The world is getting smaller and smaller every day. This interconnectedness in an ever increasingly global community, and marketplace, means that retailers must continuously seek ways to engage and return a diverse customer group and foster consumer loyalty. Online retailing presents many unique challenges, and retailers must adapt quickly to understand how to respond to these challenges in an extremely competitive landscape. Innovations in technology can help streamline one of the biggest issues for retailers with an online presence; the issue of fit.
Online shopping is one of the fastest growing segments in retail; a business that is projected to account for 9% of total retail sales in 2016, or $372 billion dollars in the U.S. alone, according to a recent report, “U.S. Online Retail Forecast, 2011 to 2016,” a study by Forrester analyst Sucharita Mulpuru. To put this in perspective, in 2011 online shoppers spent about $202 billion dollars; in five years alone online sales have grown exponentially, and research indicates this trend will continue as more and more brands seek to engage customers online. There is big money to be made online, but with this opportunity comes a catch 22; approximately 30% of online purchases are returned, largely due to fit issues. Until retailers are able to resolve some of these issues, returns will continue to erode margin in a very significant way, and are also extremely damaging in terms of value perception and loyalty in the customer base.
Since the advent of online shopping, companies have developed new technology to try to combat some of these issues, with varying degrees of success. However, considering that online shopping has been around for approximately fifteen years or so, a return rate of 30% is an abysmal statistic and testament to the cold hard fact that something just isn’t working. Retailers need to understand on a deeper level why customers are returning such a large percentage of online purchases due to fit, and how to meaningfully implement systems to combat these challenges in order to really effect meaningful change.
What are these fit issues, and why haven’t giant corporations with millions of dollars readily available to conduct research been able to tackle this thorny problem in a significant way? This dilemma is multifaceted, and is exacerbated by an extremely diverse group of consumers, and body types, due to doing business in a global marketplace. As always, the failure to truly understand the mindset and desires of the consumer, coupled with the failure to successfully implement the technology that can streamline the process, are two huge stumbling blocks in making online retail more profitable.
So, just how important is fit, and how can technology help resolve the problems posed? This month, Gap reported a 2% drop in revenue in February alone due to fit and production issues plaguing one of its key brands, Banana Republic. As brands like the Gap continue to expand and increase ownership in larger parts of the value chain, they face unique challenges in finding ways to streamline the global design production process and deliver a quality product on time. With design teams based in New York, product development and sales teams in California, and an Asian production base, technology is obviously supremely important in connecting and supporting the Gap’s crosspartners and teams that need to collaborate across time zones and oceans. Increasing the speed and quality of communication are key functions of technology that can help streamline brands like the Gap and reduce the issues currently costing the company millions.
Companies like Lectra, one of the most widely implemented patternmaking and production programs used in the industry, are seeking ways to solve this issue. Lectra developed a virtual prototyping technology that can meaningfully enable brands like the Gap to better manage their product lifecycle. The program, Modaris, allows design and product development teams to collaborate on a 3D prototype, enabling them to envision in real time proportion, color, fabric, and fit, thus reducing the proto cycle, saving money and time. Another function links the 3D proto to both the pattern for that particular design, as well as an online library of pattern blocks and slopers, ensuring that the brand’s proprietary fit and consistency will be present from the earliest stages of the product’s lifecycle.
An excellent example of the successful implementation of the Modaris software is British giant Tesco’s proprietary clothing brand, F & F, sold online and throughout their grocery store chains. Accounting for 11% of F & F’s sales, online shopping has enabled the brand to reach over 70 markets worldwide, and a customer base with diverse clients, and body types, from Eastern Europe to Saudi Arabia to Thailand. This exposure to an extremely diverse customer base presented the brand with the challenge to fit as consistently as possible the various consumers across borders with a limited range of sizes. Prior to the implementation of the Modaris software, the brand allowed its many suppliers to create their own patterns based on F & F’s pattern blocks and sizing charts, resulting in the potential for as many different fits as there were suppliers. For a large retailer sometimes having the same product produced by multiple suppliers, this inconsistency in fit in the same product was disastrous both online and in the store, where the customer often did not have the time to stop shopping for groceries to try on the product.
