“WHY VIRTUAL IS THE FASHION FUTURE ANDHOW VIRTUALISATION TECHNOLOGY INTEGRATES WITH THE FASHION INDUSTRY? VIR- ” TUAL

FASH- ION CONTENT

EXECUTIVE SUMMARY 04

04 INTRODUCTION 06 08 METHODOLOGY

PART 01: THE DEFINITION OF DIGITAL 10 FASHION

PART 02: CONTEXTS 14

PART 03: CURRENT LANDSCAPE OF VIRTUALISATION FASHION 26

PART 04: CHALLENGES 44

PART 05: FUTURE STRATEGY 46

CONCLUSION 54

2 3 EXECUTIVE SUMMARY

The main purpose of this report is to response to these contexts. analyse the contextual drivers, the different performance of new virtualisation techs (3D Part 3 and AR) in the fashion industry, and how It shows the current landscape of 3D and virtualisation integrates with and augmented reality technology using in younger consumers from marketing to supply the industry, and how fashion brands take chain. advantages of them to respond to this new trend. There are some case studies of The Part 1 Fabricant, Carlings, and so on as In this part, it explains what digital fashion the evidences to support this part, combining means for the future fashion industry. The with the their SWOT analysis. rise of new digital technologies leads to the industry 4.0, which is a transformation process Part 4 of production. The utilisation of virtualisation Despite the fact that virtualisation fashion has technologies can gather and analyse data lots of advantages, there are some challenges or consumer feedbacks to set up relevant as well. It involves in costly investment and production strategy. It is no longer stop at limitation of designers 3D techniques skills. e-commerce, it becomes more virtual. Also, there is a comprehensive SWOT analysis Part 5 of virtualisation techs for fashion brands. It Eventually, four future strategies for brands, supports that virtualisation technologies are retailers and designers are come up with, beneficial for the future fashion industry. based on the previous four parts’ analysis. In this part, it explains workflows of gamification Part 2 fashion, digital , 3D designs in supply Analysis of contexts of virtualisation chain and train the designers, including each technologies feasibility is this part’s main strategies’ objective evaluation. theme. Divided into three parts, it includes Macro environment, consumers psychological contexts and their latest interests. In the Macro analysis, it explains the impacts of policy, economy, social cultures, technologies, environment and Covid-19 pandemic. Mostly, millennials and Gen Z are the main research objects and target consumers.For consumers psychology, it is analysed by the reworked Maslow’s Hierarchy of Needs theory for their needs of digitalisation, following trends, emotional connections, self-expression and sustainability. Thus, embracing virtualisation technologies is the way fashion brands in

Figure 1: Courtesy of Getty Images

4 5 t the digital age, the lines between virtuality and reality become increasingly difficult to be distinguished (Langton, 2019). As the quality of technology has developed, digital and mixed reality fashion has taken advantages Aof it (Drinkwater, 2019), which have contributed to experiences, virtual shopping and games (Love Magazine, 2019).

When it comes to gaming, it is the next foremost thing in fashion since it has become an indispensable part of young generation and its potential of storytelling. Therefore, it is vital to integrate fashion with gaming and digital world (Owen, 2019). Players have been investing money on digital equipments such as apparel, weapons, beauty, accessories and decorations.

Inspired by gamings, digital clothing has already been proved that it has the much more potential market in the future because of catering to the sustainability issue and young generation’s demands (Mcdowell, 2019). In terms of sustainability, it INTRO- is still a hot issue in the fashion industry for the reason that it is one of the most polluting industry with carbon emission, waste of water, and bury clothing in the landfill (Johnsen, 2020). By coincidence, digital fashion corresponds with the need of sustainability. For environmental-minded young consumers , they have changed their shopping attitudes and behaviours for prefer sustainability- focused brands and seek new ways to maintain balance between fashion and DUCTI- sustainability. In addition, young generation immerses in the virtual world of . Owing to express themselves and document their life, most young generation purposely post photos about their daily outfits styles and new fashion items they bought to manage their social media account homepages. Actually, fashion ON has shifted from streets to social media and those platforms are more likely to transform into virtual runway (Grubak, 2018). Eager for newness products that convey their personality and continue buying new clothes make them feel stressed (D’Arpizio et al., 2018; Hanbury, 2019). Under this circumstance, it has caused -inspired overconsumption. After taking photos, many items lie in their endless wardrobes or just are worn several times. Thus, digital fashion is making sense, and it is tend to expand to a more virtual area.

Could virtualisation technologies such as 3D and AR address these issues?

6 7 METHODOLOGY

The aims of research were examining the context of fashion, exploring the future capacity of virtualisation fashion, discussing how fashion brands respond to the virtualisation technologies currently, and collecting relevant datas. On the purpose of analysing its potential, the author searched fashion websites with systematic literature reviews, academic journals and books. However, the report lacks primary research because of Covid-19.

Firstly, some keywords such as 3D, augmented reality, virtual fashion, digital fashion, game, esports, millennials and Gen Z were typed into search area. The relevant results mostly came out from business of fashion, Ls:n global, Vogue Business, WWD and McKinsey. At this stage, the whole report structure was confirmed.

Secondly, the ideas were complemented by academic journals. The journals were searched in the Science Direct, ResearchGate and WARC, including the keywords : consumer psychological, circular fashion, sustainability, consumer behaviours and virtualisation.

