To fight back against online retail giants, more boutique operators are turning to artificial intelligence. But first, they need to change how people shop.
“I think that five years from now, we’re going to say things like, ‘Remember when we used to have to wander around stores to find our clothes? When we had to know how we fit in every brand? What was up with that?’,” says Eric Colson, chief algorithms officer at Stitch Fix. The San Francisco-based startup is one of a growing number of companies trying to combine artificial intelligence with a human touch to take on big online retailers.
Stitch Fix counts 2.7 million active customers in the US and plans to launch in the UK in 2019. Instead of expecting you to trek to the shops, the company combines the results of a series of algorithms with the insights of a human stylist to deliver a tidy box of new clothes straight to your doorstep. Delivery and returns are paid for by the company.
When Stitch Fix does arrive in the UK, it’ll face stiff competition from more established rivals. Thread, founded in 2012, has already amassed one million UK customers for its personalised menswear shopping service. The company raised £17 million in new funding in October (more than half of which came from the investment arm of H&M), and it recently launched its first advertising campaign on the London Underground. Thread’s current goal, according to co-founder and CEO Kieran O’Neill, is to become a household name. “We see that when people discover [the service], they love it,” says O’Neill, who, like Colson, laments both the offline (crowds, queues) and online (choice paralysis) clothes shopping experiences.
The companies aren’t identical: Stitch Fix uses the “surprise box” approach – you don’t know what you’re getting until you open the package – while Thread lets you select the items that get delivered. But both companies rely on algorithms to make their best (informed) guess at your perfect outfit, and both use algorithms to better understand their clients and manage their inventories.
And in a move that echoes Netflix’s decision to start creating their own films and series, Stitch Fix has launched its very own range of AI-informed clothing – shirts, blazers, trousers and belts that fill gaps identified by the company’s algorithms. Thread is doing the same.
But fashion is fickle and fundamentally very human, and both companies acknowledge that the AI-supported fashion model only works insofar as it’s able to incorporate a personal touch. Julia Bösch, the CEO of Outfittery, a Berlin-based startup that offers algorithm-informed fashion to 600,000 men across Europe (but not yet in the UK), says that one of her company’s main challenges is bringing its service to scale without losing a human connection. “We need to truly understand our customers,” says Bösch. “Who is this guy, and who does he want to be?”
Operating across eight European countries, Outifittery has learned, example, that men in Sweden tend to stick to grey and dark blue, while Dutch men are more inclined to bright colours. Swiss men? Well, they like to get dressed up. To account for such differences, the company’s stylists specialise by country. To date, Outfittery has managed to achieve close to 80 per cent brand recognition in Germany, mainly by word of mouth.
What the company ultimately wants to do, says Bösch, is to recreate the feeling of walking into an ancient boutique: the owner greets you by name, sits down with you over a coffee, then tells you about some of the latest items they have in stock that might fit your taste.
It’s a goal that many in the fashion industry are aiming for, she says, acknowledging, like Colson, that the high street is being threatened by consumers who are demanding a much more personalised shopping experience. The trick is how to pull it off and still meet your bottom line.
Artificial intelligence can help in this transition, but will it ever be sophisticated enough to out-compete the human touch? “No, shops won’t die,” says Matthew Brown, director of Echochamber, a consulting firm that tracks global retail trends. “But they will change.”
“The interesting thing we are seeing is the phenomenon known as ‘clicks to bricks’ – online retailers that are also opening physical stores,” he says, noting that players like Trunk Club and Bonobos are leading the way on that front in the US. “In the future, we will have hybrid retail where customers drift seamlessly between online and off.”
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