A Journey Into Digital Clothing How It Has Captured The Luxury Fashion Industry

How luxury fashion brands are leveraging technology to pioneer digital clothing, revolutionizing the industry landscape.

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Introduction of Journey Into Digital Clothing How It Has Captured The Luxury Fashion Industry Assignment19540

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Every industry is degililising in the 21st century and the fashion industry is no different. It can be noticed in the luxury fashion industry too that the adoption of technological innovations is being applied. This allows these organisations to gain a strategic edge over adversaries and provide a greater customer experience to the final consumers. When it comes to luxury brands there is a tendency for those brands to stay traditional and ornate. However, as the industries try to stay balanced with finances and reputation both they are adopting technologies such as AI rendering technologies to help boost the customer experience and excel in markets. This also helps in the creation of digital cloths in 3D for the metaverse. This is because in the age of machines every company is able to achieve relative perfection in their finished products and branding and marketing today play the biggest part in being recognized as a luxury brand or not.

This makes boosting the customer experience a necessity so that the customers are provided with all the convenience and service that makes them feel special like a luxury brand does. Customer experience is a major part of the creation of a luxury brand. Here all people are treated with special care and attention. That not just boosts experience but also creates brand loyalty. In this report hence, the adoption of technologies by luxury fashion brands, the industry trends, the market environments, brand management, and issues are going to be developed through secondary research. As per the findings, relevant recommendations are to be also provided for the solution of issues.

Rational

The ability of luxury businesses to adapt to new technology has become crucial in today's society. This is due to the fact that the craftsmanship that made a brand a luxury brand has been exported to other nations, and given that Bangladesh, India, and China are the world's leading three garment source states (Repp et al. 2021). Hence, it's possible that the same producer is producing the item for multiple "luxury" brands. Therefore, the apparel item's form and price are the only factors contributing to its aspirational value, making customers want to own the goods to set themselves apart from others. Therefore, it is necessary to draw customers to the stores rather than the other way around as it was in the past. These are compensated by the use of NFTs, data driven processes, boosting customer experience through AI algorithms and various things to promote a brand as a luxury brand. From this perspective, the evolution and design of digital clothing in the metaverse are going to be discussed.

Aims and objectives

Secondary research will be used to gain an understanding of how luxury fashion brands are utilising technology, industry trends, market situations, brand management, and challenges. According to the findings, pertinent advice must also be given for problem solving.

Literature review

Critical understanding of the fashion industry

The fashion industry is characterised by a large number of worldwide brands that are existing on the world stage and are MNCs, conducting business across the world. Then there are the domestic organisations that are conducting business locally with their producers being present in the same country. Apart from these two, there exists a third type of fashion business that promotes their productions as luxury based on the fact that their clothes are not mass-produced and there may be just two or three of those in existence.

These are the smaller boutique companies that make clothes with an exotic appeal, these are small-scale producers that make use of quality materials and have original designs that people love and they benefit other fashion brands to than just the luxury brands (Teona et al. 2020). These small businesses are the closest to a luxury brand that they can get. However, their reach is always limited, and thus is important for them to maintain an online presence and use internet algorithms to enter public view through paid promotions. They do not have as much volume of sales and hence are dependent on the individual pieces they sell. Some examples of these types of companies are suits tailors such as Huntsman of Savile Row, Gaziano and Garling, Brooks Brothers, and so on. These are usually companies that have been established for over a century or more and they market themselves as brands for the privileged.

However, the small boutiques and the other SME-level industries may or may not be able to digitize and increase their income by developing digital clothes for characters online that may or may not be brought to life in the real world. However, there are plenty of platforms on the internet that allows people to interact virtually with avatars. The digital clothing can be sold on these platforms for the digital avatars.

