to deliver intelligent, targeted marketing
ultra-fast loading times. and e-commerce solutions for every customer.
Exhibit 6:

Companies need a full range of analytics capabilities for a new

era of personalisation

.com Apps Store Cross-channel implementation

Applied AI engine Data analysis

Data integration platform Data integration & storage

First-party First-party Third-party &

customer customer external Data capture
data (online) data (offline) customer data

SOURCE: MCKINSEY ANALYSIS

31
EXECUTIVE INTERVIEW

Zalando: Bringing Data Science

to the Art of Fashion Retail
by Marc Bain

Robert Gentz
Co-Founder & Co-Chief Executive, Zalando

32
AI and other technologies are critical to how the fashion
giant matches millions of customers with the right product
in the right fit, says co-founder and co-chief executive Robert
Gentz, and now the company is looking to innovations like
augmented reality as it seeks to capture more market share.

Z
alando is Europe’s years and is a key part of the as human feedback that we
largest online-only customer experience it offers. internally produce.
fashion retailer, but Why is it so important for the
What are some of the ways a
there’s another way it company?
customer’s experience on the
often describes itself: Europe’s On Zalando you have 1.4 site or app is tailored to them?
most fashionable tech company. million different items. It is a
Technology has been central to First of all, in onboarding you
huge selection. And then you
how the company operates since already have an opportunity to
have 48 million customers.
its founding in 2008 in Berlin. express brands you like, your
Using technology and data to
Today it uses data to optimise sizes. That personalises the
bring the right customer to
everything from how it buys site already for you. In terms of
the merchandise, or the right
products from brand partners to the product and merchandise
merchandise to the customer, is
how it delivers items to customers. to the teasers that you see, it is
important because, for these 1.4
It also leverages technologies, customised so the Zalando shop
million choices, how do you make
including AI, to deliver shoppers looks different to every single
sure that she finds one item? So
a more personalised experience customer once they actually have
we're trying to use technology to
on its site and app. The approach an interaction with us.
personalise it for customers as
has worked: in its 2021 fiscal year, much as we can. It comes down to What metrics does Zalando
total merchandise volume on its the matchmaking problem: how look at to determine if these
platform rose 34 percent year on do you matchmake merchandise efforts are successful?
year to €14.3 billion ($15.7 billion), with customers? Sometimes the short-term
bringing in revenue of €10.4
Which technologies are you metrics are not always the ones
billion.62
using for this task? that lead to the right long-term
Robert Gentz, co-founder and answers. If you want to just
It's AI. There’s one program
co-chief executive, is helping to optimise click-through rates, then
that is running, an algorithmic
steer Zalando to its next goal: the items that might be the most
fashion companion, which is
by 2025, it expects merchandise fancy ones have the highest click-
based on items that you have
annual sales to top €30 billion as through rates but are probably
bought in the past. The algorithm
it aims to capture more than 10 not the ones that create the right
combines fitting items to [create]
percent of the European fashion offering, the right experience
an outfit, which we have learned
market.63 It’s a lofty ambition, in the long term. What we are
through how people combine
and far from guaranteed as mostly optimising is long-term
[items]. When you look at
competition grows online. If customer lifetime value, and the
click-through rates and buy-
Zalando is to achieve it, it must long-term customer lifetime
through rates, the outfits we're
continue to set itself apart, and value is generated through
producing are hitting the mark
technology will be vital in complex algorithms that [factor]
of what customers want. So it's
the effort. how much time you spent on
algorithms that are continuously
site, how much are you browsing
Personalisation has been a improving with feedback loops
and what are you buying — it's
major focus at Zalando for from customer data as well

33
EXECUTIVE INTERVIEW

different sets of [key performance What we're trying to achieve is by, Are there features of Zalando’s
indicators]. probably 2030, you don't really organisational structure that
need the physical changing room. allow it to better integrate
Discovery of new products is
You have the same experience technology and data? Even
one type of value a retailer can
everywhere. What we are doing companies that want to make
offer shoppers, but if shoppers
at this stage is mostly based on the best use of technology
are getting personalised
data we get from our customers aren’t always set up for it.
recommendations based on
to help them make better choices. Departments might be siloed,
past behaviour, does that limit
It's very much based on returns for example, so they’re not
their chances of discovering
— why you return a certain item — looking at the same data to
new items they might love but
and customer feedback. make decisions.
that aren’t like what they’ve
bought in the past? Does We have many customers who One of the big things that we
Zalando take any steps to order a very wide range of at least try to do is to bring
account for this? products and across brands. A cross-functional teams together
customer returns an item, and as much as we can. We have
Just looking at the past does not
another customer returns about 2,500 software engineers
always answer the question for
exactly the same item for the working at Zalando in various
the future. What we actually
same reason, but kept a similar teams. When we have large-scale
take a lot of inspiration from
one. You get a data graph — a projects, we try to bring the
is how the music industry is
graph of fitting — and based different disciplines to the table
trying to solve the problem. You
on that we're able to make and have them all looking at this
cannot only do it by machines
recommendations with existing problem.
and past behaviours. You always
have to mix in new and modern customers with whom we have One of the big challenges
fashion elements. This is where a deep relationship on whether companies face is making
the fashion people help the items fit or not. We have already sure all the data they’re
technology people. been able to reduce size-related relying on is clean, and then
returns by 10 percent. The next they need to be able to derive
So there’s still old-fashioned iteration of this will be when we valuable insights from it. How
human curation in the move more towards whole-body does Zalando tackle these
process? measurements and experiment challenges?
Yeah. In the end it’s all about much more with 3D technology
I wouldn't say we are perfect at
emotion. Nobody wants to and body measurement
this, but we're very focused on
just shop in a big automated technology.
it. We set ownerships for specific
warehouse. It is about the art as
Logistics is another complex amounts of data we produce in
much as it's about the science.
area. How is Zalando using terms of who is responsible for
Determining the right size AI or other technologies to it and have constant discussions
and fit of a product remains manage logistics? about how we get better data. It’s
one of the biggest obstacles One of the biggest tech teams we a culture of data cleanliness.
shoppers face when buying have is working on convenience AR and VR have gained more
online. Zalando has invested and logistics. An interesting attention as everyone talks
heavily to help solve this problem is where do you allocate about the metaverse. Are
issue. It acquired a virtual an item with the [greatest] there emerging technologies
dressing room company in proximity to a customer across a or applications Zalando sees
2020,64 has an an entire size warehouse network, which is very as being able to have a big
and fit department, and is important to drive sustainability impact in the future?
establishing a technology hub and delivery times by avoiding
in Zurich dedicated to the Coming back to the real-life
single-item shipments. Where
task. How is Zalando using problems of size and fit, this
you have size and brand and other
technology to solve or at least augmented reality space might
items, it gets very granular. This
reduce these issues, and what be a good catalyst to produce real
is a very big data and algorithmic
solutions is it exploring? breakthroughs in terms of solving
problem.

34
Zalando's pilot virtual try-on experience. Zalando.

the virtual try-on experience for actually provide [partners] with collaboration problem. As fashion
customers and having definite an interface. It doesn't require brands get more data-savvy
answers if an item fits you any integrations into a store. It in terms of their own supply
personally or not, before you requires a match of the inventory chain — they don't need to be
have it physically in your hand. a store has with a database so more tech-savvy but I think more
It's something that we feel quite that customers can order from it, data-savvy — and collaborative,
passionate about, that this part and it requires a certain interface we can all jointly produce a
of the metaverse might actually with regards to physical aspects of fashion ecosystem which makes
help us to solve big problems on the logistics. In the future, where more sense and is less resource-
the size-and-fit and sustainability it gets much more interesting is consuming.
area. When it comes to a purely when we are able to combine this
What we're trying ourselves is
virtual world and to items that with our local delivery efforts [to]
to work with brands very early
only live virtually, we're still enable customers who want to
in the design process to make
exploring. order inventory that is close by.
sense of how data can help the
Even as e-commerce has Zalando says it wants to have entire process. Less resources are
grown, stores are still a net-positive impact — that is, consumed, at least for us in terms
where most sales happen. In running the company “in a way of delivery and returns. It creates
2018, Zalando launched its that gives back more to society more profit pools for everyone,
Connected Retail platform to and the environment than and this can be reinvested. But
offer inventory from physical we take.”65 It’s a big goal and generally what to me is very
stores. How is Connected something much of the fashion clear is, in the end, it's about
Retail progressing and how industry is thinking about. data, it's about collaboration,
does technology enable that What role can technology play data exchange. Many of the
programme? here? problems that we're seeing in
Throughout the pandemic I think a lot of the challenges terms of overproduction, in terms
obviously this scaled quite a in fashion with regards to of wrong production, or not
lot, so there's now about 7,000 sustainability — with regards designing for circularity, can be
stores that are trading on to size and fit, overproduction, solved in the long term.
Connected Retail. It's a big piece resource allocation, This interview has been edited and condensed.
of the partner programme. How personalisation and so on — is
technology can help [is that] we fundamentally a data and

35
03.
CONNECTED STORES
The inexorable rise of e-commerce has forced fashion players
to rethink the role of physical stores. Fashion executives can
address consumer pain points by using in-store mobile
apps to enhance the experience and micro-fulfilment
technologies to leverage their physical retail networks
for the quick-commerce era.

