Stage 1 report - Digitalisation of Fashion Retail Stores : An Investigation

DIGITALISATION OF FASHION RETAIL STORES : AN INVESTIGATION

STAGE STAGE ONE ONE REPORT REPORT EMILY EMILY LINDSAY LINDSAY N0733170 N0733170 7,540 7,540 words words

2

ETHICS CLAUSE I confirm that this work has gained ethical approval and that I have faithfully observed the terms of approval in the conduct of this project.

Signed: 3

CONTENTS 1. INTRO

1.1 GLOSSARY 1.2 PROJECT QUESTION 1.3 INTRODUCTION 1.4 RATIONALE 1.5 AIM 1.6 OBJECTIVES

2. LITERATURE REVIEW

2.1 INTRODUCTION 2.2 DIGITALISATION : DEFINED AND DESCRIBED 2.3 THE EVOLUTION OF DIGITALISATION 2.4 CAUSE AND AFFECT OF DIGITALISATION

3. METHODOLOGY

3.1 RESEARCH APPROACH AND RATIONALE 3.2 RESEARCH SCOPE 3.3 SAMPLE 3.4 OBJECTIVES MATRIX 3.5 PRIMARY RESEARCH 3.5.1 FIELD OBSERVATIONS 3.5.2 PILOT SURVEY 3.5.3 FOCUS GROUP 3.5.4 INDUSTRY EXPERT INTERVIEWS

4

9 10 12 13 14 15 17 18 20 22

24 26 27 28 29 30 32 33 34

5

CONTENTS CONTENTS CONT. CONT. 3. METHODOLOGY CONT. 3.6 SECONDARY RESEARCH

4. FINDINGS & DISCUSSION

35

4.1 INTRODUCTION 4.2 CHAPTER 1 : WHAT DOES “DIGITALISATION” MEAN? 4.3 CHAPTER 2 : ONLINE VS OFFLINE : CAN THE TWO COEXIST? 4.4 CHAPTER 3 : FIX OR FACADE? 4.5 CHAPTER 4 : THE INSTANT GRATIFICATION SOCIETY 4.6 CHAPTER 6 : FUTURE LANDSCAPE

36 37 40 42 44 45 46

5. PEST ANALYSIS

47

6. CRITICAL REFLECTION 7. KEY INSIGHTS 7.1 INSIGHTS 7.2 CONCLUSION 7.3 RECOMMENDATIONS

48 49 50

8. APPENDIX

51

9. BIBLIOGRAPHY

78

10. REFERENCES

82

11. IMAGES REFERENCES

84

7

INTRO DUCTION

1.

8

1.1 1.1 GLOSSARY GLOSSARY Digital technology - throughout this report, the term digital technology will be used to broadly refer to as any of the below terminology, that fit under the definition of digitalisation.

Virtual Reality (VR) - A technology which generates 3D worlds with the aim to fool the observer into believing that they are fully immersed in the computer-generated environment by means of motion tracking and detailed graphics (Gala, 2016).

Augmented Reality (AR) - A technology which superimposes realistic looking objects onto the background scene of the observer giving the illusion that the computer-generated object is actually present as part of the real scene (Gala, 2016).

Artificial Intelligence (AI) - Artificial intelligence is the ability of a digital computer or computer-controlled robot to perform tasks commonly associated with intelligent beings. Example of AI include using a robot to help locate specific items, or a markup matching service to find you correct shade in foundation, lipstick etc.

Multi-Sensory Technology (MST) - Multi-Sensory technology refers to sensory delivery technologies such as lighting, sound, scent and temperature systems that work is synchrony (Peralta, 2020).

RFID technology - Radio frequency identification is a tracking technology that uses small tags or chips within clothing labels to transmit a signal to remote scanners, often within virtual mirrors (Bianchi, 2017)

9

1.2 PROJECT QUESTION 10

“

AN INVESTIGATION INTO THE DIGITALISATION OF FASHION RETAIL STORES AND TO WHAT EXTENT WILL IT IMPACT THE FUTURE OF RETAIL.

”

11

INTRO AND RATIONALE

1.3 intro

This report will act as a catalyst for the stage 2 report where business ideas surrounding the topic will be researched and explored. Initial insights from the future thinking report will be acknowledged within this report as well as previous future recommendations. A literature review will be carried out early on within this report to find a gap within the research, which will then aim to be fulfilled through primary research. Finding will be discussed and analysed, as well as other external factors that could be affecting the research. The report will conclude with notable insights and recommendations for further research within the stage 2 report.

With the increase of online retail and the decrease of offline, many argue that retail, simply, is dying. More and more highstreet retailers are shutting down stores for good, and according to the Centre for Retail Research, an estimated 16,000 retail stores closed in 2019 (Clark, J. 2019). Brands are desperate, and are doing all they can to entice consumers back into their stores (Peralta, 2020). Alas, brands are moving to a new type of retail experiences, known as ‘digitalisation’. Fashion brands are taking technology such as AR, VR, AI and multi-sensory experiences to elevate and re-vamp consumers shopping experiences.

12

This report is being conducted in order to fully investigate the meaning and the implementation of digitalisation and digital technology within fashion retail stores. Whilst the concept can be considered relatively new within the fashion sector, as a UK demographic we are not fully exposed to its full effects and benefits.

This research should be carried out to see whether the use of digital technology within physical stores will be beneficial in the long run, what effect it has on both consumers and retailers themselves, as well as to see some of the main causes of the rise of ‘digital’. Any limitations highlighted can also be used as a prevention for any future issues or obstacles that could arise within the future.