The list of most popular fashion brands in the UK

Figure 1: The list of most popular fashion brands in the UK

(Source: Statista, 2022)

On the other hand, the MNC luxury brands also limit the number of pieces produced and have innovative and original designs but most of their designs are still based on rudimentary clothing styles as they have the need to appease a broader audience (Bai et al. 2021). This builds exclusivity in the market and allows them to sell their products at a higher value. These companies are characterised as having much higher brand value.

The globalisation of luxury fashion companies is a particularly important development in the fashion industry. The most popular market entry strategies employed by fashion firms in the twenty-first century include joint ventures, franchising, running subsidiaries, and other similar strategies. Through a joint venture, they can quickly grow their market share in international markets with a minimal investment in fixed assets. However, the recent pandemic has hindered firms' ability to grow financially globally, requiring them to rely on acquisitions and cross-industry cooperation for increased revenue. In order to regain the lost market stability, businesses must adopt technologies to better understand the industry and use better risk management techniques (Kaufmann, M. and Wiering, M., 2022).

The ability of luxury businesses to adapt to new technology has become crucial in today's society. This is due to the fact that the craftsmanship and artistic sophistication that made a brand a luxury brand has been exported to foreign nations as mentioned above. Therefore, the apparel item's design and price are the only factors contributing to its aspirational value, making customers want to own the goods (Iqani, 2019). Therefore, it is necessary to draw customers to the stores rather than the vice-versa happening as it was in the past. Besides that, the recent pandemic has shown businesses the power of the IoT and the importance of maintaining a strong online presence to reach more customers and maximize sales.

The online stores allow them to click and buy various types of items and provide people with the instant gratification they seek (Nakayama and Wan, 2021). This is a much faster way of selling rather than the people having to actually arrive at the physical store to fulfill their clothing wants. Luxury clothing and accessory items are based on the want of something rather than need. Hence, the glorification of items raises their prices for them (Mulnix, 2019). The greatest example would be Diamonds which is a semi-precious gemstone but has been marked as a symbol of love and is now priced worldwide higher than other truly precious gems. One can observe similar trends regarding platinum that is cheaper than gold but in jewelry, form is much higher in price. A similar trend for luxury clothing materials such as silk can also be seen in the luxury fashion domain.

Sustainable apparel made of digital technology

In the midst of the pandemic, when people were prohibited from leaving their homes, they sought out socialising opportunities. The digital platforms that enabled people to utilise avatars to be on different platforms and conduct social interactions met this requirement. The need for online communication led to the desire for digital goods like apparel. This is a method of social contact that is more environmentally friendly (Diemuodeke et al., 2019). This, however, does not serve as a substitute for actual clothing or genuine social encounters.

However, it enables the garment business to survive hard times when the demand for actual apparel has decreased as a result of people being unwilling to spend their money in anticipation of further harder times to come. Thus, social relationships are made possible through digital exchanges without leaving a large carbon footprint (Diemuodeke et al., 2019). Additionally, it makes it possible for fashion sector businesses to maintain their financial viability.

Numerous premium brands go above and beyond to improve the consumer experience. They consequently leave a huge carbon impact. Digital clothes can therefore help to lessen this, even though it is not the company's primary objective. Their renewable technology describes the integration of waste materials into the expansion of the electric distribution and consumption process (Rostirolla et al., 2021). This is a component of the overall digital clothes management environment. There are more elements that relate to the microenvironment. Technological factors are examples of microeconomic factors. This is because virtual apparel is an item whose design and advertising depend on technology. People's choices and preferences are very important and are included in the examination of the microenvironment.

Businesses have nearshored and expanded their supply base in response to the pandemic situation. This demonstrates how much it matters to businesses to increase the adaptability and agility of their supply networks during the epidemic. Digital clothing is distinctive in this aspect since it enables both buyers and developers to avoid the exorbitant expense of clothing in order to interact with others in a social setting (Mrad et al. 2019). The existence of both online and offline retail locations is a defining feature of the British luxury fashion market, and this is true even of the online metaverse. This is distinguished by the requirement for businesses to maintain an online presence and, in the process, reach out to new individuals in order to create a larger network of potential clients.