Next, it turned to search database ( Mintel, Euromonitor, Statista) for the purpose of supporting ideas. They evidences that virtual fashion has huge potential and consumers tend to engage in it.

Furthermore, the negative arguments were searched and used for debating. The dark side of virtualisation should be considered and evaluated.

Additionally, there are some case studies as evidences for supporting report ideas. For example, Louis Vuitton collaborated with League of Legends, Burberry launched its own game called B Bounce, Carlings sold digital clothing, and the Fabricant created 3D animation digital clothing.

Figure 2: courtesy of @Johwska, 2020 8 9 PART 01 Digital and technology innovations have shifted the entire fashion industry. The development of e- commerce brings the distribution channels from offline to online. The Fashion and Apparel industry FuturE Report estimates that fashion e- commerce worldwide revenue will continue growing to $712.9 Figure 3: Digital Fashion Concept Image for an FASION- billion by 2022 (Statista, 2019). Unreleased Game, photo from IVA, 2019 Moreover, with the help of social media, brands expand to omni- VIRTUAL channel marketing. Not only can What is virtual fashion? brands marketing through emails, advertising and in-store posters, but FASHION also the influencer marketing and product-centric contents on social media platforms. Beyond that, social Virtual fashion is the evolution of using new virtualisation technologies media like Instagram also integrates in the fashion industry. It changes the relationship between virtual the direct-to-consumers retail and physical products, as well as experiences (Salamone, 2019). function achieving multi-channel e- Relying on the 3D, augmented reality, virtual reality and other commerce. As more brands shift to technological materials, brands launch the virtual clothing, provide digital-centric business models, the AR try-on service, hold virtual runway, create virtual influencers, and bound between reality and digital release their game programs. It’s a new way for brands to interact world is more blurry, and young with consumers, in response of younger generations’ demands. consumers are more long for digital things. In consequence, the current digital application is far from enough. The fashion industry is expected to embrace advanced digital transformation - virtual fashion.

10 11 PART 01

Strengths Weaknesses

• offer a more sustainable alternative to the • Designers are traditionally not trained in 3D fashion industry modelling • relatively address the overconsumption and • Most 3D fashion visualisations are still overproduction relatively crude • Increase online engagement • From design to modelling in the softwares, • Offer an interesting way to experience and it is an elaborate process for designers and interact with consumers brands • Shorten production period • High investment and costs • Improve supply chain efficiency • Only can exist in the . Can not wear • SWOT Satisfy younger generation’ s demands for them out uniqueness and newness • Creating 3D clothing animation is time- • Personalised clothing. consuming and complicated • Improve loyalty • Virtual avatars lack of real experiences and • 3D images look more real and clear than 2D emotional connections images • Offer immersive customer-first experience • A new way to expand direct-to-consumer promotion, selling and showcase • Bring offline experience to online ANALYSIS

Opportunities threats

• Create brands’ own virtual avatars • Brick-and-mortar transformation like • Collaboration between fashion brands and interaction installations, smart fitting room game companies with RFID mirror and high-quality service • More 3D modelling softwares are invented • Partly consumers still want to touch and try and other new technology development the real products • Fashion schools set 3D and AR learning • Consumers negative attitudes towards as the part of fashion designers’ courses to digital clothing and feel confused about how equip them with modelling skills it works. • With the development of technology, the cost • Unclear legal landscape for virtual influencers of 3D digital design will be declined.

12 13 CIRCULAR ECONOMY PART Today, circular economy plays a significant role in most industry, including the fashion. It is able to reduce the 02 costs and decelerate the replacement speeds of products. According to a study by McKinsey, circular economy could increase 3 percent of Europe’s resource productivity by 2030, saving cost 600 billion Euros a year and generating more than 1.8 trillion Euros in other economic values (McKinsey, 2017). Aiming to create a closed-loop, it extends the lifespans of products and recycles used products without waste and then turns them to a new source of resources (Gardetti, 2018). Apart from recycling, virtualising services and applying new technologies like 3D in the process of CONTEXT production are also the reverse treatment technology to achieve closed-loop (McKinsey, 2017).

14 15 social media culture the rise of technology part 02 part 02

In terms of the social impacts, it could be referred to the Instagram culture which has impact on consumer shopping behaviours and purchase decisions (Salpini, 2017). As a visually led social media community, it encourages users to express themselves creatively and “Even if you don’t like the positively through sharing images about their fashion outfits, food and traveling (Castellano, 2019). In order idea: Technology rules the to show their personalised identities, nearly 10 percent world because it changed the of surveyed people have spent money on keeping buying new to wear once, refer to a survey world,”——Karl Lagerfeld, by Barclaycard (VOA, 2019). Moreover, 41 percent 2016 of 19 to 25 years old people won’t rewear an outfit to go out (Li, 2020). It means that social media shortens the lifespan of trends and fashion products (Hewitson, 2020). In other words, following the fashion rules of no duplicating an outfit results in overconsumption (Li, The fashion industry always globally (D’Arpizio et al., 2020). 2020). involves in the technology Apart from disrupting retail, it (Genova & Moriwaki, 2016). also improves production, the The development of technology use of sustainability materials changes the fashion industry and and the interaction methods consumer purchase behaviours. between brands and consumers. Utilising data analytics, artificial Technological innovation intelligence and virtualisation explores more possibilities in technology such as augmented the fashion, which can provide reality and 3D, it contributes to more engaging and convenient transform the retail modes from shopping experiences. Now, physical to the e-commerce, it could be argued that the and the fashion business virtualisation is the next (Rahman, 2019). Today, two- possibility for the fashion thirds of millennials are more industry (Rahman, 2019). likely to shop online rather than purchase in a physical store (Meyer, 2020). 20 percent to 25 Figure 4: Is the era of the influencer over, or just evolving? photo from Dazed. percent of luxury transactions completed via online platforms “Social media’s intersection with fashion, I would argue, is less about the clothing than the person documenting the moment.”——Laird Borrelli-Persson, 2020