1.4 rationale

13

AIM AND OBJECTIVES

“

1.4 aim

This research aims to investigate how digital technology is used within retail stores; to understand its effects and limitations, and whether it is beneficial or simply a gimmick.

14

�

1.5 objectives 1 2 3 4 5

To define what digitalisation within retail stores means.

To establish an understanding of how digital technology/digitalisation is being used and implemented within retail stores - and why.

To explore the advantages and disadvantages of digitalisation / using digital technology within retail, and its effects on consumers and retail staff.

What is causing the rise of digital technology being used within retail?

To investigate how innovative technology advancements will impact the future retail landscape and its consumers

15

LITERATURE REVIEW

2.

16

2.1 intro To gain further insight into the digitalisation of fashion retail stores, secondary research will be carried out in the form of a literature review, using previous studies and theories.

Existing literature focusing on the digitalisation of fashion retail stores, and its effects will be examined.

The literature review will be utilised to assist with defining ‘digitalisation’ in fashion retail stores, as well as identifying what technology is currently being used and implemented. Additionally, it will aid with outlining the advantages and limitations of using digital technology with retail stores, and the consumer shifts that are causing the rise of digitalisation.

Finally, gaps in the research found will be acknowledged and discussed, creating a starting point for the aims of the primary research which will further strengthen the report.

17

2.2 digitalisation:

defined and described In broad terms, digitalisation can be defined as “the use of digital technologies to change a business model and provide new revenue and value-producing opportunities; it is the process of moving to a digital business.” (Gartner, Inc. 2020) But in terms more specific to digitalisation within retail stores, there is no certain definition of what it entails. There is a paucity of studies and theories that clearly define the meaning of digitalisation, with some that also provide an insight into the technologies that contribute towards the digitalisation of retail stores.

An exploratory framework conducted by a group of students at the University of Gothenburg stated that the term ‘digitalisation’ refers broadly to the integration of digital technologies into retailing.

They devised this definition from businessdictionary.com, which similarly described digitalisation as the integration of digital technologies into everyday life, by the digitisation of everything that can be digitalised. The authors go onto categorise the different ways digitalisation can be implemented within retail stores. Based off the ‘analysis of consumption’ developed by Lehdonvirta (2012) and Ritzer (2001), the authors alter the theory by breaking down the four elements of consumption, within the context of digitalisation in retail. The first being ‘exchange’, which refers to the various activities taking place at the retail consumer interface. ‘Setting’ refers to the different situations in which retail occurs, such as offline and online; and ‘actors’ refer to consumers and retailers. Finally, the concept of ‘offering’ which refers to what is being offered by the retailers such as products and services, and the idea that products and services may be transformed by digitalisation (Hagberg, Sundström and Egels-Zandén, 2016).

The framework goes onto suggest that there is an undiscovered, symbiotic relationship between the four concepts and that each is affected by the other, as well as all being susceptible to digitalisation.

RESEARCH GAP It is clear that to gain a deeper insight and understanding of digitalisation within retail, further research needs to be carried out in the form of field observations and industry expert interviews. A broader knowledge of how digital technology is being used and implemented in retail is needed, how it is impacting consumers and retailers, and what the future of digitalisation will look like. These factors should influence thoughts when conducting primary research.

18

Hagberg, Sundström and Egels-Zandén, provide examples of digitalisation within each of the concepts, by a range of technologies and devices, such as the implementation on Omni-channel retailing, the use of ‘click-andcollect’, digital payments, digital signage and self-service kiosks.

The use of RFID technology virtual mirrors was also highlighted in the journal.

Whilst the piece of literature expands on the types of digitalisation within retail, it fails to explore the relationship between the four elements previously outlined in the framework, that form the concept of digitalisation within stores. It also fails to fully explain how digital technology is being used; only stating examples.

(Harris, 2017) states that physical, brick and mortar retail stores are evolving into ‘connected’ stores where the technology used links consumers, data and devices, and bridges the divide between offline and online shopping. Harris defines the term ‘ubiquitous computing’ as computing that is everywhere, which allows a range of devices to operate as a computer, including desktops, laptops phones and tablets; as well as terminals in objects such as a pair of glasses. The author suggests that with the use of ubiquitous computing in stores, fashion brands and businesses can transform their physical spaces, improve efficiency, reduce costs and improve performance. Whilst the author highlights a type of digital technology used with retail stores, the chapter only lightly touches on what digitalisation within retail is, and fails to state what digitalisation within retail is as a whole and highlight how it is being implemented.

19

2.3 The evolution of Digitalisation

The emergence of digitalisation dates back to the 1960s, when the first workable prototype of the Internet was made, with the creation of ARPANET, or the Advanced Research Projects Agency Network. ARPANET used packet switching to allow multiple computers to communicate on a single network, eventually leading to two computers, one located in UCLA and the other in Stanford, to communicate with each other; a “node-to-node� message (Andrews, 2013). This soon led to Tim Berners-Lee’s invention of the internet in 1996, which opened a vast realm of communication and collaborative opportunities, without any geographical or cultural boundaries (Bernes-Lee, 2017). Soon later came the social media giants, Twitter, Instagram, Facebook and Snapchat, which arguably have all played a large part in the evolution of digitalisation.