Digital clothing is also a much more advantageous option because it requires no resource investment and enables the company to take advantage of demand in international markets. Contrarily, real clothing demands significant financial outlays in addition to adherence to industry regulations, licencing requirements, and other formalities. These have a big effect on how profitable digital clothing is. Although these effects are favorable and more profitable, there are additional costs involved, such as those associated with blockchains and the construction of NFTs, if the corporation so chooses. Hence, there are many online services that let users communicate digitally with avatars. These platforms allow for the sale of virtual apparel for virtual avatars thereby making opportunities for companies to develop digital clothing.

Application of digital technologies in the luxury fashion industry

Online stores

Online stores are one of the most used technologies in the fashion industry in general as they maintain a presence online and offline (Imd.org, 2022). Offline stores have a reason to maintain an online presence as they need to reach a wider and global audience. The people need to be made aware of the brand and reach the people. In the same online stores, new and innovative software is used to boost the customer buying experience. Hence it can be said that online stores open the gates for luxury brands to incorporate the use of more technologies.

CAD software being used

CAD (Computer Aided Design) is used commonly for the designing of plans and blueprints in 3D for machinery and architecture. In modern parlance, fashion technology is also aided by CAD (Musa and Agu, 2021). This makes the designing process more sophisticated for better quality of design and innovation in the clothing industry. The use of alternate materials for the production of the clothing item and their seamless incorporation in the final product becomes possible using CAD. Apart from that, according to Musa and Agu, (2021), using CAD also aids in better and more efficient designing of layers and layered clothing.

CAD design for fashion tech

Figure 2: CAD design for fashion tech

(Source: Scan2cad, 2022)

Use of NFT

Luxury Fashion brands have through the use of data reached new heights in the field of digital personalisation. An example of this would be Nike shoes that provided NFTs for every shoe design, a customer can then purchase and own the design, and a one of a kind customised footwear can be then designed by the client to be custom manufactured by Nike (Imd.org, 2022). Personalisation is one of the distinguishing features of the luxury niche of fashion brands. According to Wang et al. (2020), NFT based products are the future of the fashion industry and play a big role in the determination of customer preference and customer based fashion trends.

Data-driven operations

When the organisation is limited in scale, it is easier for them to maintain better customer relations. However, as the scale and size of the company increase, it becomes harder to maintain the same quality of relationship with the customers (Imd.org, 2022). This is the reason data driven operations has become important. The automated algorithms that may or may not be powered by AI is used to access the customer choice and preferences and sends personalised automated machines inviting them to the shop and presents them the items they may like. However, if luxury brands are considered, follow-up needs to be done through customer executives for an additional personal touch. In terms of the Digital clothing however, a data driven procress allows the developers to collect reports on the latest trends in the real world to take inspiration from and then conduct the designing process. This also allows them to get feedback on the type of cloths the people want to buy to decorate their avatars.

AI algorithms

The use of AI is useful in data driven operations, 3D trials and in the calculation of market driven forces analysis (Liu et al. 2019). The programme can anticipate with a high degree of accuracy how the customer's top of the head, neck, and back of the head will look based on a 2D image using the database of faces. The customer can take advantage of this from the convenience of their homes and have a physical trial. This is a new function that has been added to the websites of luxury fashion companies. The 3D simulator is now being used by several firms to help customers make decisions while purchasing online. This same thechnology can be used to create a clothing item digitally for the metaverse and be sold online to the people that are willing to buy them to project confidence in the metaverse with their avatars.

Ongoing and upcoming trends in the virtual fashion area

The use of global technologies has been a characteristic feature of the fashion industry. This adoption of digital technologies allows companies to be able to achieve expansion, sales turnovers, and marketing and production efficiency that is unmatched by the previous generation of luxury clothing and accessories businesses online. With the coming of the trend of online virtual interaction communities that allows for exploration of the metaverse with an avatar. The trend gives rise to the human needs for fashionable clothing as well.

