How AI and Machine Learning Influence Marketing in the Fashion Industry

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Table of Contents

Introduction
The COVID-19 Pandemic
How Fashion Brands Use Artificial Intelligence
Machine Learning
Metaverse
NFTs (Non-Fungible Tokens)
Gaming
Conclusion
Works Cited

Introduction

This literature review illustrates the impacts of artificial intelligence (AI) on marketing, mainly the branding of products and services that have rekindled attention in recent years. There are speculations of significant changes in progress, much broader and extending far beyond the realm of marketing choices. This literature review will discuss the influence of AI, focusing on the following topics: metaverse, COVID-19 pandemic, non-fungible tokens, games using fashion brands, and machine learning.

The COVID-19 Pandemic

The COVID-19 pandemic disrupted and continues to disturb the everyday lives of billions of individuals worldwide in unprecedented ways. All household consumption areas, including clothing use, are impacted by COVID-19. Some people expressed hope that COVID-19’s substantial, forced adjustments would pave the way for future production and consumption habits that are more environmentally friendly (Silva et al. 22). When the demand for clothing fell globally, the fashion sector was severely impacted. In the COVID-19 lockdowns, consumers drastically cut back on their fashion expenditure, immediately classifying clothing, shoes, and fashion statements as non-essential categories of consumer products. Long stretches of total and partial lockdowns also led to previously unheard-of rates of wardrobe organization and a rise in textile donations.

As governments shut down factories, stores, and events to stop the transmission of the virus, the COVID-19 pandemic has had a tremendous impact on the worldwide fashion industry. Globally speaking, fashion brands have been significantly impacted by the coronavirus pandemic. The fashion business has struggled with customer demand at the same time. However, new opportunities emerge as fashion companies switch to producing stylish coronavirus facemasks (Tomovska 24). The continuing COVID-19 pandemic will unavoidably alter the fashion industry for all time. The apparel industry is commencing to collect the fragments and forge a future after the COVID-19 pandemic’s devastating economic impact (Castañeda‐Navarrete et al. 965). AI and machine learning are already gaining popularity in the sector (Liang et al. 4). Thus, fashion retailers must search within themselves to find any significant potential bottlenecks to stay competitive in today’s environment of increased competition.

It is nearly difficult to foresee the future course of any new technology. The world wide web, the initial invention and even criticized by certain general public sections, is evidence of this. A study conducted by Silvestri focused on the impact of AI and extended reality on the fashion industry (Silvestri 67). According to the study, augmented reality (AR), virtual reality (VR), and AI are already influencing how people create, sell, and experience things in their daily lives (Silvestri 67). Fashion brands were invited to broaden their horizons during the pandemic by AR, VR, and AI, which is a prime opportunity for the industry to invent and promote change (Silvestri 71). Particularly for online retail issues like the virtual fit and the stimulation of the shopping experience, VR and AR can potentially become widely used technology in the last stages of the value chain (Silvestri 62). It might be claimed that VR and AR may represent the internet shopping platforms of the future and that they will be pretty inventive in their attempts to replicate a sensory purchasing experience.

Consumer behavior in clothing and apparel has previously been widely studied within the marketing discipline. The purchase phase offers the broadest range of choices, from various types of collaborative fashion consumption, such as purchasing used, swapping, and renting clothing, to buying less altogether (Silva and Bonetti 1). Admittedly, very little research has evaluated the sustainability aspects of various fashion consumption styles that are regarded as sustainable (Silva and Bonetti 1). However, slowing down fashion, reusing clothing, and generally reducing the number of clothing produced have all been acknowledged as answers to the fashion industry’s sustainability issue.

AI can be deployed in all or the majority of the value chain phases, and it has the potential to drastically alter every aspect of modern civilization, including the fashion industry. AI will become essential for forecasting businesses and designers to make quick and precise predictions (Olson et al. 292). After the Covid19 pandemic, AI automation may become a significant concern, particularly regarding health and workplace safety (Silvestri 69). Additionally, AI and blockchain might provide nearly clear accountability in the manufacturing and logistics sector (Silva et al. 23). Lastly, online shopping is and will continue to be a massive success for the application of AI because this industry is leading the way in pursuing customization and a top-notch consumer experience. This would undoubtedly increase the power of e-commerce platforms, which have already been strengthened by the shift brought about by the pandemic.

