AI: A revolution in fashion worth $250 billion
Article written by: Alice Merli
The value of profits that technological innovation could bring to the sector within five years, according to mckinsey & co. According to deloitte, the percentage of companies adopting ai will rise from 38% to 47%, while in italy, the market is expected to approach €700 million by 2025. The demand for data scientists and ux experts is also increasing.
The artificial intelligence revolution goes hand-in-hand with fashion. In the next 3–5 years, it could add up to $275 billion (around €246.2 billion at yesterday's exchange rate) in operating profits to the clothing, fashion, and luxury sectors. This comes from the research report "Generative AI: unlocking the future of fashion" by McKinsey & Company. Additionally, according to the report "The state of fashion 2024" from the consulting firm, equity funding for AI-focused creative startups surged in 2023, reaching $14.1 billion (€12.6 billion) in just the first half of the year.
"Generative AI offers significant potential for creating value across the entire fashion and luxury supply chain. Starting from the product design phase, innovation cycles can be accelerated, with creation times up to 60% faster. This technology would reduce delivery times by 20–30% and boost sales by 5–10%", explained Gemma D'Auria, senior partner at McKinsey & Company.
"Moreover, it could cut distribution costs by 10–15% while increasing store productivity by 5–10%. In terms of customer experience, omnichannel revenue growth is estimated at 30–50%. Finally, supply chain management could see a 10–15% reduction in inventory costs and a 5–10% decrease in production costs". D'Auria highlights the growing demand for AI specialists in customer insight and experience, noting that human capital plays a crucial role in business success.
Ida Palombella, global fashion and luxury industry co-leader at Deloitte, agrees: "Human capital must acquire the right skills to use AI effectively. It's also essential for employees to understand how this innovation impacts their tasks and business dynamics". According to Deloitte's report "Beyond the artificial: The future of AI", nearly four out of ten companies (38%) currently use AI extensively. This share is expected to rise to 47% within three years.
In Italy, the market reached €422 million in 2022 and is forecast to increase to €700 million by 2025. "In recent years, the luxury sector has been one of the areas that experimented the most with technology and digitalisation. Many companies have already incorporated AI into their marketing, customer experience, and clienteling strategies", continued Palombella.
"AI is also attracting professionals from various backgrounds, particularly those with STEM (Science, Technology, Engineering, and Mathematics) training. For example, data scientists specialising in purchase and consumption models, software engineers developing algorithms for product customisation, researchers focusing on computer vision for trend analysis, and UX experts integrating AI into design and e-commerce processes". In conclusion: "Large companies are naturally ahead in adopting AI. It is undoubtedly the technology of the future, and SMEs will inevitably have to adopt it as well". (All rights reserved).