Focus on sustainability

It has been determined that the selected manufacturing organisation concentrates on enhancing various dimensional circumstances in order to promote sustainability (Thorisdottir and Johannsdottir, 2019). However, the thing about sustainability is not a factor in the metaverse as everything is electronic.

Environmental sustainability is the need of the hour and luxury brands have capitalised on the idea to generate a new line of eco-friendly products at higher costs. In a recent survey conducted by McKinsey and Co. it was found that the people voted for digital clothing as the greatest opportunity for sustainability.

Use of AI renditioning technology

The use of AI technology to render an image of how the customer should look in the cloth is often used. Designed specifically for people that prefer to buy online, this type of technology allows them to access the way the piece of clothing may look on them without being present in a physical trial room at a store. The same can be done for accessories as AI enables the websites to render a 3D image of the customer wearing the particular piece of jewelry accessory or clothes that they can view in a 360-degree view.

This is usually achieved through the “Neural Radiance Field (NeRF)” using AI algorithms (Chen et al. 2022). Based on the database of faces the algorithm is able to predict with a high level of precision how the rest of the face, back of the head, neck, and top of the head are of the customers based on the 2D image. This allows the customer to get a physical trial experience from the comfort of their homes. This is an additional feature added to luxury fashion brands' websites. This same technology can be applied to the metaverse for the adoption of real-life innovative type of clothing in digital platforms. Thus, saving the cost and effort of the designers as well.

Limitation and Recommendations

Problem solving methods and Theoretical Analysis (Limitations)

Methods of solution

Problem solving methods have been based on observation and of the collected data. The collected data was analysed to identify the issues with the industry, the economy that are affecting the industry and the factors that are leading to fall in demand and supply (Balleer et al. 2020). Inflation, market competition and other factors are examples of this. There has been identified issues with the lack of sustainability in the operations of many companies. The people are the ones that suffered from this as these activities increased the pollution in the environment. There has been recognised issues with the market conditions due to Brexit, inflation and the recent pandemic (Breinlich et al. 2022). Then there are the existence of competitors and threat of new entries and substitutes.

Theoretical analysis

The theories used to identify the problems with the luxury fashion brands are facing has been mentioned in this section. The identification of the issues and their causes are going to be used to yield solutions for the same in the recommendations section of the report. For the purpose of this project the tried and tested Porters model is used as a lot of the issues identified during the secondary data collection have been noted to be related to market forces.

Porters 5 forces

The fashion industry exists in the market of UK that has been ravaged by the recent global pandemic and other political-economic factors such as inflation and Brexit (Springford, 2021). Hence to analyse the strength and weakness of the market the Porters 5 forces has been used (Bruijl and Gerard, 2018). This is because market condition undoubtedly affects the firm performance.

It has been identified that there are many companies trying to enter into the luxury jewelry niche and thus increasing the factor of “existence of market competitors” and “threat of new entrants”. Then the companies are facing according to the Porters 5 forces model the issue of “Threat of substitutes”. As mentioned before there is negligible difference in quality and between the luxury brands and the material or manufacturing quality of luxury brands as most of them are machine made by workers abroad. However, the boutique industry that makes custom pieces of clothing and jewelry with exotic and alternative materials are the ones that are not facing the threat of substitutes.

The recent pandemic and Brexit have given rise to a third threat that otherwise would not have existed, the “bargaining power of suppliers”. Due to the covid pandemic most of the manufacturing units of raw material production and secondary processing units have been shut down. According to Gereffi (2020), this led to the breakage of supply chains and the rise in cost of the existing stock due to bargaining power gained by the suppliers of raw and processed materials for clothing as well as transportation and other additional charges. The factor of “Rivalry among existing companies” have always existed in the market of luxury brands. Hence it can be noted that the companies are at a disadvantage from nearly all market forces except the “bargaining power of the customers”. However, that factor affected the luxury brands as well due to the lack of purchasing power of the people. The same global pandemic also facilitated the growth of the metaverse through avatar-based vertcial social networking sites. This creates opportunities for the digital clothing business to grow.