How Fashion Brands Use Artificial Intelligence

In the fashion sector, digitization is rapidly changing how firms interact with clients and offer data-driven, customer-centric services. AI and other recent technological developments are offering automated fashion solutions. Such technical advancements significantly influence the sector and revolutionize it. The demands of fashion firms for consumer personalization are being met by AI technology throughout design, manufacturing, logistics supply chain, and marketing (Hasan et al. 141). Fashion houses can now comprehend rapidly evolving fashion trends and provide more individualized customer services using AI. More businesses have invested in AI to reduce the likelihood of bankruptcy. The report estimates that through 2022, the apparel and retail industries will spend US$7.3 billion on AI technology globally (Grandinetti 95). Brands are always searching for new, more effective ways to market and sell their products. Thus, AI has radically transformed how brands produce, promote, and sell their items in the fashion business.

AI streamlines these processes and maximizes consumer-shopping experiences while increasing the marketing system and process via intelligent automation. In order to boost sales, promote products, and improve the consumer experience, a handful of fashion brands, such as Dior, Macy’s, Nike, as well as Nordstrom, are turning to AI (Liang et al. 4; Silvestri 68). These companies use AI in their advertising and management strategies in a variety of ways. By deploying a bot to carry out a computerized chat via their site that facilitates buying for the user, brands have developed a more effective method of connecting directly with their customers (Silvestri 70). For instance, the Paris-based fashion house Dior introduced its Facebook Messenger-based beauty assistant, Dior Insider (Cheng et al. 31). The software poses questions to learn about the user’s fashion needs and requirements before greeting them.

AI is being incorporated into manufacturing processes by designers and manufacturers. For instance, a computer program for identifying fabric and color flaws in textiles enables quality assurance and saves time (Giri et al. 95383). Cognex ViDi is a vision-based platform designed for fabric pattern identification, including textile finishing, weaving, knitting, printing, and beading (Kumah et al. 535). According to the manufacturer, the system was designed so that it may be trained using examples of what a quality textile should look like (Kumah et al. 535). Many people have a wardrobe full of clothes they never wear since they are unpleasant, look cheap, are unflattering to their bodies, or do not go with most of their wardrobe. When numerous online stores use images to attract customers to buy yet do not necessarily give a true-to-life representation of a garment, it is impossible to avoid.

By bridging the gap between the experiences of online and in-store purchases, AI-enabled innovations are attempting to address the issue above. These advancements include such technologies as AR as well as VR (Liang et al. 13). It can be argued that the combined effect of the pandemic and available new technologies can lead to the full transition to online shopping. Nevertheless, it is unlikely that apparel will be entirely touch-free because many people still prefer to visit real malls where they may browse and try on actual clothing. Retailers can target this kinesthetic population by using in-stock AR and VR solutions (Liang et al. 13). These innovations make shopping more enjoyable and immersive, which improves the whole experience.

The fashion industry uses AR technology to add new features to traditional and online shopping. To complete their look, buyers can experiment with and try various designs, materials, and hues, as well as various footwear, handbags, and jewelry pieces. For example, the Wanna Kicks app illustrates this technology because it uses augmented reality to let users try on various pairs of sneakers (Caboni and Pizzichini 103). Individuals can choose shoes from the library of 3D models, position their cameras at their feet, and there they can have a virtual person wearing the shoes of their choice (Caboni and Pizzichini 103). Thus, AI has the potential to revolutionize the fashion industry. Faster customer support, better in-store user experiences, and more environmentally friendly company practices can all be made possible.

The use of AI is expanding throughout the fashion sector, with a CAGR of +40% predicted for the market in the following seven years (Acar and Toker 1353). As a result, the prospect of fashion is intelligent, and, these days, using AI in apparel is crucial since it improves client pleasure and experiences. The usage of AI in the retail apparel sector has also been revealed in a Capgemini survey to have the potential to save USD 340 billion by 2022 (Acar and Toker 1353). Despite the established nature of the fashion industry, AI significantly changes the industry, from how fashion enterprises manufacture their products to how they are promoted and sold. All aspects of the fashion industry, comprising design, manufacturing, transportation, advertising, and sales, are being revolutionized by AI technologies.

