The impact of AI on the fashion industry according to Euromonitor

Generative Artificial Intelligence (GenAI) has evolved from an emerging innovation to an indispensable strategic component for the fashion industry. According to Euromonitor International’s latest report, this technology is redefining creative processes and customer interactions, marking a turning point in the way fashion companies operate.

In a dynamic and competitive market, its implementation is no longer an alternative, but a necessity for brands that want to lead change. Is your company ready to take this strategic step?

The report on GenAI is based on desk research, survey data (Voice of Consumer and Voice of the Industry) and discussions during conferences, panels and meetings with experts in the field of artificial intelligence, retail and e-commerce. The conclusion is that GenAI is a business priority in fashion, with immediate applications that transform customer and retail interactions, that consumers value its convenience and that the integration, such as using the ChatGPT API, is economical and accessible.

Marguerite Le Rolland, Industry Manager Apparel & Footwear at Euromonitor International, emphasizes that the integration of GenAI goes beyond just implementing technological tools: it involves a strategic transformation of the entire business operation. From product personalization to sustainability, GenAI is redefining how brands design, produce and relate to consumers.

Effectively applying GenAI involves more than just integrating new tools. It requires a deep understanding of how this technology can improve customer experience, optimize internal processes and advance sustainability goals. Le Rolland identifies four key pillars to achieve this:

• Increasing e-commerce conversion through intuitive AI assistants.
• Ensuring that chatbots are functional and easy to use, avoiding frustrations.
• Implementing feedback systems to enrich the data and optimize the user experience.
• Maintaining a critical human approach to control processes and avoid risks associated with bias.

Personalization Competitive advantage

Personalization has become a key competitive advantage in the fashion industry, where 28 percent of consumers, according to Euromonitor, are looking for shopping experiences that are tailored to their needs. Generative AI is positioning itself as a transformative tool, helping brands meet these expectations through virtual assistants, intelligent recommendations and interactive platforms that redefine the customer experience.

In this context, Bershka introduced the “Custom Lab”, a platform that allows customers to personalize clothes with their own embroidery. This reflects a strategy focused on personalization that strengthens the emotional connection with consumers and drives on-demand production models, reducing waste and pursuing sustainability goals.

H&M has taken this trend one step further with their “Creator Studio,” a tool powered by artificial intelligence that allows users to design personalized clothing. They combine creativity and technology to offer a unique co-creation experience.

Innovations in e-commerce

Major platforms such as Tmall, Zalora and Myntra are already using this technology to optimize their offering and strengthen their competitive position in the market.

A prominent example is Alibaba and their chatbot Wenwen, launched in September 2023. This AI-powered assistant has been used by more than 5 million people, demonstrating that it can significantly improve the interaction between consumers and the platform by providing faster and more personalized responses offer.

AI has also transformed advertising campaigns. Stradivarius, part of the Inditex Group, recently launched the campaign for their first AI-designed collection, featuring virtual models generated with this technology. This innovation not only reduces costs, but also appeals to a young audience looking for innovative and creative digital experiences.

In the Spanish fashion world, Desigual has positioned itself as an innovator with their “On Demand” concept, fully designed with AI and already comprising four collections. This model makes it possible to personalize the customer experience while optimizing resources through on-demand production, avoiding surpluses and responding to consumer preferences.

A sustainable future

In addition to stimulating e-commerce, GenAI plays a key role in the transition to a more sustainable fashion industry. Enabling on-demand production, as in the case of Desigual, eliminates inventory build-up and significantly reduces waste.

This approach not only promotes a more efficient model, but also answers one of the biggest challenges facing the fashion industry by providing concrete solutions to tackle this problem. From optimizing supply chains to reducing waste, this technology is presenting itself as an essential ally to achieve circular production models.

Other initiatives focus on sustainability through AI. For example, Buff has implemented production systems tailored to market needs, and startups such as The Fabricant are designing digital fashion that eliminates the need for physical samples, minimizing environmental impact.

The ability to predict demand and optimize resources not only contributes to environmental sustainability, but also strengthens the profitability of companies in a market that is increasingly aware of responsible practices.

Ethical and regulatory challenges

Despite GenAI’s enormous potential, its implementation is not without challenges. Regulation and ethical management are important issues that are developing rapidly. For example, the European Union is working on the AI ​​Act, which aims to create a clear regulatory framework for the development and use of this technology.

Companies must be proactive not only in complying with emerging regulations, but also in ensuring their algorithms are transparent and free of bias. Ethical responsibility is not only a legal obligation, but also an opportunity to build trust with consumers and strengthen the brand’s reputation.

Source: Report Gen AI: Transforming fashion retail experiences from Euromonitor International and email conversation with Marguerite Le Rolland, Industry Manager Apparel & Footwear at Euromonitor International.