Recommendations

Use of cutting-edge design software

The use of technology and advances to improve the client experience, including NFTs enabling piece customisation, define digital clothing design. Using AI algorithms to support the testing of clothing and accessories, the execution of data-driven procedures, and other activities. For the designers to create these, the right technology is needed. The designers might not be able to create the most distinctive designs for their particular brands without these. The employment of technology must therefore be prioritised in order to remain competitive in the metaverse.

The recommendations are of more value now as the growth projection of global market of fashion industry does not show much promice for the future that may be a cause of concern for fashion industries.

Methods for Product Pricing

The luxury fashion companies use a premium or high-price strategy to offer their products on the global market. Since the product has the reputation of a luxury brand, the competitors compete on the basis of product longevity, design, and consumer perception. However, in the digital world, these elements are absent. The only factors that count in the metaverse are the distinctiveness, innovative production, and design of the digital apparel. Therefore, better designs that require better technologies must be created in order to raise the design's financial value. The businesses provide their staff with the appropriate and adaptable digital tools they require to communicate their ideas and advance both personally and professionally in the creation of digital clothing.

Promotion of brands online

Brand recognition is a crucial first step in the niche brand management of luxury clothing products. Companies in the luxury clothing industry should have discovery, inspiration, and protection as their guiding principles. This company focuses its decisions on the outcomes of its marketing and sales initiatives, not merely on louder ads (Bae, 2019). Both modern and traditional marketing techniques must be used for promotion.

Company affiliation

As the designing company requires more partners to allow their digital apparel to enter the metaverse, association formation is of the utmost importance. The metaverse is not liberalised and globalised like the actual world. To obtain access to other platforms in the metaverse, one must work with those platforms. This makes it possible for user avatars to access the clothes and goods from luxury brands on the specific platform. By working together, brands can benefit from one another’s audience, resources, and reputation. Collaborations in terms of marketing are quite beneficial for both high-street retailers and newly emerging luxury enterprises (Bai et al. 2021). Then, the smaller brands can work with the established brand on a specific platform or merge with it to gain access to the metaverse.

Social media strategy and brand reputation

Through brand development, a brand's reputation and image are controlled and improved. The main objectives of brand management are differentiating the company brand from that of its competitors, fostering positive customer associations, and increasing brand recognition. The public must continuously be informed of the availability of fresh digital designs if they are created by designers for the users. Users must be made aware of the brand's designer apparel in order to achieve this goal. As a result, social media strategies like influencer marketing and other kinds of content are required. These must be carried out only for the purpose of enhancing the company's reputation and raising brand awareness in the metaverse and digital platforms.

Social awareness

Since clothing is a crucial component of culture, it has been emphasised how important it is to be sensitive to cultural differences. The wrong forms of clothing could not be as popular in a specific country. A diverse target market and a range of prices can both enhance the company's brand. This is one of the brand management techniques employed in the luxury apparel and jewelry (fashion) sector. Both in the metaverse and the real world, this holds true for clothing. It is best to refrain from wearing or using items or symbols that are specific to a certain culture or religion.

Collaboration with online platforms

There are certain types of platforms that allows socialising through the use of avatars the Meta’s Codec Avatars program (Sciencetranselated.org, 2022). These are used by many people to communicate and socialise. The designer needs to collaborate with these platforms to allow them to make the clothes available to the people in the metaverse.