Machine Learning

The fashion business has always been at the forefront of technical progress via embroidery or the eCommerce market. With a market value of over $3 trillion, the global fashion business makes up a respectable 2% of the world’s GDP (Thomassey and Zeng 196). In the twenty-first century, technological advancements like AI and machine learning are transforming every facet of the fashion industry. The employment of AI in the 2020 fashion business has gotten so ingrained that 44% of fashion retailers are currently in financial trouble (Thomassey and Zeng 3). As a result, it is anticipated that by 2022, the fashion and retail industries will spend $7.3 billion annually on AI technologies (Thomassey and Zeng 3). Client customization and other services in the fashion industry are now just unaffordable without the usage of AI, thanks to the widespread availability of big data. As stated by McKinsey, the top 20% of international fashion brands are responsible for 144% of the sector’s earnings (Guercini et al. 424). This means that a fashion brand must rank in the top 20% for it to be lucrative.

Apparel firms are investing in machine learning and AI technologies due to the need to stay competitive in the market. Using chatbots by fashion firms to learn more about their customers’ wants and intended purchases is one of the main ways that AI and ML are used in the fashion industry (Thomassey and Zeng 6). Online shoppers seeking footwear or clothing may easily communicate with an expert system via a site or app (Liang et al. 4). For example, Burberry is one of the fashion brands that utilize chatbots. Executives at Burberry have made significant changes to various brand sectors, from marketing and advertising to planning and management (Bae 66). In order to provide customers with better service, the company is accumulating more client data from multiple loyalty programs and monitoring pertinent data at its online and physical stores.

According to apparel market research, companies that make clothing use machine learning to forecast trends in popular colors, designs, shapes, and client moods. The fashion technology institute and IBM have partnered with Tommy Hilfiger, an American premium clothing company, to create a machine learning system using Software Design and Technology Laboratory (Kühl et al. 602). Reimagine retail is a project demonstrating how several AI tools, such as machine vision, natural language processing, and deep learning approaches, may be combined with fashion data. Tommy Hilfiger used these machine-learning tools on 15,000 product photos, 600,000 publicly accessible runway images, and close to 100,000 fabric pattern websites (Kühl et al. 602). Utilizing AI, Tommy Hilfiger’s style and shapes, as well as popular colors and patterns, were revealed.

Additionally, fashion firms are employing image recognition technology, which enables them to determine the legitimacy of a product by only scrutinizing a small portion of the image of the suspended goods. The company plans to implement machine learning techniques across several key markets, including chatbots for customer support, security and fraud detection, image identification, IT operations, and logistics (Giri et al. 95381). It is critical to focus on whether machine learning simplifies processes for retail premium firms where cost is unimportant. In addition, it is helpful to understand the relationship between luxury goods and consumer preferences and how they work in practice.

Metaverse

The term “metaverse” was initially used to refer to a three-dimensional environment populated by replicas of real people. Despite being somewhat ambiguous, this description can be used to define the concept of a metaverse as it exists today. The name “metaverse,” as it currently stands, resembles a conceptual framework more closely than a predetermined definition. Metaverse is a highly scalable and coherent network of real-time delivered 3D virtual worlds that can be encountered simultaneously and relentlessly. While investigating the uses of the metaverse, Sayem observed that metaverse could be used by an infinite number of individuals with a consistent sense of presence and continuity of data (Sayem 140). Data continuity might include identity, background, remunerations, objects, connectivity, and payments.

There are already metaverses that demonstrate the potential and some level of project acceptability, albeit they are noticeably smaller. The most prominent international names in fashion are already paying attention to these existent metaverses (Silva et al. 27). One notable instance is the partnership between the online gaming platform Roblox and the fashion label Ralph Lauren (Sayem 140). This partnership allowed gamers to shop in an online Ralph Lauren store and purchase the designer’s clothing for their avatar for $ 3-5. Ralph Lauren chose Roblox as their digital association companion due to the gaming platform having 47 million active daily users (Breiter and Siegfried 53). On the other hand, Roblox can benefit from Ralph Lauren’s notoriety and legendary stature in the fashion business, which will increase its visibility to the general public and create opportunities for similar collaborations. The collaboration between the high-end luxury brand Balenciaga and the previously mentioned video game “Fortnite” was first announced in 2021 (Breiter and Siegfried 52). This is another current example of fashion brands entering the market for digital fashion goods.

