Digital transformation in fashion

Digital transformation: Fashion’s reset in 2021

Key takeaways

  • Throughout 2020 and into 2021, the pandemic has led to the rise of innovative technologies, impacting commerce, design, and business model in the fashion industry.
  • Digital transformation has been notable in e-commerce, as many brands and retailers have begun adopting digital solutions to cater to consumers' shifting values and needs.
  • Predictive analytics is one digital solution which can be integrated into the collection planning process to address challenges from inventory management to cross-team communication.

If the fashion industry had a word of the year, transformation would seem most fit to describe its journey over the past year. Everything from the way apparel and accessories are manufactured, marketed, and sold, to how traditional savoir-faire and new technologies interact, have changed radically over the last 12 months. One of the most salient symptoms of the pandemic has indeed been the rise of innovative technologies, impacting commerce, design, and business models. The industry, therefore, has (and still is) undergone a rapid digital transformation. 

Digital transformation is defined as “the process of using digital technologies to create new — or modify existing — business processes, culture, and customer experiences to meet changing business and market requirements.” 

This process is not simply a matter of improving existing ones, but of reworking them to better meet certain values and objectives. Consequently, the challenge for fashion companies today is to integrate digital transformation into the aspects of their business model which they wish to revamp. 

The evolution of fashion ecommerce

If one thing became starkly apparent throughout the past year, it’s customer experience. The closing of brick-and-mortar stores pushed brands to find new ways of making their products available to consumers, through channels with which the majority was already familiar — namely, social media and online sites. 

According to McKinsey & Co., the pandemic accelerated fashion ecommerce growth like the industry had never seen: 43% of consumers who had never purchased clothing online began doing so during the past year.

And when one day brick-and-mortar stores open fully as before, the study notes that nearly 28% of consumers expect to buy less at physical stores. 

Making the move to digital platforms 

So how to rapidly shift in-store selling to online? The simple answer is: digital transformation.

  1. Brands must reallocate their resources and attention to online, as a shift in mentality and management is the first step before integrating viable, digital solutions.
  2. Brands must figure out ways to render this rapid transition as frictionless as possible: in-store marketing, inventory management, and experience are radically different from its online counterparts. 
Models poses in bright colors in front of a painting

During the first “phase” of the pandemic, around Spring 2020 following the first lifting of lockdown in many countries, brands made moves to expand their online presence, marketing to consumers through various channels, and improving their online shopping experience through wider assortments and tailored purchase suggestions. 

But then came the second phase, during which many countries lifted lockdown restrictions and stores opened up, albeit for a brief period of time. This phase led to a somewhat rushed mix of digital solutions drawn from ecommerce and traditional in-store shopping. While this technology largely existed pre-Covid, the preponderance among brands and retailers increased throughout the pandemic, with examples such as:

  • RFID chips into products to easily track sales and better manage stock and assortment
  • Assisted shopping, in which other brands incorporated virtual salespeople into the experience
  • “Smart” changing rooms in the stores themselves
McKinsey and Co Digital Transformation in Fashion

A more consumer-centric fashion industry

Evidently, there has been a noticeable shift to consumer convenience. There exists such a plurality of brands that consumers have no issue skipping around until they find the most streamlined, accessible, and enjoyable experience before making purchases. Consumers now demand better service, whether it be ethical values, quality of clothing, visual aesthetic of the platform itself, or more personalized interactions. This is where brands need digital transformation to not only keep up with the times, but to be proactive in their commerce strategies. 

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Building a new form of commerce through digital transformation

Resell is one major ecommerce trend that has arisen this year. As many consumers are increasingly demanding sustainability and transparency from their favorite fashion brands, resell is stepping in to fill this gap in the market. Resell platforms such as The RealReal, Vestiaire Collective, StitchFix, and Rent-the-Runway have grown tremendously: 

GlobalData predicts that by 2026, the second-hand market will increase by 15.5%, from over $16B USD in 2018 to nearly $69B USD in 2026. 