Before online shopping and e-commerce, physical brick and mortar stores were all shoppers knew. But with the arrival of Omni-channel retailing, first introduced to the marketing world in 2010, consumers were instantly able to access the same, cohesive shopping experience on all platforms, from the traditional brick-and-mortars to the digital world of text message, emails, social media and online shopping (Louie, 2015).

20

In an article published online by ‘The Fashion Retailer’, it is suggested that online shopping is destroying the way retailers are understanding physical shopping in brick and mortar stores; and that many brands are using outdated and out of touch business models which is leading to an increase of closed stores (Segura, 2018).

Thus, the literature further suggests that certain stores are now reinventing the point of sales through digitalisation, such as fashion giant Zara. The brand is “already betting for experience in the digital and Omni-channel era, opening a pop-up store in London to show just how offline and online are integrated.

“The early 2000s saw the increasing adoption of advanced technologies by retailers in both their physical and online stores, to enhance both the store environment and the shopping experience.”

- unknown

RESEARCH RESEARCH GAP GAP

However, there is no clear academic research behind the article to suggest the validity or reliability of the information within the literature. Further primary research should be carried out alongside secondary to strengthen the information presented in the article, and a focus on Zara should be looked at though further secondary research and also through field observations. The brand could be used as a case study further in the report to highlight brands that utilising digitalisation within their stores.

21

2.4 Causes and affect of Digitalisation

Whilst the rise of digitalisation within retail stores can be linked to the increasing creation of innovative technology, a lot of the need for digitalisation and ‘digital connectivity’ is down to consumers; their wants and demands. Society is becoming known as the instant gratification society. Consumers are driving the demand for instant gratification, (Danziger, P. 2017) they are wanting experience and pleasure, and they are wanting it instantaneously. And now, brands and companies are having to do everything they can to provide consumers with those experiences and pleasures in new and innovative ways.

22

Whilst some studies don’t explicitly highlight the age or demographic of ‘consumers’, many, suggest that the key generations causing this consumer shift are Millennials and Generation Z. Gen Z, otherwise known as the ‘digital generation’ or ‘digital natives’ (Dalby, 2018), are known for being the first truly digital generation, that has been raised on the internet and social media, often being stereotyped as ‘tech-addicted’ and anti-social (Toplin, 2019). The result of these generations being so tech-reliant has caused an entirely new challenge for brands and their marketing strategies. The research found that Gen Z has an attention span of only eight seconds, whilst millennials are slightly higher with an attention span of 12 seconds. However, whilst attention spans might be shorter, Gen Z’s ability to hyper-process information is faster than ever, with social platforms claiming that “users only allow 1.2 seconds to disrupt their thumb swiping and capture their attention with brand connect” (Dalby, 2018).

“

A store needs to be broader than just a place of transaction. It needs to be a place where people gather and if you don’t bring in experience and education and entertainment, you’re not going to do it well.

- MACY’S CEO, JEFF GENNETTE

”

This is idea is further expanded on within the ‘State of Fashion 2019’ report by McKinsey & Co., in the ‘now or never’ chapter, it is suggested that the consumer psyche is changing fast, and one reason as to why is down to consumers being inspired through different ways, and turn to a much wider range of inspirations. The report suggests that consumers are now being inspired heavily by social media, celebrities and influencers, as well as ‘spotting attractive looks on the street’. According to a 2017 millennial survey, consumers are more likely to find inspiration from external sources (influences, friends, TV) than directly from the brand or retailer (website, in-store staff). 41 of respondents say they rely on bloggers and influencers, in comparisons with 20% of respondents who put their faith in-store staff (McKinsey & Co. 2019).

RESEARCH GAP

Whilst the pieces of literature explored in this chapter have been adequate in providing a deeper insight into current consumer behaviours, specifically gen z and Millennials, they, however, do lack a clear, direct link to the digitalisation in fashion retail stores. It can be assumed that the rise in advanced technologies can be linked to changing consumer needs, but without solid research, it can only be suggested and not proved. Therefore, when conducting primary research, questionnaires and focus groups focusing on gen z and millennials should be carried out, to gain further insight into their perspectives and opinions surrounding the digitalisation of fashion retail stores; and whether they are directly affecting each other and causing impact.

23

METHO DOLOGY

3.

24

METHO METHO DOLOGY DOLOGY 25

RESEARCH APPROACH AND RATIONALE

3.1 approach & rationale

26

In order to fully define the use of digitalisation within fashion retail stores, and to understand its causes and effects, it was paramount to undertake a mixed-method approach to the research, using a vast range of methods including both primary and secondary research. Secondary research was carried out initially to act as a starting point, identifying any gaps within previous studies, theories, and literature, which would eventually be fulfilled through a broad range of primary research. The mix method approach used, is otherwise known as the concurrent triangulation design method, coined by researcher John Creswell in 1999 (Creswell, 1999).

This method allows both quantitative and qualitative data to be analysed separately and compared (Creswell, 2009), as well as allowing research to be cross-validated, so that the overall strength of the study will be greater than either quantitative or qualitative research (Creswell & Plano Clark, 2007). Qualitative data will provide the research with statistical and factual data whilst qualitative will provide a better understanding of attitudes and behaviours of consumers, as well as opinions towards the digitalisation of fashion retail stores. Data can also be used to predict and forecast how the fashion retail landscape will adapt and develop in the future.

Whilst the mixed method design provides more variety within the research leading to better credibility, it does, however, cause limitations within the research. With multiple types of research to carry out, it means a lot more time is needed to conduct and analyse numerous research data, as well as the costs to execute them; thus acting as a constraint to the study.