36
KEY INSIGHTS

• Despite the acceleration of digital shopping habits, 60 percent of customers in Europe

still want to shop in stores so they can browse and touch physical products before
purchasing. In store, customers who engage with technology spend up to four times
longer shopping than those who do not.
• Mobile apps provide a frictionless shopping journey for different types of shoppers,
whether it’s those seeking convenience or an engaging, social experience.
• Micro-fulfilment technologies enable brands to process orders efficiently from stores,
reducing associated costs by up to 90 percent, and can help companies adapt to
today’s quick-commerce environment, thus leading to higher conversion and customer
satisfaction rates.

TECH ENABLERS

• Cloud computing to support robotics and run advanced analytics in real time
across store and distribution networks.
• Last mile optimisation software to boost the efficiency of order delivery.
• Mobile applications to optimise in-store service and customer experiences.
• RFID to track products and stock levels in real time.
• Robotics to automate order fulfilment.
• Stock optimisation software to automatically allocate inventory across store
and distribution networks.

EXECUTIVE PLAYBOOK

1 Assess customer Determine the different customer types the brand serves —
needs convenience or experience shoppers — and tailor an in-store
mobile app or in-store mode to optimise each customer journey.

2 Understand pain Engage with store associates to understand service pain points
points to develop an app dedicated to enhancing their interactions with
customers. Use online and in-store engagement data to facilitate
consistent, personalised service across locations and channels.

3 Bridge online and Determine the level of investment in micro-fulfilment

offline technologies after evaluating the volume of e-commerce orders
using new omnichannel journeys (such as buy online, pick up in
store (BOPIS) and buy online, ship from store (BOSFS)) in each
physical retail location.

37
 03. CONNECTED STORES

The rules of physical retail are changing. Mobile Apps for All
Pressure on the economics of operating stores has Brands can adapt mobile-based technology to the
been mounting, particularly since more and more expectations of two distinct consumer profiles:
consumers began embracing the convenience — the shopper seeking convenience and the shopper
and safety — of e-commerce during the Covid-19 seeking experience.
pandemic. For the convenience-driven shopper, mobile
But physical retail is far from dead. A 2020 apps can combine digital and physical shopping
survey of European consumers showed that 60 experiences in an efficient end-to-end journey. Fast-
percent of respondents wanted to see or touch fashion retailer Zara’s customer app, for example,
products in-person before buying, while 50 percent allows shoppers to book fitting rooms, see available
shopped in stores so they can take items home stock, find products on the shop floor and join a
immediately. As pandemic restrictions subside, virtual queue to complete a purchase.70 The user
the percentage of customers shopping online is experience of such apps needs to work seamlessly
expected to fall 3 percentage points from 2021 within the customer journey, and the technology
levels across key markets, including Europe, the can build on existing backend software, such as
US and China.66 This presents an opportunity for inventory management and point-of-sale software.
The State of Fashion: Technology

players to reshape the role of stores in their overall

retail mix. Fashion executives should direct
Engagement with in-store technology can
lead customers to spend up to four times longer investment towards in-store
shopping than customers who simply browse.67 technologies that specifically
But what is the right mix of technologies to attract address operational pain points
customers to stores, and keep them engaged when
they arrive? and fit seamlessly into the
Experiments with in-store technologies customer journey.
such as magic mirrors, connected hangers and
interactive holograms were once touted in the Meanwhile, for customers seeking
industry as a solution to declining footfall and store experiences, social connections and entertainment
engagement. These have largely failed to make a from stores, mobile apps can help personalise visits.
meaningful impact on in-store conversion rates Nike’s House of Innovation stores in New York,
while requiring hefty installation costs.68 Instead, Shanghai and Paris aim to showcase the brand’s
fashion executives should direct investment storytelling. In New York, interactive AR challenges
towards in-store technologies that specifically let customers surface animations and product
address operational pain points and fit seamlessly information by scanning QR codes located on the
into the customer journey. shop floor.71 The in-store experience is particular-
For example, 20 percent of customers are ly attractive for luxury players whose customers
dissatisfied with online delivery and returns.69 expect brand immersion within stores. In its
Mobile-based technologies that tailor and Shenzhen “social retail” store, Burberry encourages
streamline the in-store experience and micro- customers to interact on a WeChat mini-pro-
fulfilment technologies that incorporate stores gramme, post photos and access benefits such as
into distribution networks could help address “secret items” at the in-store café.72
these challenges. These technologies also offer brands
significant data insights into customers even if they

38
Exhibit 7:

Technology can contribute to shoppers’ reasons for visiting

physical stores and address in-store pain points
TOP THREE REASONS TO VISIT, TO NOT VISIT A PHYSICAL STORE, % OF RESPONDENTS

To not visit a physical store To visit a physical store

Need to browse and

Too time consuming 50 60
touch products

Need an item
Not safe due to Covid-19 40 50
immediately

Unsure about finding a Do not like delivery and return

25 20
product at right price policies offered online

SOURCE: MCKINSEY 2020 SURVEY OF EUROPEAN CUSTOMERS

do not make a purchase, through scanned product stores to fulfil online orders, brands can maintain
tags or tracking items taken into fitting rooms. appropriate stock levels across distribution and
Store associates can have apps designed for them, store networks and enable fast delivery. Conversion
so that they can use this customer data and improve rates are around 50 percent higher with same-day
workflow management, such as requesting stock for delivery compared with two days.74
a customer to be brought to the shop floor quickly. Some mass-market players such as Target
How brands leverage available mobile are repurposing space within physical store
technology depends on their strategic priorities. networks to create micro-fulfilment centres,
In the mass market, a high proportion of sales may helping them to adapt to quick commerce and
already be generated through e-commerce apps. ultra-fast delivery expectations. This is often
Here, a brand could develop an “in-store” mode to through buy online, pick up in store (BOPIS)
bolt onto an existing app. In the luxury segment, models or buy online, ship from store (BOSFS),
e-commerce apps commonly account for less than where the order is sent from a store where all items
10 percent of sales, which means it will be more are in stock.75 However, to date, most players have
challenging to encourage customers to adopt not gone digital. Typically, keeping track of stock is
app-based behaviours.73 done manually and in-store stock is not integrated
into overall e-commerce stock.
Improving Omnichannel Journeys Stock optimisation technologies can help
A customer’s in-store experience is not the only speed up and automate a store’s value chain. For
aspect of shopping in a physical store that can example, fast-fashion giant Inditex uses RFID
benefit from a digital upgrade. Leading players product tags that feed into a single inventory
are also adopting technologies that allow stores system. This gives visibility into stock levels across
to become micro-fulfilment centres. By using channels, allowing for online order fulfilment

39
03. CONNECTED STORES

Exhibit 8:

B C

E
Behind the Scenes
A Layout optimised for order fulfilment D Packing stations

B Robotic grids for picking and E Optimised last-mile delivery

ILLUSTRATIVE CONNECTED STORE
packing product
SOURCE: MCKINSEY ANALYSIS
ILLUSTRATION BY JOE BOYD C Modular conveyors and shuttles

from store stock. This visibility has reduced the • A “dark store,” which is a physical store
time required for store associates to take a store converted entirely into a distribution or
inventory by 88 percent.76 fulfilment hub, which could be entirely
Cloud computing is an increasingly viable automated with robotics.
enabler of micro-fulfilment centres. By running IT
infrastructure in the cloud, brands can centralise The cost savings on shipping alone can be
their technology capabilities and collaboration, substantial with micro-fulfilment models. In 2019,
and run data analytics in real time across store Brian Cornell, chief executive of Target Corp, said
networks, regardless of where they are located. that when one of its stores fulfils an online order, it
For mass-market executives looking to costs around 40 percent less than shipping from a
leverage these emerging technologies, we identify distribution centre to a customer. When customers
three types of fulfilment models: order online and pick up in store, about 90 percent
• A back-office delivery centre, in which orders of the cost is saved.77
are fulfilled with very limited automation. But without technology that can streamline
• A dedicated in-store floor section for the fulfilment process, from order allocation to
e-commerce order fulfilment, with some degree packing, a brand will likely need either high-value
of robotic automation. orders or a boutique model with low levels of

40
 Convenience Shopper Experience Shopper
A Switches to store mode on C Searches for a product’s location A Scans QR code to check in to store
e-commerce app when prompted and availability; places order if not
by location services in stock in store
B Scans RFID tag to read product
B Alerts store associate that they have information, receive styling
D Joins virtual queue for fitting room suggestions and add product to
a buy online, pick up in store package
and continues browsing wish list
and collects it from a window

E Tries on item and uses app for C Allows store associates to access
contact- and queue-less checkout customer account to enable
personalised service

D Uses photo backdrop and shares

in-store selfie on social media

E
D

E
D F
C
C

B E Earns loyalty points for in-store

interactions to gain virtual or
physical rewards
A
A F Pre-orders item from in-store café

in-store traffic to justify manual in-store fulfilment. demand. For instance, luxury brands will probably
Therefore, automation can play an not devote retail space exclusively to fulfilling
important role across all types of fulfilment orders because of the high costs of their stores’
models to help brands maximise cost savings. prime locations. Instead, they will focus on stock
Brands can use stock optimisation software, optimisation algorithms to predict the best location
which incorporates all stock across their store from which to fulfil an order and pick and pack
and distribution networks; last mile optimisation manually — something mass-market players simply
software, which boosts the efficiency of allocating cannot afford to do. For mass-market brands,
order delivery routes; employee task management automated e-commerce order fulfilment can make
solutions; and fully robotic set-ups that include financial sense if order volume is high enough and
robotic grids and arms for picking, packing and in a dense, urban area — even more so if customers
storing stock. are paying a premium for faster delivery.
When deciding which stores to use for However, regardless of order volume, using
e-commerce fulfilment and what fulfilment model inventory optimisation software to help predict the
to pursue, executives should consider the brand’s number of items returned to stores is a promising
size, store density and e-commerce activity, as use case given that approximately 30 to 40 percent
well as physical store locations and customer of e-commerce sales are returned.

