Digitization in the fashion industry - What's holding us back?

Britta Dünschede
· 3 min read

If you look at the digitization index of the German economy and take a closer look at the retail sector, you will see that it is far behind the average of 105.1 points with 75.4 points (source: Statista). But what is the situation specifically in the fashion industry? What is holding fashion retailers back from embracing digitization? And: How can digital solutions help optimize daily business?

In an industry like ours - peppered with famous names like Chanel, Lagerfeld or Versace, which stand for emotion, personality and lifestyle - the space and readiness for digitalization seems small. But why is that? And: could digitization help create more time for creativity?

Digitalization in the fashion industry: between status quo, change, and future

Our industry in particular is dominated by creative and experienced experts in fields such as design, collection planning and personal relationships with partners - mutual trust and the handshake that seals the deal will not be replaced or lose their value in the future. Nevertheless, the market and consumers are changing rapidly. Today's customers are demanding, dynamic and well informed. It is difficult for the industry to keep up - profits are lost due to long processes and huge overstocks, which result in high markdowns and unsold products. As the years go by, it becomes increasingly clear how much the world has changed under digitalization - and how the fashion world is still afraid to adapt.

This is leading to increased pressure and demand for automation and smart processes from brands.

Not that there aren't enough providers for digitization processes. A search on Google offers over 6,570,000 results in just 0.54 seconds. So why is there little to no improvement in our industry? The answer is the complexity of the processes - and our industry is a slow business. Thousands of items and multiple collections per year, all embedded in complex structures. The fashion industry is comparatively difficult, not least due to seasonal fluctuations, unpredictable developments such as weather, micro trends and increasingly unpredictable buying behavior on the part of customers.

Fluctuating demand and stock transfers: Here's how to optimize the process

Fortunately, there are companies that have been addressing these challenges in the fashion industry for many years. Chainbalance, for example, which has been helping the industry - with over 23 brands worldwide - become faster and more sustainable for 14 years. Chainbalance's Smart Merchandise Management Solution increases sales, reduces employee's workload and provides more accurate production forecasts to avoid overproduction and bring the value chain closer to consumers. With the latest update, a new feature has been added to the repertoire based on optimization algorithms and logics.

Turning long hours of planning and preparation to just a few minutes

Responding to rapidly changing demand in a timely manner requires a high level of analysis. Stocks empty quickly, especially for bestsellers, and the risk of lost sales is high. These products at the POS, for example, may be in overstock at a store that does not sell them. A transfer from that store to a profitable one could prevent the otherwise lost sales. To achieve these additional sales, time, logistics costs and the specific item must be considered and analyzed in depth. Navigating this process and making an optimal decision to transfer is an intensive and time-consuming process - one that often gets short shrift in day-to-day operations.

Chainbalance's Smart Store-to-Store Transfer uses an evolutionary algorithm - a field of artificial intelligence that automatically simulates hundreds of decisions to find the best decision, avoid lost sales, reduce logistics costs as well as CO2 emissions. Chainbalance not only has more than 14 years of business success to rely on with its team of fashion industry experts, but also supports young talent.

Lucas van der Horst for example. He is studying at the Hogeschool Utrecht in the master's program Artificial Intelligence and has been working at Chainbalance for over a year, rising from intern to Junior Business Consultant. He is co-responsible for the solution Triumph needs especially for the merchandise management of the Asian market.


To summarize, using Smart Store-to-Store Transfer - supported by artificial intelligence - reduces the team's manual effort by over 90%, cuts lost sales by 20%, and reduces costs and CO2 emissions by over 40%. User’s can easily access the function anywhere via Smart Supply and make business-critical decisions with just a few clicks. The AI takes care of the rest, allowing the team more time for creativity - no more Excel spreadsheets and hours of laborious work.

Interest piqued? Learn more about how companies like Esprit, Triumph or YAYA benefit from Chainbalance's Smart Merchandise Management, or about Lucas' process to optimize the entire transfer process of our client's stores in Asia.