16 17 fIGURE 4:

part 02 COVID-19

When it comes to the sustainability, it is seems 140 million pounds worth of clothing to be a key word of business strategies for buries into landfill in the UK (Murray, all industries. As global temperature rises, 2020). People desire for newness and sea level rise and severe water pollution, trendy clothing so they constantly the majority of consumers buying new items to keep up realise the significance of A with trends. Moreover, sustainability issue. Thus, R N impulsive purchase “circular fashion” was A D behaviour and come up in 2014, unclear products which is inspired by L i n f o r m a t i o n circular economy U increase and sustainable S return rate, development which C (Muthu, 2019). U affects It is a process original life Figure 5: Illustration by Callum Abbott of reducing cycle of the R

waste in S products. I

Due to the Covid-19 pandemic, spending will be decreased design, source,

the vulnerable fashion industry by 50 percent across nearly produce, supply T

and retail. C is hit hard from manufacture to all categories (McKinsey, A

selling, with the global fashion 2020). And the decreased

Apparently, Under this industry’s revenues will tighten transportation lead to disrupt I

by 27 to 30 percent in 2020 the supply of materials, which overproduction and N circumstances,

overconsumption high-tech is more A

year-on-year (Amed & Berg, intensifies the situation of E B 2020). Aiming to slow the long production period. Since are the serious issue L likely to achieve spread of pandemic, most the pandemic, most activities in the fashion industry for circular fashion by countries have implemented have shifted to the digital the reason that solving the problems lockdown and travel restriction world because of unlimited develops rapidly and trends of material waste in design, policy. Fashion brands halted spaces and consumers’ more change fast (Muthu, 2019). There were high return rate and purchase manufacturing and closed the online time. Experiencing the 114 billion items of apparel sold in the products with low utilisation. factories, in order to protect Covid-19, fashion brands are global market in 2019, but approximately their workers (Rodriguez, more aware of the importance 2020). With the income of regarding digital strategy as reduced and unemployment the centre of business model rose, consumers are (Achille & Zipser, 2020). significantly spending less. Figure 6: Circular Fashion loop, graphic from MUD JEANS It is estimated that overall

18 19 part 02

Figure 7: Reworked Maslow’s Hierarchy of Needs consumer 01 Sustainability 02 self-expression

03 emotional connection psycholo- 04 Digital-driven and trend-driven 05 Prices and access

With Millennials and Gen Z dominating the consumer groups, their shopping habits and attitudes form different consumer trends that reshape the fashion industry gical (D’Arpizio et al, 2020). The chart from the Statista shows that millennials and Gen Z share of global luxury sales will grow by 13 percent to 45 percent in 2025 (O’Connell, 2020). Owing to considerable spending power, brands are supposed to cater to these younger consumers’ consuming trends. In response, brands rethink their analysis business models to accelerate digital “Companies must offerings. simultaneously Based on consumers’ motivations and monitor consumer needs, the Maslow’s Hierarchy of Needs theory divides them into five different levels trends, adapt their (Appendix 1). However, the motivations and needs of younger generations are business models.” shifted when buy products so there is a new hierarchy (Figure 7). It is analysed ——McKinsey, 2020 in the following contents combing with current consumers attitudes and shopping behaviours.

20 21 part 02

o4 o1 o2 o3 Digital-driven Sustainability Value emotional & self-expression connection Trend-driven