41
IN-DEPTH

How Luxury Brands Are Using

Technology to Enhance the
Customer Experience
Far from replacing the personal, face-to-face service at the heart of the luxury shopping
experience, new technologies and digital channels are giving brands engaging and creative ways
to enhance their customer relationships.

by Marc Bain

Farfetch-owned Browns' in-store app technology. Farfetch.

42
T
he digital tools and touchpoints that are leveraged technology such as apps to connect
becoming part of the luxury customer customers directly with “what is most important
experience, ranging from apps to in the store, [and that] is the sales associate,”
online channels to virtual reality, are said Sandrine Deveaux, Farfetch executive vice
no substitute for personal, face-to-face service in president of future retail.
physical stores. Instead, they are enabling brands Browns associates use an app that provides
and retailers to enhance the experience. the usual clienteling features as well as what
Around 80 percent of luxury sales are Deveaux called a “connected retail layer.” This layer
influenced by digital touchpoints.78 Even luxury allows associates to, for example, scan a QR code
fashion brands that do not sell core products in the consumer-facing Browns app to connect to a
such as clothing and leather goods online, such shopper’s account on the store’s site.
as Chanel, have websites, apps and social media Associates can then pull physical items
accounts to connect with customers digitally. appearing on a shopper’s wishlist and recommend
Meanwhile, brands that have historically leaned other relevant ones. They’re also able to send
into new innovations are exploring emerging a list of items the shopper showed interest in
technology. For example, Gucci is using augmented during the in-store visit to their Browns account;
reality (AR) for virtual try-on of sneakers and suggest products not in the store, since only some
Burberry for uses like providing shoppers with a of Browns’ extensive inventory is available on
digital representation of its bags to better convey location; and provide a link so purchases can be
their shapes and sizes.79 made from their mobile phone.
“About 30 to 35 percent of the in-store sales
Stores continue to be where the are done from stock which is not in the store,”
vast majority of sales happen, Deveaux said. “Through that in-store app, the
sales associate is really able to tell the story of this
and store associates are at the product and the consumers want to buy it even if
centre of the luxury shopping they haven’t tried it [on].”
experience. Thom Browne, a Farfetch partner, is among
those using Farfetch’s technology. Its stores, which
Still, stores continue to be where the vast include locations in the US and Europe as well as
majority of sales happen, and store associates are at several in China, South Korea and Japan, tend to
the centre of the luxury shopping experience. Hero, be small and have limited space for stock so its
Getbee, Kering’s Luce and other clienteling apps associates use the tool to direct shoppers to its
designed for in-store associates to communicate more expansive online catalogue.
with and sell to customers remotely were already
on the rise before Covid-19 arrived in 2020 and Telling a Product Story
became vital to many brands as the pandemic Chanel has introduced elements of Farfetch’s
shuttered stores. Gucci, Balenciaga, Moncler and technology at its Rue Cambon store in Paris and has
Burberry, among others, turned to clienteling as been rolling it out to select locations. It is employing
a way to stay connected with their customers. But the tool not so much to sell products directly but to
as fashion businesses enter into post-pandemic highlight the stories around them, Deveaux said.
recovery, apps are still important for enhancing the Chanel fitting rooms have RFID sensors that read
customer experience. tags on the items customers are trying on, allowing
a connected mirror to show information such as
Clienteling 2.0 videos and photos of items as they appeared on
When Farfetch-owned Browns opened its new the runway.80
high-tech flagship in London in April 2021, it Meanwhile, LVMH Japan, in partnership

43
IN-DEPTH

with investment company SoftBank, announced remote clienteling and support for a diversity
in February that it is accelerating efforts to allow of interests among new and younger customer
customers at its stores to enter “virtual reality segments.” Burberry’s “social retail” store in
spaces” where they can communicate with artisans Shenzhen, which it created with Chinese tech
in real time and see manufacturing processes.81 giant Tencent, lets shoppers unlock content and
Clienteling apps can play a role here as well, experiences through a mini-programme in WeChat,
providing store associates with information about the Tencent super app used widely in the country
a collection which they can share with clients. In for messaging, payments and more.82
2021, the Hero app also introduced a feature for
associates to create short-form videos they can use Digital Past and Present
to highlight specific products. Luxury’s growing acknowledgement of the
Of course, these are some of the more importance of digital channels is in sharp contrast
advanced examples of how luxury labels are using to how much of the industry reacted in the early
technology for the customer experience. Milton days of the internet and online shopping.
Pedraza, chief executive of research and consulting “You had to paint a picture of what the
firm Luxury Institute, pointed out that few brands customer experience would be like,” Natalie
have yet to use clienteling apps as effectively as Massenet, who founded pioneering luxury
they could. One challenge is training staff on how e-commerce retailer Net-a-Porter in 2000, said of
to properly communicate with customers through the challenge she faced convincing brands to sell
these channels, he added. online. It was hard for brands to believe customers
would want to buy a product without having
E-commerce and social media touched it. “I always used to explain to brands that
that they were underestimating the fact that people
are increasingly where shoppers
were coming to make a purchase in their store
now encounter products, a fact already having decided to make a purchase, because
that has altered the relationship they would’ve seen the products they wanted in
fashion magazines,” she added.
between brands and retailers.
E-commerce and social media are
increasingly where shoppers now encounter
Many luxury brands are only in the early products, a fact that has altered the relationship
stages of collecting and deriving insights from between brands and retailers. Massenet noted
data on customers to help them personalise their that “wholesale distribution today is very much
service across channels. Eventually, the aim would seen as a marketing function, because brands
be to offer every shopper, or as many as possible at have the opportunity to go direct to consumers.”
least, individualised service and communications, Many luxury brands that do sell online are
from recommending products based on their taste shifting to an e-concession model, where they
when they enter a store, to serving them the most manage the presentation and stock available
relevant products when they open the brand’s app through a retail partner, or they are cutting back
to sending emails letting them know when items on wholesale. Kering recently said it would cease
they might like have arrived at a store nearby. online wholesale entirely.83 While there are several
These efforts show how brands are reasons for these moves, such as better margins and
integrating technology and digital channels into control of inventory, a key motivation for brands
the way they serve shoppers even in physical spaces. is having a greater hold over the customer journey,
LVMH Japan noted in its announcement before and after purchase.
that it is adapting “to an evolving environment Fashion businesses look set to continue to develop
which includes the expansion of online sales, ways to blend digital and physical. In April,

44
Burberry's social retail store in Shenzen, China. Burberry.

Farfetch and Neiman Marcus Group struck a deal

that will see Bergdorf Goodman’s website and
mobile app moved to Farfetch’s backend technology
platform. The companies said in a statement that
Bergdorf Goodman’s digital customer experience
will be offered to shoppers globally and integrated
seamlessly with its New York City flagship.84
Luxury brands also see a clear role for
technology for connecting with customers beyond
physical stores. The forays into virtual worlds and
NFTs by several luxury players also illustrate the
value they place on extending their brands online.
Brands have also begun exploring how they can
use technology to make customised items through
small-batch production, ultimately helping their
products become as personal as their service.

45
04.
END-TO-END
UPGRADE
Digital tools and analytics have transformed key parts of the
fashion value chain, but these optimisations are often siloed
within organisations, limiting the potential for cross-functional
improvements. Brands should embark on end-to-end value
chain integration to create more efficient and more
profitable ways of operating.

46
KEY INSIGHTS

• More than 60 percent of fashion executives believe creating integrated digital processes
throughout their organisations will be among their top-five areas for digitisation as they
look ahead to 2025.
• There are very few off-the-shelf solutions that are designed to integrate the fashion
value chain from end to end, meaning companies will need to build custom solutions or
prioritise pain points.
• By adopting integrated, digitally enabled value chain solutions, brands could see up to a
50 percent increase in speed to market, up to 8 percent rise in full-price sell through and
up to a 20 percent decline in manufacturing costs.

TECH ENABLERS

• Artificial intelligence and machine learning models to predict, execute or

suggest business decisions along the value chain.
• Big Data to provide a data backbone or “common truth” across an organisation, to
which other technologies are connected.
• Cloud computing to deliver the computing power that enables applications and
data platforms to be scalable, cost effective and high performing.
• Digital workflows to simplify, standardise and automate internal processes.

EXECUTIVE PLAYBOOK

1 Calibrate instinct Establish the right balance of data- and human-led decision
with analytics making along value chains.

2 Prioritise Instead of developing narrow use cases, prioritise one

journeys or two “journeys” along the value chain that are most
critical to business strategy and performance, including
product performance, category performance, supply chain
optimisation, stock management, and purchasing and
demand forecasting.

3 Invest in four Fund projects that focus on machine learning and AI models,
key enablers cloud computing, digitised workflows and an overarching
data backbone to unlock end-to-end integration.

4 Focus on change Invest in upskilling employees to support digitisation efforts

management — but be prepared to address potential resistance to working
in a more connected way with other functions.