The focus of this study will be mainly set within the UK retail fashion sector, as all participants in the research are within the UK demographic.

However, examples from outside the UK fashion sector, particularly the US, have been acknowledged in order to gain a deeper perception, which often influences the UK fashion sector. Other sectors such as lifestyle, beauty and homeware are all often linked in with retail fashion stores which will also be considered when conducting research. All participants will be informed of the research scope before participating, either verbally or within the project information sheet.

3.2 research scope

27

3.3 sample The research samples will mainly focus on the age demographic of 18-30-year-olds. The ages either fit into the Millennial generation or generation Z, which is the terminology that will be used throughout the report. Whilst conducting secondary research, all of the research that was looked at did not have a consistent age bracket for both Millennials or Gen Z, with many varying quite extremely in age. However, from the variety in secondary data is has been decided that for this study, 14-22-yearolds will be referred to as Gen Z and 23-35-year-olds will be referred to as Millennials.

This age demographic has been chosen as a sufficient amount of studies, found from secondary research, suggested that both Gen Z and Millennials have the biggest cause and effect when it comes to digitalisation of fashion retail stores; with one coining Gen Z as the ‘digital generation’ (Dalby, 2018).

28

3.4 objectives matrix RESEARCH

OBJ. 1

OBJ. 2

OBJ. 3

field observations

X

X

X

pilot survey

X

focus group

OBJ. 4

OBJ. 5

X

X

X

X

X X

industry expert interviews

X

X

X

X

secondary research

X

X

X

X

29

3.5 PRIMARY RESEARCH 3.5.1 field observtions To start of the initial primary research, field observations were conducted to gain a deeper understanding of what digitalisation entails and how it is being implemented and used within fashion retail stores. The research was executed in London, England, more specifically around Oxford Street where a high concentration of fashion flagship stores is situated. It was decided that 5 fashion retail stores would be looked at in the study, with some being lower-end stores and other being more luxury. This was done to ensure that results and data collected would be fair and non-biased to one another, as the term ‘fashion retail stores’ that are frequently used throughout the report refers to both lower and higher-end stores.

The stores that were chosen to be focused on were Zara, Topshop, Adidas, Burberry and Selfridges. To make sure all data collection was consistent and each store was being observed fairly every time, before conducting the research a field observation form produced as a standard operating procedure (see Fig. 6). Whilst conducting the research, a brief ethnography was carried out, providing a rich source of visual data (ExperienceResearch.com, 2019).

30

Advantages and Limitations: Whilst this research method was useful in providing a primary insight into the implementation of digitalisation in fashion retail stores, a limitation of the research was that it proved to be extremely timeconsuming which resulted in fewer stores being observed than initially thought. And due to the high volume of staff in the stores, it was not possible to gain ethical approval and consent from every member of staff who was interviewed, which resulted in any data or information they gave having to be anonymised. However, this proved not to be an issue, as the data and information were still able to be used within the report and its validity and reliability were not affected.

The research method used also allowed for certain technology within the retail stores to be used and experienced first hands, such as the VR headsets and multi-sensory technology/anti-gravity treadmills. This strengthened the reliability of the research as data was able to be relayed first hand. Seeing consumers in a normal environment also improved the validity of the research as they are more likely to act realistically and genuinely, providing a naturalistic element to the research (Cherry, 2019).

31

3.5.2 pilot survey An initial pilot survey was conducted to gain a basic understanding into the attitudes, behaviours and opinions of both Gen Z and Millennials, focused around the project question and the objectives. A sample of 10 participants was used, with mixed males and females all of an age range between 20-35; all fitting into either the Gen Z or Millennial demographic. Before doing an actual survey with a larger pool of participants, a pilot was decided to find out whether the sample used and technique are were effective (University of Surrey, 2001) in providing data that would help fulfil the project aim and objectives. Research and data collected provided quantitative data which would prove advantageous in providing statistics for the findings and discussion section of the report, but acknowledging that the results may not be fully reliable due to the small sample size.

After analysing results it was found that whilst a survey would prove useful in providing the study with more quantitative data, it would not provide any more benefits compared to those of a focus group. Therefore, it was decided a focus group would be carried out to gain a greater understanding of the objectives.

Advantages and Limitations: Whilst the pilot survey proved successful in supplying quantitative data to the study, it should be known that the sample used was small in size. This will most definitely affect the validity and reliability of the data which should be taken into account within the study.

32

3.5.3 focus group A focus group can be defined as “a group of individuals selected and assembled by researches to discuss and comment on, from personal experience, the topic that is the subject of the research” (Powell et al, 1996). This research method was used to draw upon respondents’ attitudes, feelings, beliefs, experiences and reactions in a way in which would not be feasible using other methods. These attitudes, feelings and beliefs may be partially independent of a group or its social setting, but are more likely to be revealed via the social gathering and the interaction which being in a focus group entail (Morgan & Kreuger 1993). A group of 6 participants were used in the focus group, all ranging in ages of 20-25, which either fit into the Gen Z and Millennial demographic.

Limitations and advantages: Whilst the focus group provided insights into people’s shared understandings, carrying out the research and analysing it proved to be extremely time-consuming, as all 30 minutes of the focus group monologue had to be transcribed. However, to overcome this time limitation, the transcribing apps “Transcribe” and “Transcriber” were used to speed up the process and allow more time for other parts of the report. However, this resulted in a lack of accuracy of the transcription. If this study was to be carried out again, enough time would need to be allocated specifically for transcribing to allow a manual transcription to ensure the most accuracy possible.