Paying close attention to social and environmental For younger generation, Gen Z in particular, At this stages, consumers are more likely to pay Followed by the price and access needs, digital- issues, younger consumers have eco-mind and they value self-expression as the core. Showing for the interaction, experiences and emotional driven need becomes one of the basic needs. change their shopping behaviours to correspond their individual personalities becomes a driver of connection rather than product itself. And it is also Millennials grew up with smart mobile devices with their beliefs and values.They tend to consumption. The great majority of millennails an approach for brands to deliver their values to access to various information. A research that select brands that are aligned with their values and Gen Z not only desire for personalised consumers (D’Arpizio et al, 2020). They tend to compares these two generations demonstrates like integrating sustainability value into products but also are willing to pay higher price choose brands that cater to their needs, listen that 22 percent of them focus on their phones products and services (Amed, et al, 2019). As for products that can manifest their personalities to them, and understand them. They want to be for six hours or more per day. In comparison, a part of values, sustainability is a dominating (Francis & Hoefel, 2018). As social media like the audiences and have fun on the process of as the digital natives, there are more Gen motivation for purchasing decisions continuously. Instagram involves in the essential part of access to the products. When consumers follow Z who immerse in their phones, with a third In the past decade, online searches refer to younger generation’s lives , more people have brands’ instagram, receive personalised emails of respondents (Smith & Yamakawa, 2020). having grown by 662 percent addicted to manage their personal images, with and try the immersive in-store installation, they Shopping online and communicating with others (Houghton & Buller, 2020). unique outfits to stand out from the crowd. feel connected and engaged. Additionally, brands online are a part of their normal lives. With the can receive feedback from consumers directly. popularity of the Internet digital technology, most However, the reason why sustainability need According to the new Maslow’s Hierarchy of Experiences and interactions are driven by the brands have reoriented their business models at the highest stage as the advanced need is Needs theory, self-expression belongs to the technology (Lieberman, 2019). It creates more to be more digital. This is why consumers no that some of younger consumers’ attitudes are esteem needs, a kind of psychological needs. It authentic experiences and interactions between longer regard digitalisation as the advanced contradictory. They prefer sustainability but is because they enjoy the process of receiving consumers and brands by utilising augmented need currently. Particularly, after this coronavirus sometimes are distracted by other low-ranking likes and comments for their images on social reality, virtual reality, artificial intelligence and pandemic, consumers are more aware of total factors which affect their decision-making. For media. From a research conducted by McKinsey, other tech. digitalisation is the foundation of their lives since example, they are incline to buy sustainable and there are 36 percent of Gen Z respondents willing they only can rely on the internet. As a result, ethical products, but only a few are more likely to to manage their online images carefully, while 31 roughly half of consumers have increased online pay more for them (Smith & Yamakawa, 2020). percent of millennials (Smith & Yamakawa, 2020). “The products, streaming since the outbreak of the Covid-19, and Most them don’t see and access to the polluted It means that their fashion styles and aesthetic online penetration has grown globally. What’s situation so it is difficult for them to maintain appreciations are acknowledged by others, experiences and ideas more, consumers are more likely to purchase sustainable shopping behaviours (Stott, 2018). which brings them satisfaction and respect. that they deliver will and use digital products, services and channels after pandemic (McKinsey, 2020). need to flow together to “The emphasis has gone from appeal to the emotions Young people demand freshness and newness. For Gen Z, they prefer keeping eyes on trends, in quality and craftsmanship into the of younger customers, uniqueness of the product. The order to satisfy their style demands (Owen, 2019). who are diverse, global After that, they purchase the brand products that younger generation are looking for are on trend, in particular Asian Gen Z (Smith something that stands out and makes and opinionated. ” & Yamakawa, 2020). While Millennials are three them special rather than necessarily ——Federica Levato, a times more driven by latest trends than older an amazing finish that you would find generations(Deloitte, no date). The fast-growing with some traditional brands.”—— Bain & Company partner. fast fashion is the most convincing evidence. For Demna Gvasalia, the creative instance, Zara and H&M shorten their production period to update their new collections. It caters to director of Balenciaga their desire for seeing new arrival products every week or month (Gazzola, et al, 2020).

22 23 interest

In recent years, gaming has turned into younger generations’ main leisure activity. In 2019, nearly one-third of global population have played a mobile game (Bischof, 2019). They play games and watch the live streaming. Business Insider Intelligence calculates that esports viewerships will increase from 454 million to 646 million between 2019 and 2023 (Reyes, 2019). It is not only an entertainment activity for passing the time, but also a community for them to contact with others who have same interests. Here, they are allowed to make new friends and exchange informations. Apart from gaming itself and communication function, making game characters as their avatars is an attractive point as well. They are interested in creating their avatars with adjustment of appearance and clothes constantly. Therefore, spending real money in the games is not surprising. It provides the foundation for the combination of fashion and games.

Figure 8: Riot Games, credit from Bartosz Plotka

24 25 PART 03: 3 D CURRENT Technology LANDS- technology plays a vital role in fuelling development of the future fashion industry. Although it has been applied in various industries already, it is still a relatively disruptive 3Dand innovative technology in the fashion industry (Arribas & Alfaro, 2018). CAPE It is often involved in the merchandising and marketing as a visual tool (McQuillan, 2020). However, it can expand to the design stage as well. Designers create objects in three dimensions by specialised modelling softwares and then render them with multiple materials in the database. After that, objects are greatly similar to the physical items. The process of O F 3D modelling makes design more efficient. Thus, it has a huge potential in VIRTUALI- the fashion industry. SATION FASHION

Figure 9: Digital Clothing, photo from The Fabricant 26 27 part 03: 3d technology GAMES

Why it is important for brands?