47
 04. END-TO-END UPGRADE

Fast-changing consumer demand and One reason is that relatively few off-the-
persistent supply chain disruptions are just a few of shelf applications are designed to optimise the
the factors adding to the complexity of operating a fashion value chain from end to end. While
fashion brand today. companies like Nextail,86 Logility87 and O988 offer
The industry needs a new digitised value solutions that address certain activities such as
chain model that unites multiple internal processes buying, first product allocation, replenishment
and data sources, from demand forecasting to and store transfers, no single solution covers the
pricing. Indeed, when it comes to digitisation, 61 entire value chain. Brands thus need to identify
percent of fashion executives believe end-to-end solutions that address their pain points or custom
process management is among the most important build applications, which is resource intensive. At
investment areas for their organisations between the same time, development costs remain high and
2021 and 2025.85 The result will be more fortified, companies face gaps in their technology stacks and
shock-resistant companies which are able to talent pools.
navigate today’s volatile business landscape. Five critical workflow “journeys” in the
Many fashion companies have been fashion value chain lend themselves to end-to-end
improving individual value chain processes with integration: product performance, category
The State of Fashion: Technology

digital technologies. But fully integrated backend performance, supply chain optimisation, stock
systems and workflows are still a way off. management, and purchasing and demand

Exhibit 9:

Capacity planning and end-to-end process management are

executives’ top digital investment priorities
EXPECTED DIGITISATION INVESTMENT PRIORITIES (2021-2025)
Ranked as investment priority 1
% OF RESPONDENTS
Ranked as investment priority 2-5

Capacity planning 5 61 66

End-to-end process
24 37 61
management

Virtual sampling 24 34 58

Virtual fabric libraries 11 44 55

Supply chain transparency

8 47 55
and traceability solutions

Supplier collaboration portal 3 34 37

Advanced intelligence for

3 32 35
country and supplier selection

SOURCE: MCKINSEY APPAREL CPO SURVEY 2021

48
Exhibit 10:

Digital applications need to be connected along the value chain

Range & Purchasing Supply chain Pricing & Store & sales
Design
assortment & sourcing & logistics promotions optimisation

Customer listening tools Digital range planning Digital 3D showrooms RFID stock tracking Dynamic pricing Macro space planning
and optimisation (store-level assortment
3D design, digital Digital supplier order Real-time stock Promotion planning
optimisation)
sampling Competitive granular tool visibility and optimisation
range planning Micro space planning
Modular design Supplier performance Stock positioning Markdown and
(micro-store areas and
tool clearance planning
Pre-designed mock-ups Returns forecasting shelf space optimisation)
and optimisation
and patterns Supplier sustainability
Assortment Extended catalogue
scoring
Library of colours, fabric localisation (beyond store stock) with
and trim Supplier delivery real-time stock data
Next-gen warehouse
management
robotics
Hyper-granular
Automated guided
demand forecasting
vehicles
Transportation
network and route
SOURCE: MCKINSEY ANALYSIS optimisation

forecasting. Integrating key parts of a value thus the appropriate promotional pricing, which
chain journey could make speed to market up to can ultimately boost gross margins.
50 percent faster, full-price sell-through up to 8 At Levi’s, company-wide machine learning
percent higher and manufacturing up to 20 percent combined with a cloud-based data repository
less costly.89 containing internal and external sales and
inventory information provide multiple processes
Integrating key parts of a value with resources to make better decisions around
everything from pricing to consumer marketing,
chain journey could make speed to according to chief strategy and AI officer, Katia
market up to 50 percent faster. Walsh. Data-driven knowledge-sharing also
helps Levi’s determine the best locations from
Product performance, or assessment which to ship its products, identifying the store
of which products are selling well — shows the or distribution centre that is the closest to the
impact of end-to-end integration in practice. A shipping address, helping it to control logistics costs
siloed pricing and promotions application might and manage store inventory smoothly.90
use AI and machine learning to determine a Shein takes this even further. Not only has
product’s promotional price by analysing the the ultra-fast fashion player integrated its internal
current stock, in-season price, time in season processes, but it has also linked those internal
and expected elasticity. By contrast, investing in processes with that of its suppliers. This enables
end-to-end integration would expand the scope of a fast and efficient ordering and replenishment
the application to also consider similar products journey. Shein uses AI modelling to evaluate
already in store or arriving soon, as well as millions of social media posts across platforms
expected returns or a competition range. Each of to determine which products to produce, while
these data points impact expected sell-through and advanced analytics help its design teams review

49
 04. END-TO-END UPGRADE

the performance of design attributes down to should be prepared to address potential resistance
details like the zipper and fabric. With its vertically to working in a more connected way, one in
integrated supply chain using software from which data, and knowledge, flow across processes
Singbada,91 Shein’s designs could reach customers seamlessly. Embracing deep digital integration will
within approximately three weeks after they are require focusing on change management. Teams
first conceived.92 will need to be upskilled or reskilled, and tools will
need to be designed with a user-centric mindset to
Executives should be prepared ensure their adoption. For example, this may mean
to address potential resistance to adopting “explainable AI” whereby AI predictions
and outputs can be easily understood and managed
working in a more connected way,
by humans, unlike “black-box” models that are
one in which data, and knowledge, difficult to interpret, and therefore trust.
flow across processes seamlessly. Ultimately, fashion companies — from
mass market to luxury alike — will benefit from
To be sure, fashion players’ operating optimising their time to market, flexibility
models will continue to require a finely tuned and product availability at a time when many
The State of Fashion: Technology

balance of art and science to not lose sight of the companies are struggling to maintain margins.
creative, experience-focused aspects of decision- Value chain integration will prove to be a critical
making which are critical in fashion. Executives point of competitive differentiation.

Exhibit 11:

Value chain integration can be achieved by combining multiple

layers of technology

Purchasing
Product Category Supply chain Stock
and demand

Containers for transportation of shipped goods. Witthaya Prasongsin/Getty Images.

performance performance optimisation management
forecasting

1 Connected applications that support core operational processes, such as demand forecasting or transport

2 AI & ML models deployed at scale across the organisation that can synthesise data from a range of applications in real time

3 Data backbone to offer a single point of truth for AI and ML models

4 Cloud based servers to store, manage and process data

SOURCE: MCKINSEY ANALYSIS

50
05.
TRACEABILITY
FIRST
Traceability systems powered by tracking software and Big
Data will help fashion brands focusing on sustainability reach
far into their supply chains to understand the entire lifecycle
of their products.

52
KEY INSIGHTS

• More than 50 percent of fashion decision makers say traceability will be a top-five
enabler to reduce emissions in their supply chains, but many brands at best currently
only have visibility over their suppliers with whom they have direct relationships.
• Creating a centralised system for sustainability metric calculations, data collection and
supply chain traceability is essential to make meaningful progress against social and
environmental goals.
• To accelerate advancements in traceability, fashion companies should invest in emerging
technologies like digital ledgers, be willing to open source their own solutions, and
collaborate with start-ups and industry peers.

TECH ENABLERS

• Big Data to process large, complex supply chain-related data sets with AI and machine
learning models.
• Blockchain, a form of digital ledger, to assign immutable, trackable digital
product information.
• Product passports to host traceable sustainability and authenticity product data.
• RFID tags and readers to store product information and track products in real time.

EXECUTIVE PLAYBOOK

1 Lay the foundations Engage directly with suppliers and work with industry
bodies, start-ups and peers to develop a standard for
measuring sustainability performance, supported by a clear
data framework.

2 Prioritise impact areas Adopt robust metrics to assess which areas of the supply
chain or business practices have the biggest environmental
and social impact, and support the monitoring of those
metrics by developing or investing in tech solutions.

3 Scale solutions Adopt software and Big Data technologies to automate data
gathering, regardless of how large, or how complex, the
supply chain. Open source successful technologies to enable
wider industry progress towards a common data standard or
even a data platform.

53
 05. TRACEABILITY FIRST

More than ever, fashion brands are being respond to the fast-evolving regulatory
held accountable for their environmental and social landscape, including in the US, where the
impact. In terms of greenhouse gas emissions alone, Securities and Exchange Commission has
it is estimated that the industry is accountable for proposed its Enhancement and Standardization
2.1 billion tonnes (or 4 percent of the global total), a of Climate-Related Disclosures for Investors.
figure that it set to rise if action is not taken.93 This new rule will require US-listed companies
Brands are largely ill-equipped to monitor to disclose emissions from tiers one, two and
and manage social and environmental practices three of their supply chains. Also on the horizon
across their supply chains, including greenhouse is the EU’s proposed legislation as part of its
gas emissions, of which only 6 percent on average Green Deal that will set mandatory minimum
is generated from their direct operations. Fashion levels for recycled content in products and
players are operating with very limited visibility of will require digital twins for products that
their supply chain beyond their tier one suppliers contain sustainability information to combat
with whom they have direct relationships.94 misleading marketing, or “greenwashing.”98 99
Now, new legislation and the increased • Investors and the ESG imperative: Similarly,
frequency of supply chain disruptions, alongside companies need a greater grip on traceability to
The State of Fashion: Technology

consumer and investor pressure, are forcing demonstrate to the financial community how
corporate action. they are meeting investment criteria relating
If fashion brands are to achieve to environmental, social and governance
sustainability objectives, ranging from better targets.100
materials sourcing to improved regulatory • Customer expectations: Finally, customers
compliance to emissions reduction, they will need are increasingly calling on brands to be
to establish full line of sight into how their products better equipped to assess and disclose their
are manufactured. sustainability claims. In China, 25 percent of
customers rank sustainability as one of the
Currently, the industry’s traceability top three factors that they considered when
purchasing luxury products.101 In Europe, 60
efforts are hampered by manual percent of fashion customers say transparency
processes and unreliable data. is important. While just 20 percent currently
seek out this information when purchasing, the
Complete traceability entails brands percentage of customers who are acting on these
identifying the history, location and distribution of interests is starting to increase — particularly
product parts and materials throughout all stages among younger generations.102
of the supply chain — including contractors and
subcontractors. More than 50 percent of fashion Currently, the industry’s traceability efforts are
decision makers say traceability will be a top-five hampered by manual processes and unreliable data.
enabler to reduce emissions in their supply chain This is exacerbated by the lack of industry-wide
before 2025.95 This visibility provides stakeholders standards, leaving both brands and their suppliers
with information that can inform sustainability- to struggle with tracking and aggregating data.
related decisions:96 97 For traceability to operate successfully at
scale, a common data language is essential. This
• Regulatory compliance: Traceability plays a will create the level of standardisation required
critical role in helping companies proactively for comparability and allow manufacturers and

