Primary Research Report

Primary Research Report – Middle Section Outline

● Isolate and define the most pressing questions
o Most pressing questions for the market
▪ How will brands preserve market share?
● Metaverse mindset – virtual fashions build on creativity engaging in community building on e-commerce. Brands will need to tap into virtual reality for additional revenue streams for engagement in forms of collaborations with gaming platforms to design virtual fashion assets (Amed, 2021).
▪ How are brands identifying new customers and engaging currents customers?
● According to a recent survey of 200 marketing leaders by Forbes Insights, 57% of respondents reported that they seek to augment their personalization capability next year (Forbes Insights, 2019).
● Brands recognize that there is a gap between customer demand for personalization in products and in their shopping experiences (Epsilon Marketing, 2018).
● An investment in data – “A February 2019 survey from CommerceNext reported that 52% of digital retailers were not satisfied with their ability to unify customer data” (Stauffer, 2020). DTC brands are able to view their customer data as consumers are still checking out as guests (Stauffer, 2020).
● Seamless checkout process for reducing cart abandonment (Saffron Team, 2021).
● Manage a portfolio of DTC offerings and reinvent the demand model by shifting from category management to portfolio management. Using data gathered from consumers, create new products to fulfill niches in demand and differentiate the DTC channel from mass retail
● Challenges to consider: Engaging and retaining customer (Saffron Team, 2021)
● Enhancing the customer experience: According to a survey by Epsilon, 80% of people purchase more from those businesses that provide personalized shopping experiences (Epsilon, 2018)

▪ How can they ensure that their expansion to the online or VR experience is successful?
● Shopping experience translation (B&M → online/VR)
o Consumers want a combination of a great digital and human experience (Angevine, 2018).
▪ Front end user experience (Angevine, 2018).
o Personalization and customer service – Brands have to merge physical locations with digital experiences and adopt a channel-agnostic experience that places the customer at the center (Stauffer, 2020).
o Retail partner conflicts – Brands need to highlight different purchase options in owned digital experience (CBInsights, 2022).
o Capitalizing on opportunities – Future opportunities by emerging physical and digital to immerse to increase competitor advantage to meet consumer needs (CBInsights, 2022).
o “ need to re-evaluate how to exploit existing platforms more effectively, capitalise on the rise of new platforms and understand how to generate direct sales through social platforms” (Ahmed, 2020).
● Preservation of reputation/customer perception
o Building and maintaining credibility: As per a survey by ZDNet, 85% of American customers like to shop from transparent businesses (Brown, 2018)