As younger generations engage in the Particularly after the covid-19 pandemic, The growth in the amount of game virtual games world, fashion, music and more industries will be inspired by games players and online participation has been The reason why fashion brands have other industries enter into the game for the reason that the majority of people identified by some fashion brands to taken notice of gaming industry is that it is market for the purpose of cementing their have spent their mostly time on playing adjust strategies to tap into gaming and a market composed of massive younger places in consumers brand preferences games. During lockdown, the gaming esports industries (Zaczkiewicz, 2019). players, without the limitation of gender. (Langton, 2019). By 2020, the revenue of traffic in March increased by 75 percent Champion sell products for esports, Millennials and Gen Z grows up with the game industry will reach $196 billion in U.S. and the viewerships of Youtube’s while Adidas has teamed up with famous games and are used to playing games while the esports industry at $1.79 billion gaming channel grown 15 percent gamer Ninja. Nike becomes sponsor (Zaczkiewicz, 2019). It can be seem as (Hunter, 2019). Through the 3D modelling, (Schaer, 2020). What’s more, Nintendo for footwear and clothing of League of the social tool as well as a community. different types of games are created. company states the record-breaking Legends competition. Moschino designed With collaboration or sponsor games, But the same thing is that they all have users who engage in games like Crossing capsule collection for The Sims. Marc it is more effective to reach younger virtual characters for players to dress up. Animals (Schaer, 2020). Players build up Jacobs released its official items in the consumers on the basis of game’s own Virtual clothing in the games is called their communities and DIY skins piece by Animal Crossing since large number of community. Establishing the emotional “skin”. Aiming to acquire more fancy and piece for their characters. They are used players are interested in customising connections with brands, consumers are appealing skins, they are willing to spend to playing games and embrace them. different brands’ clothes patterns for their more likely to increase loyalty and their real money, or earn in-game currency Therefore, it is a key turning point for characters. Beyond these brands, Louis online engagement. to redeem them by finishing missions. fashion to rethink its link with game. Vuitton is partly the most successful Demands for in-game fashion, it is an fashion brand in responding gaming opportunity for fashion brands to fill this trend. Back to 2015, a Final Fantasy gap between games and fashion. game character presented in the Louis Vuitton’s SS16 campaign (Langton, 2019). Now, it not only designed a custom trunk for League of Legends winner to store trophy, but also released in-game skins (Servantes, 2019). Moreover, Louis Vuitton dropped ‘League of Legends’ capsule collection, with LV monogram patterns and game’s elements.

28 29 Key Points of Games

• Increase online engagement • Interact with players • Figure 10: Louis Vuitton x League of Legends skins, photo from Increase loyalty Louis Vuitton • Build up a community for players • Dressing up virtual avatars achieves self- expression • The in-game skins represent the status

Figure 11: Louis Vuitton x League of Legends skins, photo from Louis Vuitton

Case study of Louis Vuitton

Louis Vuitton is the first luxury fashion brands releases the skins for esports. And the iconic Figure 12: Louis Vuitton x League of Legends symbols are put into its new collections. It also capsule collection, photo from Louis Vuitton signed a two-year collaboration contract with League of Legends. This collaboration definitely draws younger generation’s attention..

30 31 “ Digital clothing generally refers to 3D-rendered garments that can Digital Clothing be dressed on a digital avatar or overlayed on an image of a person. Because it offers newness and By 3d design diversity for social media feeds without the need to create physical garments, proponents argue that it is a powerful and more sustainable alternative to fast fashion.”—— Maghan Mcdowell, Vogue Business, 2019 Inspired by gaming, digital fashion is the next popular trend. From Animal Crossing, The Sims, QQ Dancer to Fornite, people dress their characters in games as a way to present their love for fashion (Langton, 2020). Curating virtual characters becomes a new way for self-expression. Partly, skins can be a status symbol, which can help owners earn reputations and be more confident. In the games, it is common for players to spend real cash to top up game currency. Matthew Drinkwater (2019), the head of the Fashion Innovation Agency at London College of Fashion, indicates that Fortnite players have Figure 14: Carling’s digital collection, photo from Carlings payed skins for their characters with millions of dollars in total. By selling skins, Fortnite averagely earns $300 million each month (Lieber, 2019). Under this circumstance, it’s likely for younger consumers to purchase virtual clothing for themselves. Consequently, some start-up studios and companies’ attention are diverted to the digital clothing market. Similar to in-game apparel, it’s also designed and modelled by 3D technology. After consumers providing their body datas and images, brands spend couples of weeks to create virtual pieces and edit onto consumers’ images for posting on their social Figure 15: Carling’s digital collection, photo from Carlings media. According to different sizes data, they could be correspond with various body shapes.

Figure 13: photo from @skinnycleo

32 33 part 03: 3d technology

Taking retailer Carlings as example, it released its first digital clothing collection in 2018, including 19 limitation pieces cost from 10 Euro to 30 Euro each. Designers at Carlings rework customer photos so that buyers seem like truly wearing the virtual pieces (Mcdowell, 2019). The first digital collection were sold out within one week, which makes Carlings realise the strategy is make sense. Hence, it prepares for the second drop. For younger consumers, it’s a novel approach to try clothes and share looks to social media. It is nearly zero- waste while satisfying the demands of curating online presence. Compared with price of real luxury products, Figure 18: Digital Collection Deep, photo from The Fabricant that of digital clothing is comparatively affordable, which lower the luxury market access barrier.