54
suppliers to share data more easily with multiple industry-wide non-profit).106
brands, encouraging a higher level of buy-in across There are concerns, voiced by players
the value chain. To achieve a common language, such as the Changing Markets Foundation, that
brands will need to collaborate, both in terms of the fragmented nature of these schemes makes
the types of data collected and the way in which comparability and a holistic and granular view
key metrics like water usage and emissions are of impact difficult.107 As industry-wide labelling
compiled and assigned on a product level. standards emerge (along with mechanisms to
The industry is showing promising validate the data), consolidation of traceability and
initial signs of moving closer to this objective of impact tracking standards will likely occur and
great collaboration. Companies such as Kering, will be an important enabler for the acceleration of
LVMH, Fast Retailing and Inditex have adopted traceability efforts given the network effects of
the Taskforce on Climate-Related Financial such solutions.
Disclosures to align on how they assess and disclose
climate risks and opportunities.103 Some initiatives The Power of Data
offer certification labels (such as Cradle to Cradle)104 Technology will be critical for the development
or self-assessment tools (like the Higg Index,105 and adoption of a common data language. Given
developed by the Sustainable Apparel Coalition, an the complexity and fragmentation of value

Exhibit 12:

Traceability is a key to unlocking the sustainability challenge

APPAREL AND FOOTWEAR GREENHOUSE GAS EMISSIONS, %, 2018
Upstream production

End-of-use Brand operations

Usage and end-of-use

3

Product use
20

38 Material production

Transport 3

Retail 3

4
Cut, make, trim

15 8
Wet processes 6 Yarn preparation

Fabric preparation

SOURCE: GLOBAL FASHION AGENDA AND MCKINSEY FASHION ON CLIMATE REPORT, 2020

55
 05. TRACEABILITY FIRST

Exhibit 13:

A standardised data format is necessary to scale traceability

ILLUSTRATIVE VALUE CHAIN

Information flow Physical flow

Physical supply chain

Data integration through digital tools
with direct input or APIs connecting
into manufacturers’ Enterprise Fibre suppliers Yarn manufacturers Fabric manufacturers
Resource Planning software.

Digital tools Tool 1 Tool 2 Tool 3

Digital ledger(s)
Data collected through various Ledger 1 Ledger 1 Ledger 2
ledgers with consistent structure
and language across all channels.
The State of Fashion: Technology

SOURCE: MCKINSEY ANALYSIS

chains, brands —particularly large ones — will validate whether fibres originate from
require tracking software for data gathering sustainable sources.108
and marshalling. Brands can look to establish Meanwhile, TrusTrace offers a centralised
a decentralised ledger (a peer-to-peer shared database of certifications and other evidence to
database with no central administrator) to document the sustainability claims from retailers,
efficiently collect and distribute data and ensure manufacturers and suppliers, as well as third
its reliability — the data within digital ledgers is parties such as certification agencies. Adidas, which
immutable. These ledgers may be open source or has targets to use only recycled polyester by 2024
owned by individual brands, or third-parties and and to make 90 percent of its products in a way that
start-ups could create data interfaces for specific is more sustainable by 2025, will use TrusTrace’s
segments of the value chain. software to track all certified materials used in its
Such traceability systems — whereby each products in the next two years.109
entity along the value chain inputs data — are far
from a reality today. However, pilots are running Owing to the complex and
to test platforms that enable brands to track fragmented nature of the value
garments through the supply chain, alongside
implementations of off-the-shelf solutions chain, technology is the key
connecting suppliers and brands’ data systems. For enabler to achieving traceability.
example, TextileGenesis, which uses blockchain-
based technology to assign a trackable digital token In addition, companies such as Applied
to recycled and organic fibres, has partnered with DNA Sciences are experimenting with physical
Fashion for Good, Lenzing and other organisations (for example, RFID) and molecular trackers
as well as retailers such as Bestseller, Kering, that can be applied to products at various
Zalando and H&M Group to use the technology to stages of manufacturing and can store product

56
 Apparel manufacturers Brands/retailers Customers Recyclers

Tool 4 Tool 5 Tool 6 Tool 7

Ledger 2 Ledger 3 Ledger 3 Ledger 4

information.110 Thread manufacturer American data and shares information as a paid-for service to
& Efird has adopted molecular trackers to allow other brands to engage with H&M-vetted
authenticate some lines of recycled thread.111 suppliers without having to conduct their
However, just 10 percent of senior fashion own assessment.114
executives have invested in such physical “track The onus will be on big brands with the
and trace” solutions when seeking to address supply capital to invest — and, ultimately, the biggest
chain visibility and traceability.112 footprints — to lead the charge. It is likely that over
time a handful of data platforms will emerge as
Knowledge Sharing principal solutions, so there is a potential return on
For traceability initiatives to have a meaningful investment for brands who can help develop them.
impact, brands will need to be more open about Traceability will put the industry on
proprietary knowledge about their supply chains. track towards a more transparent, accountable
Collaboration is required to achieve a common future, ensuring that investors, consumers and
good. This is happening in some parts of the regulators can interact with brands based on
industry. The Aura Blockchain Consortium has sustainability information they can trust. What’s
united LVMH, Prada and Richemont-owned more, traceability will be critical in establishing
Cartier on a shared platform to solve traceability a competitive business model. Owing to the
challenges by developing blockchain-based complex and fragmented nature of the value
“product passports” for luxury goods.113 This chain, technology is the key enabler to achieving
would provide verified information relating to traceability. With this, brands need to embrace a
a product’s entire lifecycle. In addition, H&M new, collaborative mindset to enable information
Group has launched an open-source B2B service sharing, while extending tools and providing
called Treadler to grant industry peers access to training and support to their suppliers so that they
its suppliers list. H&M vets suppliers using Higg are also able to embrace a more traceable industry.

57
 GLOSSARY

Avatar Last mile optimisation software to issues including human rights,

A digital image or graphic Manages deliveries from the health and safety and environmental
representation of a real person used warehouse to customer, comprising impacts.
in virtual worlds such as computer route optimisation, advanced
games or social media. dispatching, customer alerts, proof Virtual fashion and skins
of delivery and analytics that help The visual representation of fashion
Category performance reduce delivery frequency and items created with technology and 3D
Measures the performance metrics minimise delivery time and distance. software to be applied, for example,
of a product category – e.g. units sold, to social media images or to alter the
revenue, full-price sell through. Magic mirrors appearance of avatars in games.
Also referred to as smart or connected
Clienteling apps mirrors, magic mirrors feature Wi-Fi- Virtual goods
Apps used by store associates to guide connected displays behind the mirror, Intangible objects traded in online
consumers through their in-store providing useful features such as communities or marketplaces, to be
shopping journey. These apps can additional lighting or sound. used either in virtual worlds or as
enable associates to, for example, collectibles.
access customer loyalty data and Molecular trackers
inventory information or act as a Chemicals that are applied to yarn Virtual sampling
point of sale. or fabric at various points in the A digitised, three-dimensional
supply chain that can be traced or product development process,
Cryptocurrency scanned to understand a garment’s enabling designers to create virtual
(e.g. Bitcoin, Ethereum, Solana) materials. Some may even be paired samples simulating movement,
A type of digital asset built on the with a digital twin to store further stretch and use.
blockchain that represents encrypted information on product origin,
currency, which can help prevent manufacturing and sustainability Web3
counterfeiting, among other uses. credentials. The next phase of the internet using
It can be “mined” (created) or a decentralised, peer-to-peer model
purchased from special exchanges. Non-fungible token (NFT) powered by blockchain technology
No official authority or government An entry on a blockchain recording on which apps and platforms would
produces, monitors or regulates a unique digital asset (e.g. images or be built.
cryptocurrency. videos) and its owner, enabling the
The State of Fashion: Technology

documentation of any sale or transfer

Customer listening tools of the item. Often associated with the
AI technology that tracks what metaverse, NFTs are a building-block
customers say on social media in technology that will allow for true
real time, capturing the “mood” or ownership of digital goods.
sentiment of posts.
Product performance
Dark store Measures the performance metrics
A physical retail facility that could be of a specific SKU – e.g. units sold,
a conventional store but is not open to revenue, full-price sell through.
the public. Instead, it houses goods to
fulfil online orders. QR code
A matrix barcode that is readable by
Data backbone or data lake machines and, when scanned, can
A centralised storage repository contain information about the item to
that holds large amounts of which it is attached or associated.
data in different formats (raw,
curated, analytical, structured or Stock optimisation software
unstructured) until analysed. Allows businesses to manage
inventory location and use. The
Digital twin software may use technology such
A virtual asset associated with a as AI to provide real-time, adaptive
physical object or process. It can stock visibility, allowing fashion
include coded information about players to fully utilise all stock.
an object or garment’s full history
from manufacturing (such as the Supply chain optimisation
type of dyeing production used) Processes to improve supply chain
to transportation (such as the operations, from manufacturing and
location of distribution facilities) transportation to distribution, often
and information about the purchase leveraging digital and AI tools.
aftercare, repairs and resale.
Third-party (3P) data
First-party (1P) data Data that is purchased from external
Data collected from customers via a sources such as aggregators, which
brand or retailer’s own channels (such are not the original collectors of the
as a website, app or in store), enabling data. The third parties purchase data
businesses to use data in a privacy- from other sources across the web to
complaint and cost-effective way. aggregate, segment and resell.