o Solutions – Addressing we meet the most pressing problems
▪ Introduction
● “72 percent of shoppers bought something they hadn’t planned to because of AR, and 55 percent said AR “makes shopping fun” (Salfino, 2021).
● Note: using VR/AR for customers will be an extension of co-creation. We can solicit feedback from customers in real-time. Co-creation, which is the process of building experiences and resolving problems with joint efforts by customers and brands.
▪ Personalization of the shopping experience
● AR/VR dressing rooms will be a trend for the future according to CB Insights’ Industry Analyst Consensus (CBInsights, 2022).
● Social Media Engagement continues to trend to promote personalization. The study focuses on consumer engagement, how consumers are engaging on the platform due to content strategy (Liu, 2021).
● Offer hyper-personalization – Hyper-personalization is the common goal of satisfying the specific needs of an individual customer by a DTC brand that can examine both products and services from manufacturers, retailers, and consumers’ perspectives (Jin, 2021).
● 3D personalization in manufacturing space – heading towards AR/VR dressing rooms (CBInsights, 2022).
● Technologies such as VR and Ar can utilize and enhance productivity and create hyper-personalization, which will help to increase efficiency in both consumers’ purchase decisions and designers’ product development processes.
● Effective personalization – to reduce customer acquisition costs, improve retention, and maximize customer lifetime value (Saffron Team, 2021).
● Innovative business model, products, and brand storytelling in which consumers perceive brands as being able to provide new and valuable solutions to their needs; incorporation of cutting-edge technology (e.g., augmented reality, VR/virtual try-on) (Kim, 2021)
● The advantages stay the same from 2018 to the present – easy set up of virtual stores, which several apparel brands are activating through 3D renderings. By utilizing VR to shop, consumers will be able to enhance their experience and engagement, which will result in a more positive attitude to make more purchases. DTC brands will be able to attain a high customer retention rate (Park, 2018).
● Examples
o North Face has a VR campaign – store can be viewed via VR headset, consumers can see what the hikers are wearing in the video, and then go find the garments in the store. Consumers are not able to purchase via VR headset. Consumers are able to learn about the product worn by a mannequin, by tapping specific points in the video (Salfino, 2021).
o Warby Parker is on the list of innovative companies, highlighting the technology enabling their consumers to try on their glasses virtually (Kim, 2021).
▪ Digital customer engagement
● Digital Customer Engagement – The study shows that in terms of content strategies, action content strategy has the most significant impact on digital customer engagement (Liu, 2021).
● Digital customer engagement is influenced by brand image and discretionary purchases. Findings reveal the interaction of brand social media response strategies with brand image and discretionary purchases and demonstrate how they affect digital customer engagement (Liu, 2021).
● 45% say they would be interested in apparel brands and retailers using virtual reality to enhance the shopping experience. Consumers under the age of 35 (59%) and those making $50,000+ per year (49%) are significantly more likely to be interested in this than their older demographic (36%) and those earning less than $50,000 per year (4%) (Salfino, 2021).
● what the consumers perceive is what they recieve (Kim, 2021).
● Website interface, attractiveness, and brand uniqueness will influence attitude towards the brand and influence re-purchase (Kim, 2021).
● DTC brands’ strong focus on customer relationships in order to connect every aspect of their business with consumers: from their website to their product, and every touchpoint in between (Kim, 2021).
▪ B2B Revenue maintenance and expansion during B&M to VR shift
● Retailers that adopt 3D technology can gain a competitive edge (Chen, 2021).
● Study conducted on virtual try-on decreased rate of return decreased by 27% due to incorrect sizing and fit (Hwangbo, 2020).
● The results indicate that virtual try-on affects the sales results: the average sales per customer increased by 14,000 won (13USD) (Hwangbo, 2020)
● co-creating value for the consumer and perceived cost-effectiveness by the consumer will influence re-purchase intention (Kim, 2021).
● Online shoppers are asking for the option to view products in 3D or via AR/VR, according to a Harris Poll survey, which found that 60 percent said they’d be more likely to buy a product shown in 3D or AR. Majorities of 66 percent said 3D and AR visuals increase their buying confidence and make them more interested in shopping on a website (Chen, 2021).
● It is predicted by 2022, online fashion sales will grow by 79% (Boardman, 2020)
● AR/VR will be adopted to increase to help make purchase decisions converted into sales (Boardman, 2020)
● Retailers will have to learn to invest more in technology and adopt at a faster rate (Boardman, 2020)
● With technology and the shopping experience becoming increasingly common and intertwined, AR and VR technologies have the ability to significantly influence the decision-making process but in order to do so they must be easy to use (Boardman, 2020)
● Full potential of AR/VR have not been immersed into the apparel industry as of yet (Boardman, 2020)
● DTC brands have been successful because they extract so much data from their customers. They are able to track every customer from start to end of their shopping journey (Rangan, 2021).
● Our VR/AR technology would be a continuation of data collection. Our body scanning device will take measurements of a shopper’s figure and know the exact dimensions of their customer base. They can adopt their sizing to fit their customers, rather than use a standard model for size and shape increments in their clothing. They will learn exactly how their clothes fit on real people and extract data on which body types purchase which items (and which items are put back on the shelf after an AR try on).
● Examples – technology for customization – NM example is AR
o Neiman Marcus and Uniquelo invested in “Magic Mirrors” – which allow the consumer to see their outfits in a 360 degree view (retail level only). They are able to sare the images on social media with their friends/family (Boardman, 2020)
o Nike: To adapt to this challenge, brands are using mass customization. The authors mention the NikeID shoe which allows shoppers to customized components of their shoes before purchasing them (Jin, 2021).
o Levi’s: “Levi’s gives their customers the option to customize their jeans by choosing an individualized combination of the wash, overdye, pattern, distress, and back patch. Size and fit can be further customized based on the measurements taken with 3D body scanners (Lang et al., in press) or reported by the customers (Son of a Tailor, n.d.).” (Jin, 2021).
o Pop-up Store: Instead of running a pop-up store to test new products and concepts, high value shoppers can have the perk of testing new products at home using VR/AR. This can build customer loyalty and deliver data to brands without the high staff/set-up cost of running pop-ups in multiple locations.
o “a client of visual-AI company Syte, for example, saw a 12 percent increase in basket size after installing mirrors combining AR-capability with technology-enabled recommendations. They stitched in-store behaviour and external data sources to provide targeted styling advice” (Ahmed, 2020)

▪ Importance of prototyping, iteration, and simulations to meet changing customer shopping experience desires
● Relentless testing of different site formats, promotions, and configurations can maximize visitor numbers, transactions,and revenue. One leading multibillion-dollar global e-commerce site launched more than 100 new marketing campaigns using a rapid test-and-learn pilot approach within six months of its launch. Amazon, the oft-cited leader in all things digital, employs a large team of PhDs to constantly analyze the site’s layout, using advanced testing techniques to evaluate multiple versions of it at any given time and find which permutations generate the most sales (Angevine, 2018).