Figure 16: Carlings’ virtual puffer jacket, photo from @ Higherthanfashion

Apart from digital clothing attached to the photos, it also could be visualisation form to showcase fashion products vividly. The Fabricant, a digital fashion house, creates virtual clothing animation for fashion brands and retailers in marketing (Semic, 2019). It partnered with retailer I.T Hong Kong to open a pop-up store Figure 20: Iridescence Dress, photo from The without physical products. Instead, there were only Fabricant screens in-store to display products in 3D rendered digital version (TPH, 2019). Additionally, Selfridges launched its advertising campaign using 3D design. Figure 19: RITA LOURO X THE FABRICANT, Picked physical brand garments were transformed to photo from The Fabricant 3D animation effect in virtual animated environments. This campaign was also put into its window display. Digital clothing is an exploration for new retail. 3D Case Study of The visualisation show product details more clearly than 2D images. For marketing campaigns, it can engage Fabricant more audiences than normal dynamic videos. Figure 17: Chloe’s 3D top and trousers, photo from Selfridges The Fabricant is a Dutch Digital Key Points of Digital Clothing clothing tech company. It is well- known in the field because its virtual dress (figure 20) was sold at a charity • Create lower emissions than physical apparel auction for £7,500. It not only designs • Partly address the overconsumption and overproduction virtual pieces, but also creates 3D • Cater to younger generation’ s demands for uniqueness and newness clothing animation. • Inclusiive. Through the 3D modelling, digital clothing could fit different consumers’ bodies appropriately, without the limitations of size and body type • Can be collected and last for a long time

34 35 Virtual influencers in, IRL influencers out Virtual influencers, called CGI influencers as well, are created by softwares. They are changing the landscape of social media marketing. Well- known CGI influencers, such as Lil , Bermuda, Shudu, Tmma and Blawko, have large numbers of followers. Top Instagram Virtual Influencers in 2019 report released by the social media analytics company HypeAuditor illustrates that the contents of virtual influencers are three times more engaging than real influencers (Baklanov, 2019). The popularity of them means that younger audiences have aesthetic fatigue and uncertainty for real influencers. IRL influencer marketing is nearly close to saturation in Instagram with online engagement rates fluctuate lowest points (Koltun, 2019). Followers need to identify what contents in IRL influencer homepages are advertising, but they clearly know virtual influencers are brand extensions.

Virtual influencers upload photos wearing designer garments in social media, share pictures with their CGI friends, and attend events. For the purpose of drawing younger consumers’ attention, brands partner with virtual influencers for campaigns and advertising. They also can put on new collections to show off. Besides collaboration, brands create their own virtual avatars as well. For example, Balmain set up its ‘digital models army’ including Shudu, and KFC creates its virtual Colonel Sanders.

Lil Miquela, a 19-year-old girl with 2.4 million followers, is the most successful VI. Her engagement rate is about 2.7 percent, which is equivalent to that of Selena Gomez and Beyonce (Sokolov, 2019). She always wears fashion outfits like , Vetements, and so on. She present in some events like Coachella and takes pictures with other VI. As a model, she participates in fashion shooting for Calvin Klein campaigns with , and on the front cover of Highsnobiety and King Kong magazines. In her Instagram platform, she not only supports civil rights like transgender and LGBT but also have storytelling about being sexual assaulted. “ Virtual influencers are taking center stage on Key Points of Digital Clothing social media, gaining • Virtual influencers are unpaid and can promote at anywhere millions of followers” • They are more easier for brands to control • All the information can be programable ——Tiffany Hsu, The • Protect the brand images without PR risks such as affairs and negative news New York TImes, 2019

Figure 21:Lil Miqquela, photo from Omar Pineiro 36 37 part 03: 3d technology Virtual Runway

Figure 22: Models in Shanghai’s digital fashion shows, photo from Alibaba Group

ue to Covid-19, is forced Models and garments can be virtual as well. to turn to digitalisation. Followed by the The fashion technology company Bigthinx Shanghai Fashion Week, Paris, London will live stream a 3D virtual . Dand will all take place Based on actual garments designs and sizes, Figure 23: Trashy Muse virtual avatars fashion show, photo from Trashy Muse. online. Apart from choosing live streaming the products are rendered and animated. to showcase, fashion brands also utilise 3D However, before the pandemic, some fashion technology to imitate runway background. brands have already done the experiments. Like Shanghai Fashion Week, it achieved the Trashy Muse launched virtual fashion show Key Points of virtual runway ‘Cloud Fashion Week’. Models walked in front at EP7 gallery in Paris SS20 fashion week, of a green backdrop. After that, 3D designers with the virtual model Shudu. The video was created models and rendered in computer to displayed on the LED screen outside the • solve problems of places make a virtual background. In Angel Chen gallery (Yalcinkaya, 2019). • Becomes direct-to-consumer marketing Fall/Winter 2020 fashion runway video, its C • cuts out the cost of renting places, building real scenes and background, a modern gladiator arena with team travel fees an apocalyptic city and a desert views, is entirely created by computer (Kendall, 2020). Because of technology, runway backgrounds can be changed on the basis of designers’ inspirations. It cuts out the cost of renting places, building real scenes and team travel fees.

38 39 part 03: augmented reality

In instagram, the benefits of AR face filters have been gone primarily to beauty brands. But now, fashion brands have also dabbled with this area. Camera is no longer a pure entertainment tool. It is a gamification process for consumers to try new products, interact with brands and know brand identities. Prada’s SS20 campaign is informed by acronyms that explains brand name’s meaning. It launches an AR face filter that users can try and know their current Prada mood. These answers are also printed onto the t-shirts and hoodies. The filter emotionally connects users with latest products, and it plays a role in storytelling.