By acquiring NFT-developer RTKFT, sportswear behemoth Nike also boosted its presence in the metaverse. An NFT (non-fungible token) is a document proving ownership of a digital medium, with the owner being the only person accessing it (Gao et al. 240). With the usage of the abbreviation increasing by 11000%, Collins Dictionary named it the phrase of the year 2021 as a result of the term’s enormous popularity over the previous several years (Liang et al. 4). In the instance of Nike, this leads to collectible variants of digitized sportswear and footwear. The design of these NFTs relies on their developer. Depending on the advancement of related technologies that would enable owners to wear their digital attire, the applicability of these collectibles may see an even more significant expansion.

NFTs (Non-Fungible Tokens)

While traditional offline and brick-and-mortar experiences still account for a sizeable portion of sales for luxury fashion labels, there is no denying that a sizable portion of the future will be dominated by digital technology. For this aim, 21st-century premium brands must consider several digital trends (Thomassey and Zeng 4). The growth of the metaverses and the adoption of NFTs are two of the digital trends that have caught the attention of the fashion market and have already begun to govern other market environments (Gao et al. 242). NFTs have been suggested as a way to win over the hearts of these young, high-net-worth individuals due to their numerous similarities to luxury fashion (Gao et al. 242). In order to encourage connections with the intended Generation Z and millennials, enhance brand awareness, and eventually encourage sales and enthusiasm in their business, luxury fashion companies can create customized digital assets and adventures employing NFTs.

In the cryptocurrency market, non-fungible tokens have become the dominant asset. This flourishing digital asset earned $10.3 billion across numerous blockchains in the third quarter of 2021 (Thomassey and Zeng 6). For artists, designers, and businesses worldwide, the marketing and advertising potential of NFTs present previously unheard-of financial and exposure rewards. The growth of metaverses and NFTs demonstrates how the world continually evolves toward a market where augmented reality defines it and digital assets power it. The ever-increasing demand for NFTs is a glaring indication of the current trend, the intersection of culture and technology, influencing many industries. According to a study by Silva, a number of obstacles are likely to prevent the successful deployment and flip of big data in the apparel industry (Silva et al. 27). These difficulties include the implementation of GDPR, the lack of technical proficiency among fashion graduates, and the infrequent availability of fashion data. This is used as existing knowledge while attempting to manage large amounts of data.

Therefore, it is unsurprising that the multibillion-dollar luxury fashion industry has begun showing interest in NFTs. Non-fungible tokens offer limitless options for luxury companies. They may even be considered a lifeline for traditional luxury houses currently struggling to develop new ways to engage with customers who prefer using digital devices (Thomassey and Zeng 2). Although many firms still view the transition to virtual fashion as dangerous, luxury brand executives and designers should be aware of the underlying prospects NFTs present for luxury fashion (Gao et al. 247). NFTs, like authentic luxury fashion goods, can be considered social assets that give buyers a certain status, a chance to stand out from the crowd, and a place in the community of the desired luxury brand.

Thus, it is a logical transition for today’s high-end companies because the very nature of NFTs as cryptocurrencies already performs the same role as a luxury fashion for its clients in its purest form. Tiffany & Co. is embracing the crypto era by providing some NFT jewelry called NFTiffs to Cryptopunk users (Schill 1). Information revealed in the issuing contract states that 50 over the 250 NFTiffs would be designated for an allow list (Schill 1). The remaining 200 will be granted access to Punk holders in some other way, such as a general mint (Schill 1). All interested parties must submit identity verification information via KYC and are only permitted to purchase up to three NFTs.