Generation-Z (Gen-Z) Traceability

Demographic cohort born The ability to identify and monitor
c. 1996–2012, following the Millennial the history, distribution, location
generation. and application of materials, parts
and finished goods to understand the
sustainability of practices relating

58
ENDNOTES
1 McKinsey & Company Client is Shaping Design at Levi 27 Dean Takahasi, “Roblox’s to Launch Metaverse Business
Benchmark 2021 Strauss & Co.,” Levi Strauss, year-end data reveals its Unit,” The Business of Fashion,
November 10, 2021, https://www. metaverse advantage,” Venture December 2, 2021, https://www.
2 McKinsey expert interviews and levistrauss.com/2021/11/10/ Beat, January 26, 2022, https:// businessoffashion.com/news/
analysis ai-shaping-design-levi-strauss/ venturebeat.com/2022/01/26/ technology/balenciaga-to-launch-
robloxs-year-end-data-reveals-its- metaverse-business-unit/
3 Sean Fleming, “Top 10 tech 15 “Inditex Annual Report 2021,” metaverse-advantage/
trends that will shape the coming Inditex, https://www.inditex. 38 MC Nanda and Marc Bain, “Nike
decade, according to McKinsey,” com/documents/10279/682269/ 28 Marc Bain, “Virtual Fashion Is Acquires Virtual Fashion Start-Up
World Economic Forum, October Inditex+Annual+Report+2021. Big News. Can It Be Big Business?,” RTFKT,” The Business of Fashion,
12, 2021, https://www.weforum. pdf/4720f528-68f4-1726-2f36- The Business of Fashion, December 13, 2021, https://www.
org/agenda/2021/10/technology- 06516d3b7697 November 10, 2021, https://www. businessoffashion.com/articles/
trends-top-10-mckinsey/ businessoffashion.com/briefings/ technology/nike-acquires-virtual-
16 “2022 Horizon,” Inditex, https:// technology/virtual-fashion-is-big- fashion-start-up-rtfkt/
4 Peter H. Diamandis and Steven www.inditex.com/documents/102 news-can-it-be-big-business/
Kotler, “The Future Is Faster 79/304402/2022+Horizon_eng. 39 McKinsey analysis of
Than You Think: How Converging pdf/0c482bbd-692e-1346-5af5- 29 “A digital Gucci bag sold for Crunchbase data of the top 50
Technologies Are Disrupting 0c6bf1c5e02f US$4,000 on gaming platform fashion and retail investment
Business, Industries, and Our Roblox – will virtual fashion rounds, Jan 2019 - Feb 2022
Lives,” Simon & Schuster, 2020 17 Patrick Wong, “Nike’s D2C really become a US$400 billion
E-Commerce Strategy for Hitting industry by 2025?,” Jing Daily, 40 BoF Interview with Nicole
5 McKinsey analysis 50% Digital Penetration,” Johnson, March 2022
June 7, 2021, https://www.
Fabric, January 14, 2022, scmp.com/magazines/style/
6 Kasey Panetta, “Gartner Top 41 Interview with Frederic Court,
https://fabric.inc/blog/ news-trends/article/3136325/
Strategic Technology Trends April 2022
nike-ecommerce-strategy/ digital-gucci-bag-sold-us4000-
for 2021,” Gartner, October 19,
2020, https://www.gartner. gaming-platform-roblox 42 Casey Hall, “Xiaohongshu
18 “LVMH and Google Cloud Create
com/smarterwithgartner/ Strategic Partnership for AI and Raises $500 Million in New
30 McKinsey estimate based on
gartner-top-strategic-technology- Cloud-Based Innovation,” LVMH, Funding Round,” The Business of
expert interviews and inputs
trends-for-2021 June 16, 2021, https://www.lvmh. Fashion, November 9, 2021, https://
com/news-documents/news/ 31 Sam Shead, “Meta plans to take www.businessoffashion.com/news/
7 Ferry Grijpink et al, “Connected china/xiaohongshu-raises-500-
lvmh-et-google-cloud-partenaires- a nearly 50% cut on virtual asset
world: An evolution in connectivity million-in-new-funding-round/
strategiques-pour-lintelligence- sales in its metaverse,” CNBC,
beyond the 5G revolution,”
artificielle-et-linnovation-dans- April 13, 2022, https://www.cnbc.
McKinsey, February 20, 2020, 43 Interview with Alan Ting,
le-cloud/ com/2022/04/13/meta-plans-to-
https://www.mckinsey.com/ March 2022
take-a-nearly-50percent-cut-on-
industries/technology-media-and- 19 “The Virtual Economy,” nft-sales-in-its-metaverse.html 44 BoF Interview with Reina
telecommunications/our-insights/ L’Atelier, https://atelier.net/
connected-world-an-evolution- Nakamura, March 2022
virtual-economy/ 32 Boris Rebo, “New Dapps Report:
in-connectivity-beyond-the-5g- NFT Collectibles – January 2022 45 BoF Interview with Reina
revolution 20 McKinsey estimate based on Edition,” Dapp Radar, January 6, Nakamura, March 2022
expert interviews and inputs 2022, https://dappradar.com/blog/
Note: McKinsey estimation based
new-dapps-report-nft-collectibles- 46 Diana Lee, Rahul Malik, “The
on Cisco’s projections through 21 McKinsey expert analysis
january-2022-edition Future of Fashion Resale,” The
2022 and extended to 2030. For
22 “Initial data released on Business of Fashion, July 19, 2021,
Cisco’s 2022 projection, see “Cisco 33 Miles Kruppa, Criddle and Tim
consumer views of the metaverse,” https://www.businessoffashion.
Visual Networking Index: Global Bradshaw, “The great NFT sell-off:
National Research Group, com/reports/retail/the-future-of-
mobile data traffic forecast update,” has the digital collectibles craze hit
December 16, 2021, https:// fashion-resale-report-bof-insights
Cisco, February 2019 its peak?,” Financial Times, March
www.globenewswire.com/news-
11, 2022, https://www.ft.com/ 47 Anna Ringstrom, “H&M’s online
8 Rebecca Moody, “Screen release/2021/12/16/2353391/0/
content/46349496-790a-4223- second-hand shop Sellpy launches
Time Statistics: Average en/Initial-data-released-on-
8c65-d6a0bde897bc in 20 more countries,” Reuters, May
Screen Time in US vs. the rest consumer-views-of-the-metaverse.
31, 2021, https://www.reuters.com/
of the world,” Comparitech, html 34 Marc Bain, “How Brands Are article/us-h-m-sellpy-secondhand-
March 21, 2022, https://www. Using NFTs to Keep Customers
23 Diana Lee, Rahul Malik, “The idCAKCN2DC0MB
comparitech.com/tv-streaming/ Hooked,” The Business of Fashion,
screen-time-statistics/ Opportunity in Digital Fashion and
March 31, 2022, https://www. 48 Tamison O’Connor,
Avatars,” The Business of Fashion,
businessoffashion.com/articles/ “Vestiaire Collective Hits $1.7
9 McKinsey & Company Global November 3, 2021, https://shop.
technology/how-brands-are-using- Billion Valuation With New
Digital Sentiment Insight Survey, businessoffashion.com/products/
nfts-to-keep-customers-hooked/ Fundraise,” The Business of
2021 the-opportunity-in-digital-
Fashion, September 22, 2021,
fashion-and-avatars 35 “Zepeto x Gucci,” Gucci, https://
10 McKinsey & Company Global https://www.businessoffashion.
www.gucci.com/uk/en_gb/st/ com/articles/finance/
Digital Sentiment Insights Survey, 24 McKinsey luxury consumer
stories/inspirations-and-codes/ vestiaire-collective-hits-17-billion-
2021 survey, March 2022, N=1,500 from
article/zepeto-x-gucci valuation-with-new-fundraise/
China
11 McKinsey Global Institute (MGI)
36 Tiffany Lung, “Burberry Bridges 49 “Etsy to acquire global fashion
analysis, Modeling the Impact of AI 25 “DressX – Our Vision,” DressX,
NFT With Physically Limited- resale marketplace Depop,” Etsy,
on the World Economy, 2018 https://dressx.com/pages/about
Edition Scarf Ahead of Alibaba June 02, 2021, https://investors.
12 McKinsey analysis 26 Rachel Douglass, “H&M Singles Day,” Forbes, October 24, etsy.com/press-releases/
launches virtual fashion collection 2021, https://www.forbes.com/ press-release-details/2021/
13 “H&M Group Annual Report in collaboration with Dress-X,” sites/tiffanylung/2021/10/24/ Etsy-to-acquire-global-fashion-
2020,” H&M, 2021, https:// Fashion United, January 10, burberry-bridges-nft-with- resale-marketplace-Depop/default.
hmgroup.com/wp-content/ 2022, https://fashionunited.uk/ physical-limited-edition-scarf- aspx
uploads/2021/04/HM-Annual- news/fashion/h-m-launches- ahead-of-alibaba-singles-
Report-2020.pdf virtual-fashion-collection- day/?sh=1dca702b2259 50 Interview with Pierre Denis,
in-collaboration-with- March 2022
14 Mark Cazares, “How AI 37 Robert Williams, “Balenciaga
dress-x/2022011060500