Previously, Dior has launched AR face filter for DiorColorQuake sunglasses in 2018. In 2019, it has added new filter for users to try Dior SoLight sunglasses. Since launched in Fall 2019 Paris Fashion Show, the filter gained over 2.6 million impressions within the first week (Wynne & Burlet, 2019). It proves that AR filters can efficiently enhance engagement by engaging with users. Also, it has powerful promotion function as users need to visit brands’ profile before access filters. What’s more, other users can get campaign information via friend’s instagram stories. Consequently, as a marketing tool, it is key to increase brand popularity. According to data from company Creators AR, it reveals that using AR filters in influencers marketing generates 457 times brand exposure than that without filters (Mcdowell, 2020). Figure 24: Dior sunglasses filter

40 41 AR TRY-ON

The AR try-on is the same as AR face filters, but people look forward to virtual try on is divorced from social media platforms. With the more functional try-on, consumers’ shopping journey becomes more fun and efficient. When shopping online, people can’t try them on and view details carefully like in a brick-and- mortar. It results in high return rates and refunds due to inappropriate sizes or Figure 25: AR try-on Ace sneakers in App, photo from Gucci don’t meet expectations. Within the past five years, e-commerce return rates have soared by 95 percent (Schiffer, 2019). However, consumers can view and try on products instantly in their real environment. There is a new function in Gucci app, which allows users to virtually try on the ACE collection shoes. It is almost like people actually wearing them. Tech company, Wannaby, offers this AR try-on technology. Aside from Gucci, Wannaby also collaborates with Farfetch. In Farfetch app, consumers can digitally try on different brands’ sneakers before purchasing.

AR try-on technology brings offline experiences to online, which contributes to decrease return rates and increase online conversion rates. It could be evidenced by the data from Shopify that using AR tech to view products increases conversion rates by 250 percent (Mcdowell, 2020). Moreover, consumers are more interested in engaging with brand, which boost connection between consumers and brands or retailers, and enrich their online shopping experiences. For consumers, nearly Key Points of AR Try- 65 percent of them are more likely to purchase after viewing products in AR on (Mcdowell, 2020).

• Fill the gap between offline and online • Shopping experiences more fun • Increase the conversion • Reduce return rates

F 42 igure 26: AR try-on function in Farfetch App 43 The limitation of designers/ challenges creative process

Traditionally, fashion designers mostly lack 3D modelling training when at the school. The limitation of designers’ technical skills results in barriers for fashion brands to tap into digital fashion market, unless they hire professional 3D creators. Compared with editing digital garments onto photos, create 3D digital clothing animation is more complicated. For the latter, designers are supposed to draw and modelling manually, then turn into 3D animation. part Designers are required higher computer skills. Investment

Fashion brands need to invest more in employing 3D designers, but their salary are more higher than the revenue from the digital clothing (Murphy, 2020). Additionally, 3D scanning machines and modelling softwares are costly. Under this circumstances, it still need to maintain a few 04 weeks of production period.

“When you do a campaign like Carlings, you have a bunch of 3-D artists and those 3-D artists are more expensive than the revenue from the clothing itself”——Kerry Murphy, the founder of The Fabricant, 2020

44 45 For Brands: Gamification Fashion

part 05

Gamification is the next big hit in the fashion industry (Schaer, 2020). Gamification fashion has already been an integration of brands and Future customers. As previous consumers analysis and current landscape of game show, millennials and Gen Strategy Z are the dominant consumers groups while are the leading game players as well. They regard in-game skins as the status symbols and aesthetic appreciation. Aiming to engaging consumers and let their shopping experiences more interesting, brands are able to combine with games to achieve gamification fashion and drive sales.

46 47 “ The aesthetics of gaming

and e-sports will even EVALUATION bleed into beauty and PLAN A fashion”——Lucie Greene, Like Burberry launched its own game, other brands also can launch their own games. By trend forecaster, WWD, completing missions, players will earn rewards for redeem brands’ virtual in-game products. 2020 In the game store, interior design like a real physical store and display iconic products and latest collections. In-game clothing is updated with the release of new collections at the same The success of gamification fashion could be evaluated through game time. Players can walk into game store to downloads in app store, the number of active players, game revenues shopping. Players can use rewards to exchange from players in-game purchases, and web traffic linked from games. By skins, or spend real money on topping up their calculating datas, fashion brands will recognise the relationship between accounts to get skins. Successfully purchased consumers engagements and games. skins are put into virtual wardrobe to style for virtual avatars. There are different themes of In terms of its pros, the consumer experiences becomes more fun and styling competitions in each season. Based valuable. Games are interactive. With placing consumers at the centre of on each themes, players need to participate in games, it build up emotional connection and consumer-first experiences. the competition by selecting clothes they own In the process of playing, game is a storytelling marketing tool, which to style for their avatars. The ranks are relied allows players to know brand products, cultures, values and identities on other players’ votes. Eventually, players in so that establish consumers’ brand loyalty. Combined with interactive different ranking ranges will obtain the different games, shopping becomes direct-to-consumer. It can improve conversion rewards. Higher ranked players are likely to get rates as products exposure will drive sales. Also, limited time in-game limited skins. activities for get rewards can increase engagement because players are more willing to spend more time on playing games frequently (Bobroff, 2019).