Critical assessment of macro and micro environmental effects on organisations

Issues within the luxury fashion brand market and improvement strategies

Use of social media

The use of social media is one of the recommended strategies. However, the use of social IoT platforms may hamper the prestige of the brand as they may be seen as equal to other common brands on the medium. The brands need to advertise and promote their wear using influencer marketing and the use of celebrity and top influencers needs to be done. To maintain the brand association and also promote the brand by giving it added aspirational value. A similar use of OTT platforms can also be made and brands can promote themselves in a leading show by appearing in them. That is by paying producers for screen time. This is an effective way of boosting brand value. Social media in itself is a technological marvel for communication. This needs to be used by luxury fashion brands.

Use of BDA (Big Data Analysis)

The company can use software tools like BDA ("Big Data Analysis") for the analysis of large amounts of data, "Machine Learning" (ML) for condensation and the extraction of themes and trends from the market, inventory, and other sources by implementing technologies, which can improve the effectiveness of the decision-making process. the application of "Artificial Intelligence" (AI) to decision-making and project management (Hofmann et al., 2020). Numerous well-known businesses have exploited these technologies for a wide range of purposes. The use of strategic management procedures and the development of leadership will be aided by these technologies. Also, research on the needs of the client must inform planning. According to Ribeiro et al. (2021), it is necessary to put cyber tools into practice, such as using AI for automation and BDA for market prediction. Lean manufacturing can be implemented to control processes.

The BDA analysis allows the companies to analyse the shortcomings of the market to navigate the various markets better. As shown in figure 6, Europe does not show promissing results and hence, the European developers can choose to make use of BDA to become more profitable by improving operational efficiency.

Use of AI algorithms

Many brands have started using the 3D simulator to aid customers in making their choices while shopping online. This technology is however not as widespread as it could be. Many of the early adopters have adopted the use of these technologies yet most of the luxury brands choose to remain traditional in their approach to selling online. This hampers the customer experience and also the perception of the customers towards the brand. This also applies to the digital clothing in more ways than not.

Since there are numerous factors affecting the businesses that are micro environmental in nature, the micro environment has an impact in more ways than one. The fact that the sectors operate in a market with a limited number of fashion brands competing with one another for market share has a noteworthy impact. The second effect is that these industries are highly modernised and innovative, offering additional services for customer experience and customer relationship management as a result of the microenvironment and the competitive aspect. The pandemic's devastating effects on the local and worldwide economies have broken supply networks and stopped production, among other serious effects.

Conclusion

It can be noted in the conclusion that technological development needs t be adopted in the luxury fashion brand for many reasons. The adaptation of technologies has become paramount in the world today for luxury brands for the development of the digital clothing for the online metaverse. This is because the craftsmanship that qualified a brand as a luxury brand has been exported to other countries and the same producer is possibly making the product for multiple “luxury” brands in Bangladesh, India, or China as these are the major garment-producing nations in the world. Hence, the only factor giving aspirational value to the product is the design of the clothing item and its price that makes a customer aspire to possess an item to distinguish themselves from others. Hence, people need to be attracted to the stores rather than the other way around that was traditionally the situation. The use of technology by luxury fashion brands, market environments, industry trends, brand management, and concerns will all be covered in-depth in this report with high levels of accuracy. According to the findings, pertinent advice must also be given for problem-solving.

Online shops, which have an online designs, are among the technologies that are most frequently used in the fashion industry as a whole. The making of digital clothing is a new generational addition to the clothing industry. By advancing the design process for improved design quality and innovation in the apparel industry for the metaverse, fashion technology is also promoted to new heights. Use of technologies such as CAD, AI algorithms, ML applications the designers also promote fashion technology as a field of research. This is Because it has been determined that personalisation is one of the qualities that distinguishes high-end fashion brands, the use of NFTs is prevalent. Additionally, data-driven algorithms are used to make sure that customer experience and connection building are done well. In addition, the study covered the act of combining multiple categories in partnership or merger in order to increase sales, earnings, and marketing for luxury businesses. In this study, proper recommendations have also been given for the companies to better their production and marketing processes of digital clothing in the end as well.

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