33

3.5.4 industry expert interview Industry expert interviews were used in order to gain professional opinions and attitudes around the project question and aim of the study. The interviews were also used in order to gain a broader perspective into the future landscape of fashion retail stores. Two industry experts were initially planned to be interviewed, Ari Peralta, CEO of multisensory research company Arigami, and a member of the Burberry Press office staff. However, the member of staff from the Burberry press Office was unable to be interviewed.

Prior to the interview, interviewees were sent a project information sheet which outlines all intentions and information needed to complete the interview; as well as a consent form. Interview questions were sent over email which were sent back over completed. All questions were openended and provided qualitative data.

Advantages and Limitations An advantage of using industry expert interviews is that it gives insight into and understanding of future events, such as consumer trends or adoption of developing technologies (Underwood, 2019). However, a limitation of this research method is whilst the participants interviewed are considered to be industry experts, some bias could arise, especially with open-ended questions. The industry experts chosen have been working within the fashion retail field for several years which should be taken into consideration before presuming bias; as their opinions and experiences will most likely be valid and reliable.

34

3.5.5 secondary research In order to organise all the secondary research that was carried out, a literature review was conducted. It was used to summarise all the major literature on the research problem, as well to provide a framework for establishing the importance of the study (Creswell, 2009). Furthermore, it proved useful in outlining gaps within the research which acted as a starting point for the aims of the primary research.

35

4. findings and discussion Following the completion of the literature review, prominent gaps in the research were discovered; and field observations, industry expert interviews, a pilot survey, and a focus group were utilised to fulfil these. By conducting the primary research, it allowed for deeper, organic insights into the perceptions and attitudes towards the implementation of digitalisation into fashion retail stores; as well as its causes & effects and it’s future. These insights will conceivably highlight potential business plans which will be outlined in the second report.

36

4.1 What does “digitalisation” with fashion retail stores mean?

Whilst conducting both primary and secondary research, it was paramount that in order for readers to fully understand the term ‘digitalisation’ of fashion retail stores, a definition that clearly explained all elements needed to be composed.

In this report, the term ’digitalisation’ refers broadly to the digital technology used within fashion retail stores. This includes the likes of virtual reality, augmented reality, artificial intelligence, RFID mirrors, multi-sensory technology and personalisation services. However, whilst the use of digital technology within retail stores has increased over the years, with the likes of self-service tills and virtual mirrors, the incorporation of ‘digitalisation’ into these stores doesn’t solely consist of technology alone. It is more specifically the blend of both online and offline, digital and physical features that work cohesively together to produce an immersive, exciting experience for consumers. It is more than just omnichannel retailing, and more so an elevated and modern way for consumers to shop. However, as found in the literature review, there is a lack of UK based fashion stores that would be classed as ‘digitalised’. This chapter will discuss the primary research findings based around the definition of digitalisation, and how it is being implemented within fashion retail stores.

What in stores is being digitalised / what is changing? How is it being implemented?

Primary research collects through an industry expert interview with Ari Peralta (See appendix page) highlighted a further insight into the definition and meaning of what digitalisation as a whole is. In response to the second question: “What comes to mind when you see the word digitalisation?” he responded with an opposing statement, stating “I know the term as digitisation. To us this refers to the markets pivotal shift from physical consumption to digital consumption…regardless of canvas or industry, brands are digesting their operations, services and even products.”

37

This could suggest the term ‘digitalisation’ isn’t as well known or even understood.

However, further research on the difference between the two terms stated that simply, digitisation is the process of converting information from a physical format into a digital one, and digitalisation is the process of leveraging digitisation to improve business processed. While digitalisation carries implicit positive connotations, digitisation does not. Digitalisation is an act that may enable digitalisation, but the latter will always require the former (Burkett, 2017). This could suggest a reason as to why there is a paucity of fashion retail stores implementing ‘digitalisation’ and digital technology into their stores; they are not aware of the term being used, and are not initially digitising their operations, services and products which results in stores not implementing this ‘digitalisation’.

It could be assumed that many fashion brands simply do not have the knowledge or insights on how to successfully implement digital technology within their stores.

From the focus group and pilot survey, it became clear that whilst participants were either not explicitly aware of the term ‘digitalisation’ or had a basic understanding, they were all fully aware of the digital technology that falls under the definition when asked. In the pilot survey, 40% of participants had used selfservice tills within fashion retail stores, 25% had used augmented reality as well as 25% who had experienced multi-sensory technology within a fashion store.

Throughout the focus group, it became clear that it’s not offline vs online, and it’s not a matter of choosing one or the other. Both online and offline retail is being used simultaneously by consumers, and Millennials and Gen Z, in particular, are using both to fully maximise their shopping experience, getting the best products at the best prices. This evidence further supports the idea that online and offline can and will co-exist, and with more brands implementing digital technology into their physical stores, they can also utilise the needs of millennials and Gen Z who want both online and offline shopping experiences, simultaneously.

Within the next chapter, these brands and companies that have succeeded in combining digital and online technology into their stores will be discussed, as well as those brands that have tried but failed.