When it comes to its cons, it’s risky to launch brands’ own games. Apparently, brands care about return on investment. At the stage of PLAN B development, brands need to spend huge investment. As the founder of fashion technology company Coded Futures Daniel Bobroff (2019) says that invention of a game cost at least £100，000. However, game will be withdrawn from the market in time if it doesn’t resonate with consumers. For retailers, it’s better to partner with tech game studios to create games. Same as dress-up functions in general games, but virtual clothes it provided are in the e-commerce catalog. Linked to retailers’ websites directly, players can buy varied brands physical items.

48 49 3D design

The increase of speed to market and the decrease of inaccurate in decision-making are the key measurements of the achievement of 3D design. Because of production costs, production places are distributed into different countries, where save the time to ship materials. Meanwhile, 3D design cuts down fashion cycle and supply costs, reduces the waste of materials, and accelerates speed to market without reinventing samples repeatedly. It contributes to make data and information have end-to-end seamless chain connection that improves entire effectiveness of supply chain. Once transformation becomes developed, the employees will be decreased. These savings could be reinvested to hire 3D artists and production.

Refer to its disadvantages, accelerating pace to market is likely to lead to more overconsumption or overproduction. Covid-19 has exposed the shortcomings of the For fast fashion brands, speed is one of successful factors supply chain in the fashion industry. Each stage for their business models. In the process of manufacturing by of supply chain is forced to be more flexible 3D designs, it will speed up their update movement and finally and efficient. Despite without supply chain Figure 27: A Loewe puzzle bag created in 3D, photo cause overconsumption and wastes (Bakker & Mugge, 2017). disruption, expensive sample costs, time wasting from Ddigitt materials sourcing and shipment slow down the productivity. This process will take months.

Therefore, fashion brands now can adopt a new digitalisation supply chain model - 3D design solution. At the beginning, designers create product images in 3D softwares, with materials and components picked up from database. According to different requirements, fabrics and details can be modified and changed at any times before manufacturing. All of initial design versions are saved into cloud database, where designers can find archetypes. Prediction ”companies can cut down of trendy elements and colours are added into on physical samples by database. After confirmation of final version, it can be send to factories as 3D file without as much as 70%; fashion delivering physical samples. companies will likely need up to 20% fewer people in the end-to-end creation process; an end-to-end digital transformation can squeeze the calendar by up to 40%.“——BCG, 2020

50 51 digital for designers clothing & fashion schools

Figure 29: Influencer wears Carlings’ digital coat, photo With more brands employ 3D technicians, all designers by Carlings tend to accept 3D design trainings. Formerly, most design programs in art schools without 3D design and modelling courses so that designers are passive in this transformation. They need to rely on 3D teams outside Based on the previous analysis, digital clothing will be one of brands’ main the company. As a result, in the future, more fashion strategies. At the current situation, brands can try to have small-scale schools are expected to set up 3D modelling courses experiment. 3D creative designers create virtual apparel then input to to teach students how to use modelling softwares and market. Brands can modify, assess the prediction of demands and return on how to create AR effects. For designers who have investment of realistic products to formulate relevant strategies by receiving already entered into the industry, they can also self- feedbacks from consumers and measuring their interests. In addition, digital learn through online tutorials to enrich and update their clothing also can be used in influencers marketing. Brands send free new skills. items to influencers for marketing, which costs a lot of expenses and wastes. Mostly, influencers only wear once then throw them away. Thus, customising their digital garments and attaching to photos are make sense. Evaluation

The number of likes and comments from followers represent the attractiveness Train of virtual clothing in influencers marketing. Taking advantage of testing digital clothing, wrong decisions and cost of production are decreased, and consumers preferences can be targeted accurately. It avoids returns caused 3D tech skil by the results which are not correspond with expectations after trying on.

However, digital clothing more relies on the social media now. If consumers are inactive and negative on the social medial platforms, its value is lower than virtual try-on function (Mcdowell, 2019). Despite the fact that millennials and Gen Z are immersed in social medial, not all of them have demands in buying digital clothing for their social images.

“ For all its technical elaboration, which is juxtaposable with that of actual art, digital fashion is still limited to the sphere of social media and e-commerce. ”——Lorenzo Salamone, 2019, NSS Magazine

52 53 In this report, it achieves the objectives of research aims. It proves that new virtualisation tech such as 3D and AR can affect the whole fashion industry. By studying the entire context, including macro trends and shifts of consumer psychology and shopping behaviours, new virtualisation technologies have strong potential in the future development of the fashion industry. After looking at the current landscape of virtualisation technologies usage, more fashion brands start to embrace them. Virtualisation technologies in different fashion fields have different benefits, such as gamification fashion connects brands and consumers, digital clothing reduces the carbon footprint, virtual influencers engage with younger generations, AR try-on decrease the return rates and increase conversion rates. Nevertheless, the virtualisation process is costly. There is amount of investment in the early stage, but it is a long-term conclusion profit plan. It is crucial for brands to focus on long-term values. Once the implement of this strategy is gradually on track, costs will fall. Both supply chain and marketing campaigns are more controlled. Consequently, brands can launch digital clothing, shift into gamification and use 3D design as the future strategies.

However, the limitation of this report is lack of analysis of virtual reality technology. It is outside this report research topic but included in the virtualisation technology. In the next in-depth report, it will be added into research objects. As for the future prospect, virtualisation technology can involve in not only the fashion industry, but also the video apps with virtual make-up and clothes.

54 55 Appendix 1

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