References

Amed, I., Balchandani, A., Berg, A., Hedrich, S., Jensen, J.E., Merle, L.L., & Rolkens, F. (2021, Dec 1). State of Fashion 2022: An uneven recovery adn new frontiers. McKinsey & Company. Retrieved from https://www.mckinsey.com/industries/retail/our-insights/state-of-fashion

Amed, I., Berg, A., Balchandani, A., Hedrich, S., Rolkens, F., Young, R., & Poojara, S. (2020). The state of fashion, 2020. McKinsey & Company. Retrieved from https://www.mckinsey.com/~/media/mckinsey/industries/retail/our%20insights/the%20state%20of%20fashion%202020%20navigating%20uncertainty/the-state-of-fashion-2020-final.pdf

Angevine, C., Catlin, T., Chappuis, B., Esber, D., Harrison, L., Hatami, H., Jakobsen, S., Liu, W. W., Maechler, N., Mahdavian, M., McLellan, K., Naik, K., Plotkin, C. L., Poenaru, A., Raberger, N., Reis, S., von Colleberg, T. R., Schulze, P., Stanley, J., Tamson, A., Valdivieso, M., Viertler, M., Winkler, G., & Yee, L. (2018, May). Digital sales & analytics: Driving above-market growth in B2B. McKinsey & Company. Retrieved from https://www.mckinsey.com/~/media/mckinsey/business%20functions/marketing%20and%20sales/our%20insights/digital%20sales%20and%20analytics%20compendium/driving-above-market-growth-in-b2b.ashx

Boardman, Rosy & Henninger, Claudia & Zhu, Ailing. (2020). Augmented Reality and Virtual Reality: New Drivers for Fashion Retail? 10.1007/978-3-030-15483-7_9.

Brown, E. (2018, Aug 24). 9 out of 10 consumers will stop purchasing from brands that lack transparency. ZDNet. Retrieved from https://www.zdnet.com/article/9-out-of-10-consumers-will-stop-purchasing-from-brands-that-lack-transparency/

Jin, B.E., & Shin, D. C. (2021). The power of 4th industrial revolution in teh fashion industry; what, why, and how has the industry changed? Fash Text 8(31). https://doi.org/10.1186/s40691-021-00259-4

CBInsights. (2022, March 22). The future of fashion: From design to merchandising, how tech is reshaping the industry. CBInsights Research Briefs. Retrieved from https://www.cbinsights.com/research/fashion-tech-future-trends/

Chen, D. (2021, May 19). Retail reset: Using 3D technologies to reduce returns and grow online sales. TotalRetail. Retrieved from https://www.mytotalretail.com/article/retail-reset-using-3d-technologies-to-reduce-returns-and-grow-online-sales/

Epsilon. (2018, Jan 9). New Epsilon research indicates 80% of consumers are more likely to make a purchase when brands offer personalized experiences. Epsilon. Retrieved from https://www.epsilon.com/us/about-us/pressroom/new-epsilon-research-indicates-80-of-consumers-are-more-likely-to-make-a-purchase-when-brands-offer-personalized-experiences

Epilson Marketing. (2018). The power of me: The impact of personalization on marketing performance. SlideShare. Retrieved from https://www.slideshare.net/EpsilonMktg/the-power-of-me-the-impact-of-personalization-on-marketing-performance/1

Forbes Insights. (2019, May 1). The path to personalization. Forbes. Retrieved from https://www.forbes.com/sites/insights-treasuredata/2019/05/01/the-path-to-personalization/?sh=6c70caf17a76

Hwangbo, H., Kim, E.H., Lee, S., & Jang, Y.J. (2020). Effects of 3D Virtual “Try-On” on Online Sales and Customers’ Purchasing Experiences. IEEE Access, 8, 189479-189489.

Kim, N. L., Shin, D. C., & Kim, G. (2021). Determinants of consumer attitudes and re-purchase intentions toward direct-to-consumer (DTC) brands. Fashion and Textiles, 8(1), 8. https://doi.org/10.1186/s40691-020-00224-7

Liu, Y., Liu, X., Wang, M., & Wen, D. (2021, Dec 15). How to catch customer’s attention? A study on the effectiveness of brand social media strategies in digital customer engagement. Frontiers in Psychology. Retrieved from https://www.frontiersin.org/articles/10.3389/fpsyg.2021.800766/full

Park, M., IM, H., & Kim, D. Y. (2018). Feasibility and user experience of virtual reality fashion stores. Fash Text 5(32). https://doi.org/10.1186/s40691-018-0149-x

Rangan, V. K., Corsten, D., Higgins, M., & Schlesinger, L. A. (2021, Nov-Dec). How Direct-to-Consumer brands can continue to grow. Harvard Business Review. Retrieved from https://hbr.org/2021/11/how-direct-to-consumer-brands-can-continue-to-grow

Saffron Team (2021, Dec 10). Direct-to-consumer technology trends for 2022. SaffronTech. Retrieved from https://www.saffrontech.net/blog/direct-to-consumer-technology-trends-for-2022

Salfino, C. (2021, Nov 4). Here’s how blending reality can seriously increases sales. Sourcing Journal. Retrieved from https://sourcingjournal.com/topics/lifestyle-monitor/augmented-reality-virtual-reality-ar-vr-north-face-zara-extended-reality-311746/

Stauffer, J. (2020, Jan 2). The biggest challenges DTC brands are facing. DEG. Retrieved from https://www.degdigital.com/insights/biggest-challenges-dtc-brands-facing/

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