38

It can be suggested that whilst some participants are aware, as UK demographic they are still not fully exposed to the full extent of digitalisation of fashion retail stores, potentially due to the lack of them within the UK. As found from the research, internationally known stores such as Adidas have successfully implemented digital technology into their flagships store in London, England (see appendix page for images). When conducting field observations, it was clear that within the London flagship store, AI, AR, MST, RFID technology virtual mirrors and a personalisation service were featured throughout the four-storey store. Within the first floor of the store, a permanent “immersive platform” was present, which consisted of an interactive floor made up of hundreds of iPads, which acted as a promotions space for the brand to promote a new product/collaboration / experience. During the January period, the space was transformed into an outof-space themed area to promote Adidas’ new ‘Ultraboost 20.’ shoe; which is in the process of being test run by NASA astronauts to see if they are suitable for ‘space use’. An employee from the store stated that having this immersive experience within the store creates more excitement around the product/s, and has successfully increased sales of the shoes.

On a global scale, digital technology within fashion retail is increasing, but from the research, it can be thought that the UK is yet to catch up. This suggests that in regards to Gartner’s Hype Cycle, it could be argued/thought that the concept of digitalisation in fashion retail stores is currently in the ‘technology trigger’ stage (Gartner, 1995). Gartner stated that Trigger is the first breakthrough event that starts the interest in the product or innovation. Early proof-of-concept stories and media interest trigger significant publicity, and often no usable products exist and commercial viability is unproven (Gartner, 2020). Whilst it can be agreed that the digitalisation of fashion retail stores is a relatively new concept, it can be argued that it potentially a bit further up the line as there is a vast range of digital technology products that exist and are being implemented within stores. It can be suggested that digitalisation is evolving and is growing with more advanced technologies and implementations, and will eventually reach a peak of inflated exceptions within the near future (Gartner, 2020).

39

4.2 Online vs offline: can the two co-exist?

This chapter will look into one of the significant causes of digitalisation of fashion retail stores; the increase of online shopping and e-commerce. The rise of online shopping and a shift in how consumers spend their time (Butler, 2019), as well as their changing attitudes, have hit fashion retailers hard, and have caused an increase of brick and mortar store closures over the past decade (Clark, 2019).

Primary research from the pilot survey showed that on average, 45% of participants would go into a physical store to browse or purchase a garment/s once a week, compared to the 36% of participants who said they go online to browse or purchase garment/s every day. This was investigated further in the focus group, where participants were asked if they had to choose to either shop online or in-store forever, which one would they pick (fashion retail-specific). Participant 4, Laura Main said “I like shopping and seeing stuff physically as it inspires me more. You see products put together as outfits which is just more inspiring than seeing it online”. Participant 3 said, “I like the user experience you get in-store compared to online … it’s more personal and I like having someone there to help find my size or something when I need it”.

However, participant 1 stated they would choose online. “Online. If I need something quickly I can get it next day sort of thing, and stuff is easier to find online. With instore, you’ve got to leave the house and go and do it… it’s easier, there is more of a range and it’s more convenient … but if I’m going to spend a lot of money on a suit I need to go in to store and be measured and have it fitted properly … so a bit of both”.

Participant 1 also stated “it’s easier to look around online and find the best prices for the product you are wanting to buy … then you can go into the store and try for size and then buy, knowing you have gotten the best deal”.

40

Whilst some suggest online to be easier as garments/products can be viewed and purchased instantly from the comfort of their own home, they also acknowledge that in terms of finding the right fit and size, this could be an issue with online only.

Throughout the focus group, it became clear that it’s not offline vs online, and it’s not a matter of choosing one or the other.

Both online and offline retail is being used simultaneously by consumers, and Millennials and Gen Z, in particular, are using both to fully maximise their shopping experience, getting the best products at the best prices. This evidence further supports the idea that online and offline can and will co-exist, and with more brands implementing digital technology into their physical stores, they can also utilise the needs of millennials and Gen Z who want both online and offline shopping experiences, simultaneously.

Within the next chapter, these brands and companies that have succeeded in combining digital and online technology into their stores will be discussed, as well as those brands that have tried but failed.

41

4.3 Fix or facade?

This chapter will explore the advantages and limitations of the digitalisation of fashion retail stores, and the digital technology used. The chapter will also aim to answer the question of whether the technology used is simply a gimmick; a facade, or is it a longterm fix for physical retailers; providing effective benefits for both consumers and retailers.

Furthermore, this chapter will also act as a case study of the fashion brand Burberry, and more specifically their London Flagship store. The store will be used as an example of a brand that attempted to implement digital technology into their stores but failed, due to lack of usage and customer satisfaction.

In order to fully outline the main advantages and limitations of using digital technology within fashion retail stores, a SWOT analysis was conducted.

Before conducting the field observations, secondary research was carried out to find out what stores are considered to be implementing digital technology. Burberry was found to be a key player within the fashion sector, involving digital technology not only within its marketing, but also in its stores, through its app and even though their products (Marr, 2017). Patel (2013) stated that Burberry (were) leading the way with in-store technology and setting the bar high for other retailers. Whilst conducting the primary research and completing the field observation, a store employee was interviewed to gain an insight into where / and what technology was being used within the store. The employee explained that when the store first opened in 2012 (Alexander, 2012), it was considered to be ahead of it time, with the likes of RFID chip technology mirrors and catwalk live streams, as well as digital rain showers and sophisticated sound systems (Alexander, 2012). However, since the opening, the RFID mirrors, one of the main digital touchpoint within the store were removed years ago, due to them being obsolete. The employee explained that whilst customers would interact with the technology, many were often left disappointed with the end results; feeling they were more of a gimmick rather than a benefit to the store. Upon trying an item on, the changing room mirrors would flip to show images of the specific piece on the catwalk or film (Alexander, 2012), but would fail to provide any real benefits to consumers.