These numbers have two chief drivers:

  1. Increased focus on sustainability: Consumer focus on sustainability serves to explain the desire to purchase second-hand rather than new clothing in an effort to reduce overproduction and waste that the fashion industry is well-known for. 
  2. Increased investment in luxury goods: Many millennials now view luxury goods as a “worthwhile investment,” with 76% of them expressing a certain pleasure in collecting luxury items.

Why is digital transformation so important for ecommerce?

Resell is important because it demands a level of digital transformation in its management and execution: authenticating luxury goods, tracking purchases between consumers rather than between brands and consumers, and organizing second-hand products on a new type of platform all demand digital finesse that the fashion industry did not quite possess not so long ago. 

Model in fluo reflective clothing for Margiela 2018 Spring Couture
Margiela Spring 2018 Couture

But shifting sales to digital channels, resell or not, requires new and different ways of organization and management. Fashion brands which rely on retailers, for instance, depend on wholesale operations to create and sell their collections. Digital transformation can come in many forms here, such as digital showrooms, pre-season purchasing, and easily-modifiable inventory and assortment. These methods can lead to more accurate collection planning and thus reduced overstock and increased sales through retail platforms for fashion brands.

Collection planning in 2021

While commerce — both in-store and online — is a crucial part of a brand’s digital transformation, it is equally important for a brand to integrate digital solutions into the collection planning process. 

Rethinking sales strategy and distribution channels is necessary, but so is rethinking conceptualization, manufacturing, and marketing.

Even before the pandemic, a handful of fashion brands were already experimenting with new and innovative technologies in the design process. The design process is of course primordial to collection planning, and over the past year, it has experienced a significant digital transformation within many brands. 

Some have indeed embraced this digital novelty, opting for 3D-rendered garments, on-demand manufacturing, AI-based technologies for design and creation, and more. For instance, Scandinavian brand Carlings is one example of 3D garments: their recent collection is called Neo-Ex, and is a 19-piece, genderless, entirely virtual collection that remains affordable at just over $30 for the top price point. 

Seokwoonyoon at Seoul Fashion Week FW21

The digital transformation of product development is no longer an if, but a when. AI-supported design doesn’t have to mean that an algorithm draws the clothes, or that a robot sews the pieces — it can mean a more efficient, time-saving process for designers who now have assistive technologies and actionable data to produce better collections. This also means that designers can work more closely with merchandisers who pull from the same data, avoiding all sorts of traditional hindrances from sample costs to production delays.

Predictive analytics as a valuable form of digital transformation

As such, a major iteration of digital transformation is predictive analytics. This can apply to trends themselves, to sales, to consumer behaviors, and more. 

  • Designers and merchandisers can create desirable products in the right assortment and quantity
  • Planning teams can execute faster and more accurate product availability for consumers
  • Marketers can better target customers for the collection at hand. 

Brands which have already embraced this form of digital transformation use data for all of these steps within the collection planning process, reducing under-performing products (or those predicted to do so), accelerating markdowns, transferring inventory, and more.

Data and digital: Transforming fashion’s future

Data is truly the core of digital transformation. It reforms the traditional way of creating and selling: digital transformation doesn’t mean abandoning the past, but rather marrying irreplaceable savoir-faire with innovation. As we’ve seen, ecommerce is expanding and evolving rapidly. There exist resell platforms, drop shipping marketplaces, digital showrooms, virtual assisted shopping, social channel shopping, native mobile applications… The list goes on. 

And the way collections are being created is changing, too, with big data and predictive analytics becoming infused throughout the entire process. Data is providing:

  • Future trend behavior
  • Predicted sales
  • Better inventory management
  • Reduced overstock
  • Lower time-to-market speed
  • Better cross-team communication
  • Improved decision-making

At Heuritech, these results are facilitated through an image recognition technology which scans social media images to predict future trend behavior. So as we look ahead, we can expect more exciting, more innovative digital transformation in fashion in the years to come.

About the writer: Mélanie Mollard, Fashion Content Manager at Heuritech

Mélanie writes about the fashion industry and its many features through the lens of applied data and trend forecasting technology.

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