In 2021, fashion companies invested between 1.6 and 1.8 percent of their revenues in technology. By 2030, that figure is expected to rise to between 3.0 and 3.5 percent. Behind the predicted increase is a conviction among many that technology could create a competitive edge—in customer-facing activities, where companies have mostly focused to date, and, more increasingly, in operations. Technologies such as robotics, advanced analytics, and in-store applications may help streamline processes and support sustainability, as well as create an exceptional customer experience (exhibit).
Consumer digital engagement rose sharply during the COVID-19 pandemic, as a result of more hours spent online, new shopping habits, and rising interest in gaming and virtual worlds. In 2021, people spent on average just below four hours on their mobile phones, which includes about two and a half hours of scrolling though social media.
Of the fashion customers who made the move to online-shopping channels in 2021, 48 percent said the pandemic was the reason, 27 percent cited convenience, and 11 percent cited product availability and promotions.
The pandemic also boosted digital brand relationships, with 72 percent of customers reporting they interacted with brands online in 2021. In the year ahead, as restrictions ease in some geographic areas, digital interactions will likely stabilize at about 66 percent on average.
Exhibit
Looking ahead, the impact of technology on people’s lives may accelerate. By 2024, AI-generated speech could power more than half of human interactions with computers, McKinsey analysis shows. Soon after, more than 75 percent of enterprise-generated data could be processed by cloud or edge computing.
This offers a more flexible, scaleable foundation on which brands can potentially build their tech offerings. By 2030, more than 80 percent of the global population is expected to have access to 5G networks,
enabling, among other things, faster connectivity and data transfer across Internet of Things devices.
The operational potential of technology is becoming ever more apparent. McKinsey analysis shows that fashion companies that now embed AI into their businesses models could see a 118 percent cumulative increase in cash flow by 2030. Conversely, those that are slower to invest in digital technology will lag behind—and could see a 23 percent relative decline. Over the next three years, potential key areas in which fashion executives could make digital investments are personalization, store technologies, and end-to-end value chain management—areas in which digital can make a real difference to performance.
Fashion’s five key technology themes
As fashion industry
