How Digital Technologies and Data Empower New Business Models and Growth

Debbie McKeegan discusses how digital technologies and data are empowering industry 4.0 as it changes how companies manufacture and sell their products.

Digital technologies and data are empowering industry 4.0 as it revolutionises the way companies manufacture and sell their products. In this new entrepreneurial space artificial intelligence and real-time data are being utilised to harness and analyse consumer behaviour and ultimately control manufacturing. Data rich retailers and ecommerce brands can now fine-tune their stock holdings and marketing activities to increase sales and importantly to amplify consumer gratification.

Harnessing valuable data also enables the retailer to get a very close handle on sales, to control manufacturing output, fine-tune stock turn, therefore improving supply chain management and ultimately costs and profitability. 

New business models with a strong digital structure have achieved, previously unheard-of rates of growth, widely showing year-on-year growth in double digit territory.

An example of this business model is Stitch Fix, an online personal styling service in the US and the UK, it uses recommendation algorithms and data science to personalize clothing items based on size, budget and style. This is smart styling and offers a new benchmark for the fashion industry.

Caption: Harnessing valuable data also enables the retailer to get a very close handle on sales, to control manufacturing output, fine-tune stock turn, therefore improving supply chain management and ultimately costs and profitability.

Since it started in 2011 its had grown to a turnover of over $2billion and in its latest results for Q1 2022 it reported a net revenue of $581.2 million, an increase of 19% year over year with active clients of 4,180,000, an increase of 417,000 or 11% year over year.

Stitch Fix uses data science through a custom-built, web-based styling application that provides recommendations to stylists from a broad selection of merchandise.

This story is not a surprise to the market, as the global fashion agenda has shifted significantly towards digital sales in this ever-developing environment, accelerated by the consumers' widespread adoption of online shopping and new buying behaviours post pandemic.

In fact, more than half of global retail growth is projected to come from online sales between 2020 and 2025, and around 10% of total digital sales are expected to be in the hands of the fashion industry during that period (Research & Markets).

Retail e-commerce sales in 2021, amounted to approximately $4.9 trillion U.S. dollars worldwide. This figure is forecast to grow by an incredible 50% over the next four years, reaching about $7.4 trillion dollars by 2025 (Statista).

Data is the new gold. A successful digital business model must focus on data analysis, strong customer engagement, automation alongside digital manufacturing and increasingly - close proximity production and seamless, speedy fulfilment.

Looking at the design process - Through precise photorealistic 3D rendering designers can now create garments in their studios virtually that accurately replicate the final product. The digital twin. Designers, technical specialists, and pattern makers now use 3D software to create designs and, using pattern modification, true-motion fit and grading.

Apparel brands are embracing digital tools which make traditional workflow obsolete, as they deliver faster time to market, reduced returns and greater cost effectiveness.

As Lena Lim, Browzwear Chief Commercial Officer said “Now, more than ever, designers will be able to produce digital garments that look, drape, fit and move almost exactly like real physical garments. Using 3D garments shortens time to market and significantly reduces wasted resources including budget and materials for a better bottom line and a cleaner environment.”

Caption: Apparel brands are embracing digital tools which make traditional workflow obsolete, as they deliver faster time to market, reduced returns and greater cost effectiveness. Image credit: Browzwear.

Beyond the digital engagement of clients and customers and the use of 3D Software, the new entrepreneurial model has also been driven by extraordinary advances in digital manufacturing.

An example of this is the Digital Micro-Factory where a recent demonstration by Mimaki highlighted the huge changes that digital workflow in apparel manufacture has transformed the industry driving it ever closer to a low-stock low-inventory production business model.

In this model, which serves the growing trend to customisation, automated digital transport of images and instructions through workflow to manufacturing machinery creates the turn of speed needed to satisfy the demands of the omni-channel customer.

As Mark Sollman of Mimaki Europe B.V explained “Facilitating savings in a whole line of resources, from physical storage and production space to time and energy, micro-factories ultimately have the potential to significantly increase profitability for garment manufacturers, with the additional benefit of being easily scalable as production increases.”

As can be seen, It’s not just the customer facing fashion industry that’s adapting to the evolving digital agenda and the requirement for the seamless flow of information. For the print industry, an example of this is the EFI MarketDirect Customer Engagement Platform, which provides an integrated set of solutions for eCommerce, Marketing Campaigns, Variable Data Composition and Production Automation designed to power customer engagement and drive sales.

As Lynn Smith, EFI’s chief marketing officer said: “EFI MarketDirect Fulfillment is a game changer. With full integration of our web-to-print and fulfilment services, we can manage our clients with one central solution, providing a more integrated experience for our customers and better automation for our production team.”

Digital technologies, take many forms, be that data collection, analysis, design software, CAD/CAM, digital printing applications or order fulfilment. There can be no doubt that together they provide a strong platform for growth across all marketplaces. The next decade will transform the sales and manufacturing landscape, disrupting established business models, many of whom will have to adapt to survive a new era of data driven on-demand production twinned with consumer gratification.