59
 51 “Reflaunt Raises $2.7 Million 61 McKinsey expert interviews, Retail, March 1, 2022, https:// 84 “Farfetch and Neiman Marcus
From Luxury Industry Leaders, 2021 www.modernretail.co/retailers/ Group Announce Global Strategic
Led by MadaLuxe Group,” target-announces-plans-to-invest- Partnership and Investment,
Businesswire, February 17, 2021, 62 “Zalando on track with 2025 5b-mainly-in-stores-as-same-day- Including Expanding Bergdorf
https://www.businesswire.com/ growth plan fueled by strong services-drive-growth/ Goodman’s E-Commerce
news/home/20210217005645/en/ customer growth in 2021,” Capabilities and Reach,”
Reflaunt-Raises-2.7-Million-From- Zalando, March 1, 2022, https:// 76 “Zara’s Retail Inventory Businesswire, April 5, 2022,
Luxury-Industry-Leaders-Led-by- corporate.zalando.com/en/ Management System https://www.businesswire.com/
MadaLuxe-Group investor-relations/news-stories/ Drives Business,” Impinj, news/home/20220405005613/en/
zalando-full-year-results-2021 November 5, 2014, https:// FARFETCH-and-Neiman-Marcus-
52 “Lizee Financials,” CB Insights, www.impinj.com/library/ Group-Announce-Global-Strategic-
https://www.cbinsights.com/ 63 “Zalando Targets More Than blog/zaras-retail-inventory- Partnership-and-Investment-
company/lizee/financials EUR 30 Billion GMV by 2025,” management-system-drive Including-Expanding-Bergdorf-
Zalando, March 16, 2021, https://
Goodman%E2%80%99s-E-
53 Nidhi Arora, Wei Wei Liu, corporate.zalando.com/en/ 77 Lauren Thomas, “Target CEO
Commerce-Capabilities-and-Reach
Kelsey Robinson et al., “The investor-relations/news-stories/ says cost of handling online
value of getting personalisation zalando-targets-more-eur-30- orders drops 90% when shoppers 85 McKinsey Apparel CPO survey
right, or wrong, is multiplying,” billion-gmv-2025 use same-day options,” CNBC, 2021
McKinsey & Company, November 20, 2019, https://
November 12, 2021, https:// 64 “Zalando Invests in Customer www.cnbc.com/2019/11/20/ 86 “We are Nextail,” Nextail,
www.mckinsey.com/business- Experience With Acquisition of target-is-cutting-costs-by- https://nextail.co/
functions/marketing-and-sales/ Swiss Mobile Body Measurement 90percent-thanks-to-its-same-
our-insights/the-value-of-getting- App Developer Fision,” Zalando, day-delivery-options.html 87 “Supply chain solutions for
personalisation-right-or-wrong-is- October 16, 2020, https:// better decision-making,” Logility,
multiplying corporate.zalando.com/en/ 78 Antonio Achille, Sophie https://www.logility.com
newsroom/news-stories/ Marchessou and Nathalie Remy,
54 Kate O’Flaherty, “Apple’s zalando-invests-customer- “Luxury in the age of digital 88 “The o9 Digital Brain platform,”
Stunning iOS14 Privacy move: experience-acquisition-swiss- Darwinism,” McKinsey & o9 Solutions, https://o9solutions.
A game-changer for all iPhone mobile-body-measurement Company, February 1, 2018, https:// com/
users,” Forbes, January 31, 2021, www.mckinsey.com/industries/
65 “do.MORE – our 89 McKinsey Impact Cases 2021
https://www.forbes.com/sites/ retail/our-insights/luxury-in-the-
The State of Fashion: Technology

kateoflahertyuk/2021/01/31/ sustainability strategy,” age-of-digital-darwinism 90 John McCormick, “Levi’s

apples-stunning-ios-14-privacy- Zalando, https://corporate.
AI Chief Says Algorithms Have
move-a-game-changer-for-all- zalando.com/en/our-impact/ 79 “Burberry creates augmented
Helped Boost Revenue,” The
iphone-users/?sh=19c58587e8d3 domore-our-sustainability-strategy reality pocket bag experience,”
Wall Street Journal, December
Burberry, April 19, 2021,
66 McKinsey & Company Digital 17, 2021, https://www.wsj.com/
55 Vinay Goel, “An updated https://www.burberryplc.
Sentiments Survey 2021, N=29,000 articles/levis-ai-chief-says-
timeline for Privacy Sandbox com/en/news/brand/2021/
from 24 countries algorithms-have-helped-boost-
milestones,” Google — The burberry-creates-augmented-
revenue-11639744231
Keyword, June 24, 2021, https:// reality-pocket-bag-experience.
67 McKinsey & Company Modern
blog.google/products/chrome/ html 91 Sergison, Darcey, “Shein’s
Retail Collective
updated-timeline-privacy- Supply Chain Provider Singbada
sandbox-milestones/ 80 Godfrey Deeny, “Chanel
68 McKinsey & Company Modern Secures Investment,” The Business
planning to roll out its Farfetch
Retail Collective of Fashion, July 28, 2021, https://
56 Dave Chaffey, “Global social Augmented Retail Experience
www.businessoffashion.com/
media statistics research 69 McKinsey & Company survey of project in new stores,” Fashion
news/china/sheins-digital-supply-
summary,” Smart Insights, European customers, 2020 Network, January 30, 2020,
chain-provider-singbada-secures-
March 29, 2022, https://www. https://ww.fashionnetwork.com/
investment/
smartinsights.com/social-media- 70 “Zara’s Store Mode news/Chanel-planning-to-roll-
marketing/social-media-strategy/ Supercharges Click & Collect,” out-its-farfetch-augmented- 92 McKinsey industry expert
new-global-social-media-research/ Stylus, July 29, 2021, https://www. retail-experience-project-in-new- interviews, 2021
stylus.com/zaras-store-mode- stores,1181490.html
57 “Paid Media Q4 2019 Global supercharges-click-collect 93 “Fashion on Climate – How the
Benchmark Report,” Adstage, 81 “LVMH Japan and SoftBank industry can urgently act to reduce
https://cdn2.hubspot.net/ 71 “Nike Reveals New AR Corp. Agree on Strategic its Greenhouse gas emissions,”
hubfs/4350015/Benchmark%20 Features at NYC Concept Store,” Partnership to Enhance LVMH McKinsey & Company and Global
Report/Q4%202019%20Paid%20 Brainstation, January 26, 2021, Customer Experience with Fashion Agenda, August 26, 2020,
Media%20Benchmark%20 https://brainstation.io/magazine/ Technology,” LVMH, February https://www.mckinsey.com/
Report.pdf; “Facebook nike-reveals-new-ar-features-at- 24, 2022, https://www.lvmh. industries/retail/our-insights/
Advertising Costs by CPM,” nyc-concept-store com/news-documents/news/ fashion-on-climate
Revealbot, https://revealbot.com/ lvmh-japan-and-softbank-corp-
facebook-advertising-costs 72 Maghan McDowell, “Burberry agree-on-strategic-partnership- 94 “Fashion on Climate – How the
tests “social retail” in China’s tech to-enhance-lvmh-customer- industry can urgently act to reduce
58 “Zalando’s new filter feature capital,” Vogue Business, July 31, experience-with-technology/ its Greenhouse gas emissions,”
makes sizing personal,” Zalando, 2020, https://www.voguebusiness. McKinsey & Company and Global
October 29, 2021, https://corporate. com/consumers/burberry-tests- 82 “Burberry debuts luxury’s first Fashion Agenda, August 26, 2020,
zalando.com/en/newsroom/ social-retail-in-chinas-tech-capital social retail store in Shenzhen, https://www.mckinsey.com/
news-stories/zalandos-new-filter- China, powered by Tencent industries/retail/our-insights/
features-make-sizing-personal 73 McKinsey & Company expert technology,” Burberry, https:// fashion-on-climate
interview, March 2022 www.burberryplc.com/en/
59 “About Us,” The Yes, https:// company/social-retail.html 95 McKinsey Apparel CPO Survey
www.theyes.com/about 74 McKinsey & Company client
2021
interviews, June 2020, N=1,508 83 Robert Williams, “Kering’s
60 “Stitch Newsroom: Stitch Fix Game Plan for 2022,” The Business 96 “A Guide to Traceability A
Turns Ten,” Stitch Fix, https:// 75 Maile McCann, “Target of Fashion, February 18, 2022, Practical Approach to Advance
newsroom.stitchfix.com/blog/ announces plans to invest $5B https://www.businessoffashion. Sustainability in Global Supply
stitch-fix-turns-ten/ mainly in stores as same-day com/articles/luxury/ Chains,” United Nations
services drive growth,” Modern kerings-game-plan-for-2022/ Global Compact, 2014, https://