Gaming

Various industries have been affected by AI, which has the potential to disrupt markets through innovative technology, more efficient operational processes, and connectivity to business and consumer insights. At first, the idea of using AI automation in the fashion industry, a sector built on the capacity to express one’s creativity through games and other activities, did not appeal to executives (Olson et al. 292). In contrast to rivals who use conventional approaches, these applications can alter firms and produce considerable market growth and revenues as we reach the hyper-digital age.

The coronavirus pandemic has severely affected sectors like fashion and retail but has had a favorable impact on the gaming and e-sports industries. In 2020, the worldwide games market will produce $159.3 billion in revenue, according to a recent Newzoo research (Takahashi 3). A $200 billion market for gaming is anticipated by the close of 2023 (Takahashi 3). This is partially a result of a new age of emerging gamers with significant purchasing power. Gen Z gamers make up roughly 90% of the population, compared to 59% overall. Research suggests that Generation Z has a $44 billion purchasing power (Takahashi 3). Unsurprisingly, companies from industries other than gaming are now vying for a piece of the action, with the fashion brand sector grasping the chance to market to customers (Giri et al. 95377). There have been a variety of activities in this area recently, ranging from fashion designs inspired by video games to brands developing their games and even a new class of online styling games geared toward fashion consumers.

Luxury brands have collaborated with several renowned video game creators and programmers to offer their vision of the industry as part of an industry-wide effort to appeal to younger consumers. Video games are an effort to connect a new fan base and produce material on the cutting edge of fashion, much like how many businesses have joined TikTok. Adopting digital forms for these companies is natural, given that fashion days and presentations have been held digitally throughout the previous year. Fashion designers Marc Jacobs and Valentino have created clothes for the perennially famous games Animal Crossing, demonstrating the enormous overlap between the two industries.

Drest is only one of the numerous ways that fans of high fashion may access it via their mobile devices and video games. For the 2019 League of Legends World Championship Finals, Louis Vuitton collaborated with Riot Games’ League of Legends to create prestige skins (Hitar-Garcia et al. 1). Similarly, Burberry has its line of adorable internet games, including B Surf, a playful Mario Kart meets monogram racing game, and skins it designed for Tencent’s Honor of King’s heroes (Papagiannis 3). Drest and Covet Fashion were created from the perspective of a fashion editor (Milanesi et al. 3). These applications include a carefully chosen mix of well-known and emerging labels. How the lesser brands receive equal prominence to the larger ones is one facet of the game that many people find pretty satisfying.

Roblox has made it a new field of conflict for the digital fashion world. It allows users to buy and sell unique features and accessories using a virtual currency called Robux, making it the ideal platform for businesses looking to market and sell their goods to gamers. The most notable is Gucci, which brought its most recent installation, Gucci Garden Archetypes, to Roblox. Gucci joined the game to build a Gucci-themed environment in the Roblox Metaverse (Kadry 135). Companies can access this virtual world, purchase in-game goods with actual money, and use one of the available virtual persons, or avatars, which are fundamental to the Metaverse. Gucci has offered a digital line of recognizable clothing on the Roblox video game, thus helping some potential customers become more familiar with the brand.

In addition to experimenting with the idea of video games, businesses have also joined a growing economic sector, including Bitcoin and NFTs. NFTs, or Non-Fungible Tokens, are essentially one-of-a-kind digital works of art that can be actively traded through digital money (Silva et al. 28). Paris Hilton, Justin Bieber, and labels like Louis Vuitton have all expressed interest in the new platform. Fashion manufacturers and retailers have been trying new approaches to engage the burgeoning shopping environment and break into new markets (Giri et al. 95377). Luxury fashion companies have been more open than ever to cooperating with thriving creative industries, whether via investigating virtual currencies or working with popular video games.

Conclusion

Despite the established nature of the fashion industry, AI significantly changes the industry, from how fashion enterprises manufacture their products to how they are promoted and sold. All aspects of the fashion industry, including design, production, transportation, marketing, and sales, are being revolutionized by AI technologies. It is anticipated that by 2022, the international investment in AI by the design and retail sectors will amount to $7.3 billion annually (Olson et al. 294). This is because the use of AI in the 2020 fashion industry has become so pervasive that significant portions of fashion retailers that have not adopted AI now run the risk of going out of business.

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