42

Further information was given as to why the technology wasn’t considered useful, and it was highlighted that it was due to consumers buying a luxury good/s wanting more personalised, human interactions as opposed to technological interactions.

The employee went on to explain that is their opinion, customers that are spending a significant amount of money within the store don’t want gimmicks and technology assisting them, and that instead, customers are wanting to build up a rapport with staff and build up a sense of trust; as buying products from Burberry with the high price points can be seen as a large investment.

This qualitative data can be further supported by data from the focus group, where participants 5 expressed “Millennials and Gen Z especially prefer experiences over than material things”. When participants were asked if they would normally choose to pay at a retail staff facing till or at a self-checkout/express till (both fashion retailspecific), participant 4 stated: with staff facing tills you get better user experience. I enjoy the human interaction, and most of the time its always quicker as they can pack and fold everything for you…saves you having to do it yourself. If you’re spending a lot of money as well you expect good service and for someone to do and fold everything nicely for you”.

Participant 2, Ellie Nugent-Spick suggested that whilst self-service tills may be convenient, “if you think about all the adds on the have at some shops at their tills… you could quite easily double your payment from just that…and the staff up-selling products at the tills oh look at this offer we have on today sort of thing”.

The evidence furthermore shows and reinforces that whilst as a generation, Gen Z are known to be ‘digital natives’ (Dalby, 2018), they can still value the likes of experiences and human interaction, as opposed to digital interactions and materialistic items.

43

SWOT Strengths: - It is convenient for shoppers when it comes to the likes of express tills, personalisation services etc. It feeds into the needs of their ‘instant gratification’ and it saves them having to do things themselves when digital technology can do it for them.

- The use of digital technology within fashion retail stores creates a sense of excitement around the brand and the products within the store. It is a different way to shop which allows consumers to be fully immersed inside the brand’s values and beliefs; allowing them to make a deeper connection with the brand.

Weaknesses: - can be expensive to implement into stores, especially independent fashion retailers.

- for more sustainably conscious fashion brands, it may be again their brand identity and personality to implement digital technology into their stores and overall brand.

Whilst it may work for some brands, it may not work for others which I’m comparison could cause a lack of exciting customer experiences and therefore sales.

Opportunities : - As previously outlined within the main body, it is clear that the digitalisation of fashion retail stores is relatively new within the sector, and it is yet to experience its peak of inflated expectations (Gartner, 2020). It is unsure what the exact future of fashion retail stores will entail but with the inevitable rise of technology, it will be expected for fashion retail spaces to transform into fully immersive shopping experiences that will provide both consumers and retail staff long-lasting benefits.

Threats: - a cause in consumer shifts could result in consumer no longer being interested in having digitally enhanced shopping experiences - as well as the threat of potential change consumer shifts, the brand also face an initial rejection of digital technology being implemented in stores. Attempting change is always a risk financially, but if implementation instantly fails and is rejected by consumers, it could lead to a loss in sales and a waste of time and investment.

44

4.4 The instant gratification society Consumers are driving the demand for instant gratification, so much so that we are becoming an instant gratification society (Danziger, 2017). As found from primary research, it is clear that Millennials and Gen Z are very much aware of their wants, needs and demands as consumers. When participants were asking if they were aware of the stereotypes Millennials and Gen Z have in the focus group, all participants answered similar; with an array of negative connotations about the two generations: Lazy, entitled, extra, materialistic, snowflake, avocado toast.

It could be argued that it’s not technology that is directly causing a consumer shift, and it’s not the consumer causing a direct increase in digital technology either. Both constantly affect each other, which should be acknowledged when predicting the future landscape of fashion retail stores.

“Taking the time to map the end-to-end customer journey is an essential first step in understanding how to turn consumers’ digital dependence from a risk to an opportunity” A further insight provided by Ari Peralta during primary research was the idea that brands are now turning to the use of innovative, digital technology within retail stores due to desperation. He recognises that retail is undergoing a seismic shift on many fronts, and in particular with the rise in digital consumption and the mounting pressure for sustainability; brands are being forced to change due to consumers. It is clear that today’s retail market is simply more difficult, more expensive and riskier; but reducing any of these barriers enables retailers to be more efficient, less reactive and more agile (Peralta, 2020).

45

4.5 Future landscape Primary research in the form of an industry expert interview with Ari Peralta gave further insight into the future of physical fashion retail stores. In response to the last question of the interview: “For us, the future of the physical store is the content itself. We believe that digital consumption of goods and services will continue to rise and transform retail, regardless of the sector…imagine being able to download the latest designer tote bag design onto a pre-existing canvas.” He went onto further explain how as we continue to pursue sensory technology, other technologies are advancing such as quantum computing and programmable matter, which will undoubtedly transform out generations consumption and manufacturing for the better.

A key insight taken from the interview would be a simple idea that as technology grows, so will not only the fashion sector but also every other sector using and implementing digital technology and ‘digitalisation’.

Along with this, changing consumer shifts will also undoubtedly have an effect on what fashion retail stores and retail as a whole will look like in the foreseeable future.