F & F uploaded their library of patterns with their customized and perfected fit to the database, and their suppliers could use these patterns immediately to create a more accurate first sample that is consistent with the brand’s sizing from the product’s inception. The software enabled the brand to conduct the first fitting on a virtual avatar, allowing the design team in the UK to receive a correct sample much more quickly. The implementation of the software and the use of 3D prototyping has been very successful for the brand, contributing to a reduction by 5% of the online return rate in the first year alone, saving the company over 3.75 million pounds, and perhaps of even greater value, the shift reestablished the customer’s confidence in the brand and its perceived value. In terms of cost reductions in the development process, the company was able to further save another 100,000 pounds in the first year by reducing costs associated with fit models, buyer’s and technician’s time, and courier charges normally spent shipping fit samples back and forth. They were able to reduce the number of fittings from 1.8 to 1.5, shaving one to two weeks off of the leadtime, enabling the brand to sell more at full price, capitalizing on a net margin gain of 4-8%. Due to the success of the program the brand plans to implement the technology on a larger percentage of styles, projecting an increase of 20-40 million pounds in profit, all due to effectively streamlining their process through this technology.
For large brands like F & F and the Gap, technology like Modaris can mean the difference between functioning and excelling; however, unless these companies actually use the technology they cannot reap its benefits. For example, most large companies use programs like PLM to manage the product cycle, but fewer companies in the U.S. at least have fully embraced programs like Modaris, perhaps due to the cost of the software, or inability to see how the program could have a real effect on their business. Whatever the reason, brands can easily reduce the amount of online returns by ensuring that sizing is consistent across all products and markets.
Another equally important factor in reducing the amount of returns is understanding the other factors that cause customers to return clothing besides inconsistencies in fit. If customers are able to accurately choose the correct size for their unique body from the beginning, or are able to visualize the garment on their body before making an online purchase, they will be exponentially more likely to be satisfied with and keep their purchase. Several companies launched virtual fitting technology targeted at the consumer back in the early 2000s, but this technology has not been widely embraced and implemented by retailers. If retailers are able to implement and popularize virtual fitting among its customers, they may further reduce the amount of returns and increase sales. In order to do this, retailers must understand first why this initial technology has not been more successful in the first place.
For example, Lands End launched a program on their website, My Virtual Model, that allowed customers to use an avatar to virtually try on clothing. Today, there is no evidence of this capability on their website. No matter how revolutionary a product or technology is, unless the consumer sees its value it cannot be successful. Perhaps accessibility played the biggest factor in the failure to launch; consumers at this point have to go to a brick and mortar to have a machine do a full body scan in order to input their avatar online to “try” on clothes. Back in 2004, perhaps this was too early to try to introduce this technology to the consumer, they may have just not been ready for it. Today, more and more retailers are implementing 3-D fitting technology for the customer, and the industry may see a shift in the popularity of 3-D fitting as a viable incentive to consumers.
Zugara and Fit.me are two companies offering this technology to brands like Hugo Boss, Nicole Farhi, and Adidas…and Rakuten, a Japanese retailer similar to Amazon in terms of size and profitability, has announced that is too is looking to launch a similar system to enable customers to virtually try on clothing before they buy it. With more retailers jumping onto the bandwagon, customers may be more willing to try virtual fitting. However, accessibility may still play a factor in the popularity and success of virtual fitting; if retailers can make it easier for customers to scan or input their measurements they may unlock the key to dramatically reducing returns, and in fact potentially grow sales by allowing the customer to envision products and thus make additional purchases.
For example, online-only Canadian eyewear company BonLook has a function that allows the customer to upload a photograph of their face and virtually try on glasses. The consumer can then upload a photograph of their face with a credit card for scale held up between their eyes, allowing a technician to view the image and to measure the distance between the consumer’s pupils and thus order the correct-sized lenses. If technology can be developed that can similarly make it as simple for customers to almost instantly measure their body from home and upload a photo, 3D try-ons could become significantly more accepted and entrenched in the culture of fashion, perhaps finally solving the issue of online returns.