Here’s the problem: fashion retailers are under massive competitive and economic pressure. Stores are closing and thousands of jobs are under threat. Online innovators like Pretty Little Things, Romwe, even more established brands like ASOS and Boohoo, are spiriting once loyal customers away, and leaving some traditional brands scrambling to catch up.
Yet fashion retailers are hamstrung by not wanting to break from tradition. They are still using old-fashioned merchandising techniques to try and compete online - in the process, they are making their jobs and survival much harder.
Beyond the brand. Relevance and agility are vital
Product display and merchandising should ensure that the right product is in the right place at the right time for the shopper to buy. Simple.
It’s not unlike in-store visual merchandising and product and category management combined. In both cases, the goal is to maximise sales based on consumer preferences and current products and promotions.
But offline, merchandising is as much about creating trends as responding to them - the fast-paced world of online fashion retail is a very different animal. Yes, promotions and campaigns create desire and brand differentiation, but converting visitors into sales at a level that can offset high street struggles is about agility and relevance. It’s about removing purchase barriers for willing buyers by providing an easy, satisfying online experience.
That is where the online innovators are streets ahead - and the traditional players have barely started to catch up.
The product exposure challenge
The classic approach to managing apparel exposure online is to use experience, gut instinct and historical data. This is fine if you have a combination of limited products and finite space. How then, can a team of people merchandise 10,000 products with varying options to thousands of visitors? It’s impossible.
The response to this challenge is a combination of ‘one size fits all’ and merchandising rules such as ‘show them what other people bought’ or ‘don’t display the black with the blue’. It’s hard work and most products languish in the virtual stockroom never to be displayed.
What’s more, many of the e-commerce systems so relied on by fashion retailers deal with just one part of a site – search or recommendations or navigation. This means retailers can have up to three systems with conflicting rules, or in effect cannibalising promotions from each other, as they each run using independent logic and data sets.
For example, a shopper sets out looking for a specific product - a cocktail dress maybe - but when they find it, those pesky rules recommend a lower margin alternative. In effect, this is the antithesis of merchandising - directing willing buyers away from high value purchases to lower margin alternatives.
AI and automation - doing the heavy lifting
However, a new breed of e-commerce systems now makes use of predictive analytics and machine learning to decide which products get displayed where, when and to whom. Automatically.
The use of AI is widespread in marketing automation, manufacturing, warehousing and finance - to great, and transformative, effect. Yet despite stellar results elsewhere, the uptake in product exposure is remarkably slow. It is confined to major global retailers and Amazon itself, which generates 35% of its revenue from AI powered recommendations alone.
In fashion, it is barely in play at all - and that represents a huge opportunity for those struggling fashion retailers to make giant strides in winning back market share.
Ignorance stifling bliss
So, what is stopping those retailers from taking that first step, and embracing the benefits of AI and automation in online merchandising?
In truth, it often boils down to a lack of understanding, or the fear that a machine can never replace the nuance of human intuition. The reason is that many online fashion stores are run the same way as their brick and mortar counterparts. The maxim “retail is detail” requires, by definition, a hands-on approach.
Viewed through that lens, why on earth would you run the risk of letting a computer loose on a such an important job? What if the ‘computer’ commits some dreadful fashion faux pas such as displaying the blue bomber jacket next to the little black dress?
Yet that view is rooted in the old view that fashion retail is all about brand, which is certainly true offline, but only half true online. And it is also symptomatic of an idea that handing over to a machine means losing all control.
As alluded to earlier, brand is still vital online, but so is a satisfying customer experience - indeed, a failure to deliver that kind of experience inevitably harms the brand.
Take a step back and look again at AI and you will see that loss of control is a myth. Merchandisers retain control of the overarching strategy, or high value campaigns and promotions, and can even override ’the computer’ to boost exposure of specific products. That is the very definition of merchandising, much more so than spending hours poring over spreadsheets and wrestling with a tangle of rules.
The machine looks after the boring, never-ending, but utterly vital task of maintaining optimum product listings - with every minute decision driven by real time customer behaviour data. That, meanwhile, is the very definition of relevance, which is the cornerstone of a satisfying customer experience.
Yes, the reluctance is understandable, up to a point. But the truth is that the real fashion faux pas is to not understand, explore and seize the opportunity AI and automation presents - which translates into a missed opportunity to grasp the transformative benefits that could be vital to recovering market share.