Further secondary research on the topic recognised that customer expectations are always rising, and often companies struggle to keep up with the change. But by taking the time to invest in new technology and capabilities, companies can rapidly create valuable, new customer experiences, manage them cost-effectively and continue to evolve them to keep pace with the rapidly changing world (McKinsey & Co., 2019).

From this, it is clear companies now more than ever need to keep an open mind into what the future of fashion retail stores will look like, accepting that change in consumer behaviour is inevitable; and being ready to adapt to this as and when it is needed.

46

5. PEST Analysis A PEST analysis was conducted to highlight external factors that may have affected the digitalisation of fashion retail stores. This will act as a catalyst for the conclusion and future recommendations.

P - the recent succession of Brexit naturally will have an impact on the fashion retail industry, just like every other industry. Whilst this change may not directly impact the specific use of digital technology within fashion retail stores, it is still thought that where existing trade deals disappear, and designers, retailers and manufacturers would have to pay to trade with the EU — would mean clothing and footwear tariffs of about 11 per cent, or just over £1 billion more each year (Tobin, 2019).

E - Consumers’ buying power has increased which naturally benefits the fashion sector.

However, the fashion industry adds to the economy too since it is one of the biggest employers.

In this way, the fashion industry affects and is affected by economic factors. The level of competition in the industry has also affected individual brands and their sales and profits (Pratap, 2018).

S -A social external factor that could affect the implementation of digital technology is the idea of social acceptance. Will the ever-changing consumer shifts it is hard to determine whether the digitalisation of fashion retina stores will ever fuller be socially accepted into society.

T - With technology itself being the main focus of the report, it is only natural that the development of technology will most definitely have an effect on the digitalisation of fashion retail stores. The inevitable increase in innovative, digital technology in the foreseeable future is most likely to benefit the fashion retail sector. However, with the increase of intelligence in robotic technology, it is difficult to assume that all outcomes will be positive. If robots and robotic technology were to be implemented within fashion retail stores, staff will no longer be needed resulting in a loss of jobs across the globe.

47

6. Critical reflection Whilst investigating the digitalisation of fashion retail stores, the research aimed to understand how digital technology is used within retail stores; to understand its effects and limitations, and whether it is beneficial or simply a gimmick. On reflection of the primary and secondary research that was conducted, it would have been beneficial if further industry expert interview were carried out, potentially 5 or 6 to gain a broader perceptive on the topic from more than one expert. These could have then been cross-referenced with each other and compared in order to gain the deepest understanding possible. It would have also been beneficial if in-store staff interviews were full conducted during the field observations, as well as customer interviews and a full ethnography investigation of those customers in the chosen stores. Again, this would have deepened the understanding of digitalisation within fashion retail stores, and given more research into consumer behaviour. Furthermore, research surrounds the use of multi-sensory technology could of been carried out to see how digital technology can be implemented within fashion retail stores more discreetly.

48

7. Key Insights Throughout the whole investigation, and though the analysis of both primary and secondary research, key insights can be highlighted from the report to build further into future recommendations. It was found that there are three clear insights developed from the findings.

1. Digitalisation within fashion retail stores goes does not just apply to the products being sold. Digitalisation also applies to how the product is sold (e.g staff serving till or self-service tills) and the setting the store is, as well as the ‘actors’ selling the products and / or the experience.

2. Whilst it may be possible to predict changing consumer shifts within the near future, it can never be certain that the likes of digitalisation will ever be fully implemented and socially accepted within society.

3. Digitalisation is not just fashion retail store specific. I should be used as a global business plan to implement digital technology into other sectors; it should not be limited to just the fashion and lifestyle industry.

49

8. Recommendations With many companies and brands within the fashion sector not having any sort of digital technology within stores, it is clear there is a gap in the market for digitalisation of fashion retail stores to be commercialised and used even within the high-street. Business plans and models could be made and put in place for brands to start implementing into their business plans for the digitalisation of fashion retail stores to be a thing of the near future. Multi-sensory technology is also something to explore and potentially implemented within the future.

Before these business plans start to take place or even begin being implemented, further primary research into consumer habits as well as generational habits needs to be conducted in order to reduce as much risk as possible. Potentially significant external factors that may affect consumer shifts will need to be considered when conducting further research.

50

9. Conclusions In summary, this body of research has investigated digitalisation of fashion retail stores, and has explored how it will be impacted within the future.

The first chapter of the main body pinpointed the main technologies that fit under the ‘digitalisation’ and digital technology umbrella, as well as highlighting key Millennial and Gen Z attitudes and opinions surrounding the meaning of the phrase. The second chapter focused on the debate of online vs offline retail, but it was concluded that in fact, the two can and will coexist in order to provide consumers with the best possible shopping experience. Chapter 3 focused on Burberry as a case study, being a brand that tried and ultimately failed in implementing digital technology into their London Flagship store. Benefits and limitations of using digital technology within retail stores were also discussed and evaluated in the form of a SWOT analysis. In the remaining chapters, the effects and causes of digitalisation were discussed, focusing on the link between changing consumer shifts and the increase in technology.

In answer to the aim of the report “to investigate how digital technology is used within retail stores; to understand its effects and limitations, and whether it is beneficial or simply a gimmick” it can be suggested that the benefits and limitations of digitalisation within fashion retail stores are solely down to how it is being implemented by retailers themselves. Whilst some brand, such as Burberry have tried and failed, resulting in a gimmick, with the right insights and confidence all fashion retail stores as well know could be fully digitalised within the near future.

51