Retail Tech Opens a New Chapter

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As the vernal equinox flips the calendar to Spring, festivals and innovation summits have emerged from hibernation. At the South by Southwest festival in Austin Texas, retail was downgraded from previous headliner presentations to a minor topic, but it did reinforce the mega-themes of climate change and climate-related technologies. To its credit, BoF grabbed the retail-tech baton that SXSW fumbled. The BoF Professional Fashion Tech Summit, held at the New York Times Center in Manhattan, avoided any mention of sustainability, instead exploring the latest tech iterations in Web3 customer engagement, AI avatars, and customer data control. But wait, there is a connection between the two events for retail.

Trend #1: Web3 Discord

Web3 is a series of interconnected decentralized applications that validate interactions and transactions in a blockchain computing architecture. Its hype centers around a nonhierarchical, community-based ecosystem, unfettered by centralized platforms or large tech companies. So, listening to brands discuss the importance of launching a Web3 Discord channel without control to reach this emerging tech-savvy consumer demographic strikes one as ironic; but, hey welcome to the opportunity of capitalism.

Innovators will be challenged to reckon technology and sustainability in a world defined by flux. Success will require our best minds to design a sustainable future and that demands divergent priorities to converge.

Discord is a rising communications platform for Web3 enthusiasts. As a chat-based social channel, it serves distinct communities. It is not a channel for discovery, it is a hub for engagement among superfans based on a shared topic, game or brand. There are distinct channels on Discord called servers which are similar to chat room portals. So, within Discord, there are channels where chats occur among the micro-tribes of a community. Think affinity groups (and marketing) on steroids.

Forward-thinking brands and retailers are already experimenting with the Discord platform. Deena Bahri, chief marketing officer of StockX, and Adam Petrick, the chief brand officer of Puma are Discord advocates noting that their community of sneaker-heads are comfortable engaging on the online platform which has evolved from the gaming community. Puma’s Petrick says that the Puma brand hosts golf, football (soccer), and basketball channels as well as others. Bahri notes that StockX uses Discord for consumer engagement, customer surveys, and two-way consumer-to-brand conversations. She observes that the bottom-up nature of the community-led Discord channels emphasizes the need for 24×7 moderators to protect brand integrity. Petrick warns that the open mic nature of Discord allows for negative feedback, but on balance, he finds it an effective platform for messaging that is “less big brand, and a bit more human.” Discord is just one new application enabled by Web3, and both retailers and brands should be well informed about the innovations and planning a Web3 strategy to be ready for when it moves into mainstream consumer use.

Trend #2: AI-Driven Avatar Innovation

As technology firms lean into efficiency after years of expansion, ecommerce is eyeing technology-based tools to increase efficiency and profitability. Reducing online returns checks both boxes, so it makes sense that two innovations discussed at the BoF Summit focused on ecommerce optimization. Dr. Amy Gershkoff Bolles, Global Head of Digital and Emerging Technology Strategy at Levi Strauss, shared details on the company’s partnership with the Amsterdam-based AI avatar model design studio Lalaland.ai. Gershkoff Bolles says Lalaland creates synthetic, “hyper-realistic models of every human body type, age, size, and skin tone. With these body-inclusive avatars, the company aims to create a more inclusive and personal shopping experience for fashion brands, retailers, and customers.” She explains that customers will have the ability to customize the ecommerce experience by showing clothing on models that look just like them.

Israel-based technology firm 3DLook takes personalized models to the next level by creating AI-powered customized avatars based on 3D scans. 3DLook was developed as a Shopify plug-in, allowing D-to-C brands to launch a virtual fitting room in days, not months. Co-founder and chief executive Vadim Rogovskiy declared that their technology will mean “customers can forget about size,” it will be only fit that matters. AI’s role will be in developing precisely targeted recommendation engines. Brands using 3DLook will know what customers look like and can analyze their engagement and purchase histories. These elements will be matched with the current inventory to build a better recommendation model. Other tech developments underway are consumer data ownership models, further retail applications supporting optimized supply chains and customer engagement models, and Gucci’s doubling down on metaverse and Web3 applications.

Trend #3: Single Code of Conduct Streamlines ESG Efforts

Back at SXSW, Director of Global Responsibility at Amazon.com, Lee Anne DeWine, shared a sustainability panel with Payal Luthra, Global Apparel & Textile Lead at the World Wildlife Fund. While this session went deeply into the weeds, DeWine explained that open supply chain protocol efforts extend beyond idealistic goals, they increase profitability and reduce reputational risk as many brands and retailers share source factories. WWF’s Luthra noted, “Amazon, Target, and Walmart currently share 173 global manufacturing facilities.” She said that when each brand or retailer operates under a set of bespoke ESG goals the compliance training and enforcement are overbearing, leading to obfuscation and “auditing fatigue.”

DeWine described Amazon’s ESG goals of “protecting and respecting the rights of people who touch their supply chain.” These goals, in spirit, mirror those of competing manufacturers. DeWine added that Amazon’s complex supply chain responsibilities extend from the elemental resources used in manufacturing, upstream to protecting against forced and child labor, ensuring safe working conditions, and safe waste and wastewater disposal. Luthra highlighted the interconnected nature of large manufacturing hubs, explaining that open supply chain data is critical when environmental damage occurs. Damage mitigation costs and efforts can be coordinated among factory clients. Solutions to these issues are currently underway as large retailers have joined in supply chain transparency efforts promoting a single code of conduct for the apparel space and open-source supply chain data while Amazon has developed ASDI, an open format resource in the cloud for brands to share the supply chain data.

Trend #4: Beyond Circular, Hemp Rises Up

“In the United States, just 1.5 percent of farmland is farmed regeneratively as agriculture continues to evolve into chemical agronomy” according to hemp farmer, processor, and industrial designer Lucas Evans. Evans explained that hemp is a weed and flourishes in arid environments, with no pesticide requirements resulting in a healthier ecosystem, more water for food production and general consumption, and healthier farmers. Evans joined Patagonia’s VP of sportswear Helena Barber on an SXSW panel. Barber explained that Patagonia is migrating away from water-dependent cotton to hemp, and imports most of its hemp from China. She explained, “We need to bring hemp processing here, but because of outdated regulations, hemp processing infrastructure needs to be built in the United States.” She continued, “U.S. hemp is coarse. China outpaces this country in fine hemp processing.” Patagonia has joined farm organizations and the Textile Exchange in advocating for advanced farming and fabric infrastructure development funds as part of the recent federal climate legislation.

Essential Synergies

While the priorities of the two conferences diverged, the spirit of innovation was strong in both. And when viewed holistically, synergies can be found in how tech innovations can lead to better sustainability practices. For example, precision fit technology reduces the climate costs of reverse logistics (returns), and branded Discord channels offer ESG branded opportunities for deeper engagement and community. Although the general population is enthralled by new retail technologies as they continue to develop, the pressures of climate change will disrupt the entire industry.

Innovators will be challenged to reckon technology and sustainability in a world defined by flux. Success will require our best minds to design a sustainable future and that demands divergent priorities to converge. The intersection between sustainability and tech innovation will redefine retail’s future.

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