60
d306pr3pise04h.cloudfront. https://fashionforgood.com/ INFOGRAPHICS
net/docs/issues_doc%2Fsupply_ our_news/from-fibre-to-finish-to-
chain%2FTraceability%2FGuide_ scale-tracing-viscose-and-beyond/; 1. Metaverse Reality Check
to_Traceability.pdf Merel Krebbers, “Tracing the Story, Source: McKinsey expert analysis
one thread at a time,” H&M Group,
97 “Fashion on Climate – How the April 28, 2021, https://hmgroup. 2. Hyper Personalisation
industry can urgently act to reduce com/our-stories/tracing-the- Source: Nidhi Arora, Wei Wei Liu,
its Greenhouse gas emissions,” story-one-thread-at-a-time/ Kelsey Robinson et al., “The value
McKinsey & Company and Global of getting Personalisation right, or
Fashion Agenda, August 26, 2020, 109 Sarah Kent, “Adidas Taps wrong, is multiplying,” McKinsey &
https://www.mckinsey.com/ Traceability Platform TrusTrace Company, November 12, 2021
industries/retail/our-insights/ to Help Back Up Sustainability
fashion-on-climate Claims,” The Business of 3. Connected Stores
Fashion, March 14, 2022, Source: McKinsey & Company
98 “SEC Proposes Rules to https://www.businessoffashion. Modern Retail Collective
Enhance and Standardize com/news/sustainability/
Climate-Related Disclosures for adidas-taps-traceability-platform- 4. End-to-End Upgrade
Investors,” US Securities and trustrace-to-help-back-up- Source: McKinsey Apparel CPO
Exchange Commission, March 21, sustainability-claims/ Survey 2021
2022, https://www.sec.gov/news/
press-release/2022-46 110 Robert Bowman, “Tracking 5. Traceability First
Product Through the Supply Chain Source: McKinsey Apparel CPO
99 Sarah Kent, “Fashion With Molecular Tags,” Supply Survey 2021
Brands Face EU Sustainability Chain Brain, March 29, 2021,
Crackdown,” The Business https://www.supplychainbrain.
of Fashion, March 30, 2022, com/blogs/1-think-tank/
https://www.businessoffashion. post/32844-tracking-product-
com/articles/sustainability/ through-the-supply-chain-with-
the-eus-plan-to-regulate-fashion/ molecular-tags
100 “Larry Fink’s 2021 Letter 111 “Applied DNA Sciences and A&E
to CEOs,” Blackrock, 2021, Introduce Anti-Counterfeiting
https://www.blackrock.com/us/ Technology for Sustainable
individual/2021-larry-fink-ceo- Sewing Threads,” Applied DNA
letter Sciences, 2021, https://adnas.com/
ae-integrity-eco100-thread-launch/
101 McKinsey & Company Luxury
Consumer Survey, March 2022, 112 Diana Lee, Rahul Malik,
N=1,500 from China “Building Resilience and Value
in Fashion’s Supply Chain,”
102 “It Takes Two: How the
The Business of Fashion,
Industry and Consumers
March 2, 2022, https://shop.
Can Close the Sustainability
businessoffashion.com/products/
Attitude-Behavior Gap in
building-resilience-and-value-in-
Fashion,” Zalando, 2021, https://
fashion-s-supply-chain
corporate.zalando.com/sites/
default/files/media-download/ 113 Robert Williams and MC
Zalando_SE_2021_Attitude- Nanda, “Cartier, Prada Link
Behavior_Gap_Report_EN.pdf Up with LVMH in Blockchain
Alliance,” The Business of
103 Task Force on Climate-Related
Fashion, April 20, 2021, https://
Financial Disclosures, Supporters,
www.businessoffashion.
https://www.fsb-tcfd.org/
com/news/news-analysis/
supporters/
cartier-prada-link-up-with-lvmh-
104 Cradle to Cradle Certification, in-blockchain-alliance/
https://www.c2ccertified.org/
114 Simon Glover, “How the
get-certified/product-certification
H&M Group helps rivals access
105 “The Higg Index,” suppliers,” EcoTextile News,
Sustainable Apparel Coalition, June 28, 2021, https://www.
https://apparelcoalition.org/ ecotextile.com/2021062827992/
the-higg-index/ fashion-retail-news/podcast-how-
higg-data-helps-the-h-m-group.
106 “Origins,” Sustainable Apparel html
Coalition, https://apparelcoalition.
org/origins/

107 “Licence to Greenwash:

How certification schemes and
voluntary initiatives are fuelling
fossil fashion,” Changing Markets
Foundation, March 2022, http://
changingmarkets.org/wp-content/
uploads/2022/03/LICENCE-TO-
GREENWASH-FULL-REPORT.pdf

108 “From Fibre to Finish To Scale:

Tracing Viscose And Beyond,”
TextileGenesis, June 22, 2021,

61
 The Business of Fashion is a next-generation media company recognised around the world for its
authoritative, analytical point of view on the global fashion industry. Serving members in more than 125
countries, BoF combines independent, agenda-setting journalism with practical business advice, online
learning, career-building tools and immersive events and experiences designed to open, inform and
connect the global fashion community.

FOR EDITORIAL ENQUIRIES PLEASE CONTACT:

Imran Amed Marc Bain

Founder, CEO & Editor-in-Chief Technology Correspondent
ceo.office@businessoffashion.com marc.bain@businessoffashion.com

Vikram Alexei Kansara Brian Baskin

The State of Fashion: Technology

Editorial Director Deputy Editor

vikram.kansara@businessoffashion.com brian.baskin@businessoffashion.com

Janet Kersnar Lauren Sherman

Executive Editor Chief Correspondent
janet.kersnar@businessoffashion.com lauren.sherman@businessoffashion.com

FOR COMMERCIAL ENQUIRIES PLEASE CONTACT:

Nick Blunden Johanna Stout

President Head of Brand and Community Partnerships
nick.blunden@businessoffashion.com johanna.stout@businessoffashion.com

Rahul Malik Matthew Cullen

Managing Director, North America and Head of Business Development and BoF Careers
Head of New Business matthew.cullen@businessoffashion.com

rahul.malik@businessoffashion.com

FOR PRESS ENQUIRIES PLEASE CONTACT:

Jael Fowakes Max Tobias

Associate Director, Brand & Community Director, Camron Public Relations
jael.fowakes@businessoffashion.com max.tobias@camronpr.com

62
For questions on the report or further discussions, please contact a member of McKinsey’s Apparel,
Fashion & Luxury global leadership team:

FOR REPORT ENQUIRIES: Sandrine Devillard Madeleine Tjon Pian Gi

Senior Partner, North America Partner, Benelux
Achim Berg
sandrine_devillard@mckinsey.com madeleine_tjon_pian_gi@mckinsey.com
Senior Partner, Global
Achim_berg@mckinsey.com
Antonio Gonzalo Roger Roberts
Partner, Iberia Partner, North America
Anita Belchandani
antonio_gonzalo@mckinsey.com Roger_Roberts@mckinsey.com
Senior Partner, EMEA/United
Kingdom
anita_balchandani@mckinsey.com Holger Harreis Felix Rölkens
Senior Partner, Germany Partner, Germany
holger_harreis@mckinsey.com felix_roelkens@mckinsey.com
Carlos Sanchez Altable
Partner, EMEA/Iberia
carlos_sanchez_altable@mckinsey.com Fernanda Hoefel Jennifer Schmidt
Partner, Latin America Senior Partner, North America
fernanda_hoefel@mckinsey.com jennifer_schmidt@mckinsey.com
FOR PRESS ENQUIRIES:

Adriana Clemens Naoyuki Iwatani Raphael Speich

Senior Communication Specialist Senior Partner, Japan Partner, France
adriana_clemens@mckinsey.com naoyuki_iwatani@mckinsey.com raphael_speich@mckinsey.com

Aimee Kim Alex Sukharevsky

FOR REGIONALLY FOCUSED ENQUIRIES:
Senior Partner, Asia Pacific Senior Partner, Russia and CEE
Carlos Sanchez Altable aimee_kim@mckinsey.com alex_sukharevsky@mckinsey.com
Partner, Iberia
carlos_sanchez_altable@mckinsey.com Sajal Kohli Alexander Thiel
Senior Partner, North America Partner, Switzerland
Colleen Baum sajal_kohli@mckinsey.com alexander_thiel@mckinsey.com
Partner, North America
colleen_baum@mckinsey.com Franck Laizet Cyrielle Villepelet
Senior Partner, France Partner, France
Pamela Brown franck_laizet@mckinsey.com cyrielle_villepelet@mckinsey.com
Partner, North America
pamela_brown@mckinsey.com Karl-Hendrik Magnus Nitasha Walia
Senior Partner, Germany Partner, Middle East
Raphael Buck karl-hendrik_magnus@mckinsey.com nitasha_walia@mckinsey.com
Senior Partner, EMEA
raphael_buck@mckinsey.com Emanuele Pedrotti Daniel Zipser
Partner, Mediterranean Senior Partner, Greater China
Gemma D’Auria emanuele_pedrotti@mckinsey.com daniel_zipser@mckinsey.com
Senior Partner, Mediterranean
gemma_dauria@mckinsey.com

63
 The State of Fashion: Technology

64