Fashion industry dreams big when it comes to blockchain

October 16, 2018
Chris Wheal

Continual threats shaping the fashion industry include changing consumer behaviour, environmental and ethical concerns, through to the immense competitive power of online retailers such as Amazon. Bricks and mortar chains have to adapt or die, and many retailers are opting to adapt with the help of blockchain.

IBM’s one and a half minute video explains the blockchain ledger in a complex supply chain. Blockchain is one of the key technological advances along with artificial intelligence (AI) and virtual reality (VR) helping to tackle or mitigate some of the pain points that beset the $13trn fashion industry. Problems include: waste, lack of transparency and environmental concerns as a result of pollution.

Blockchain has the ability to cut through specific pain points: traceability, compliance, flexibility and stakeholder management of the supply chain, according to Deloitte’s New Tech on the Block report. The technology’s immutability and its ability to track and trace products, provide secure contracts and facilitate peer‐to peer interactions, offers a potential solution to each of these.

Today’s customers have grown ever more savvy. They are green or conscious consumers concerned about the provenance of not just food, but also fashion, and retailers are seeking novel ways to respond.

Ushering in a new era

There are enough ongoing developments to suggest bricks and mortar retailers are not dying but are undergoing a rebirth.

US-based Oak Labs, now part of Zivelo, best known for its Oak Mirror, is one of the pioneers changing shoppers’ experiences by bringing online shopping into the fitting room along with a wealth of previously inaccessible data to retailers. Oak Labs has deployed its product across 17 countries in retail outlets such as Rebecca Minkoff and Ralph Lauren.

The company’s CEO, Healey Cypher, is evangelical and insists that physical stores and customer shopping habits are changing helped by tech. Before you imagine shopping where you are served entirely by robots (perhaps not so distant a future) Cypher says tech still remains second to the human experience.

It is a point echoed by Nataliya Makulova, a fashion tech and sustainability consultant in a recent article: “We all have heard in the news that retail is dying, but I believe that it is just transforming into a more meaningful, joyful and creative experience.“

Mutual benefit

Makulova paints a cheerful picture of the future and the ease with which supply chain transparency and authentication will become part of the everyday experience.

She says: “Shopping will be easy, fun and exciting again! Imagine going to the store where every garment can tell you a story. Where, as you are trying on an item, you’ll will be prompted to view a video about the people who were involved in making that garment, it will show you where the threads are coming from, where that garment was made, and how it got to this store and why it will be a valuable purchase for you.”

Benefits to the consumer are counterbalanced by those provided to companies in the form of massive data and insights. Retailers can build up a monolith of online, inventory, CRM and POS data in fashion and retail that, while enhancing the customer experience, will generate a healthy bottom line.

Blockchain in the retail supply chain is where the most significant changes can occur and retailers are aware it is the next big thing, but are still trying to understand “which areas of the value chain will benefit most from the new technology, and how easy it is to implement,” says Deloitte’s technology consulting partner Steve Larke.

Gentle swell

The value in fashion will come from those blockchain project with simple implementation and those that can quickly generate commercial value. Three areas where blockchain use cases are being developed according to Deloitte are:

  • Consumer – Improving and protecting the consumer experience
  • Supply-chain – Improving process efficiencies across the supply chain
  • Payments and contracts – Improving transaction processes and ensuring the validity and implementation of contracts

Larke comments: “It is technology that has the ability to track, trace, and authenticate products, record contracts and transactions and guarantee the movement of information. Significantly, the benefits can then be passed on to the consumer in the form of savings, increased trust, and safer, higher-quality products.”

Currently, it is only a gentle swell in the industry when it comes to use of blockchain with only a few trialling projects. There are fashion blockchain start-ups striking out on their own with separate blockchain, which some experts argue is counterproductive as it would be far more effective to share a blockchain allowing for more efficient use of technologies.

However, signs are that retailers are grasping the importance not only of a changing landscape but also a more demanding, discerning consumer hitched tightly to their smartphone.

Expectations are there will be a surge in the use of technology as the industry aims to stay abreast eventually scaling it up. Larke says: “Blockchain technology is expected to achieve widespread, mainstream adoption sooner rather than later. Retail and CPG businesses need to act now and plan for future blockchain adoption, or risk being left in the dust.”

Here then are three exciting steps in blockchain implementation for mankind and retail:

1. Mirror, mirror – product story

Today, modern consumers care more than just for a brand’s name and image. They make active choices that align with their own ethical thinking. The murkiness of the retail supply chain may well be a thing of the past with the inherent transparency of blockchain.

Conscious consumers want to know the provenance of their clothing and accessories and now that information may be readily available as they try on garments in the changing room through smart mirrors. We’re talking two-way looking glass with smart tech such as cameras, electronic displays and sensors providing a panoply of information.

While smart mirrors are already part of our present and future and are currently sold as part of a smartly designed home and are in a number of retail spaces retailers are grasping the opportunity to provide more services and to engage with customers as they gaze at their reflection in slenderising mirrors.

There’s an exchange with customers getting information and efficiency when it comes to a shopping experience but they’re also supplying vast quantities of previously unattainable insights to retailers – a sort of information gold.

Zippier experience?

Retailers such as Zara and H&M are already experimenting with smart mirrors that come equipped with radio frequency identification (RFID). RFID is an automatic identification method that implements contactless communication between a chip and a reader.

Radio frequency identification transponder with antenna high integrated on the smart label

It lets Zara check a store’s inventory in two hours, a contrast to the previous three days it took the retailer to find that information.

But for the consumer, to could mean that a mirrored touch screen provides information held on blockchain about that particular garment and its journey through the supply chain. The tamper proof resistant blockchain is a way of certifying a product’s authenticity, which further enhances an item’s value.

That is in addition to the screen offering personalised recommendations, available discounts and special offers.

Makulova argues, on her blog “many sustainable brands are already attempting to share about where and how their products are produced and this practice will spread with blockchain’s ability to track multiple steps of production of multiple types of garments.”

However, she holds off sharing who has done this so far because she wants them to take it a step further and says: “I am not giving any examples because personally, I don’t fully trust self-proclaimed sustainable brands unless they use such secure and transparent technology as blockchain to collect and openly present their manufacturers’ data.”

2. Wearing your data on your sleeve

Smart textiles, or e-textile, is having technology as part of your fabric. The fabric can communicate, transform, conduct energy and even grow. It has multiple uses in the athletic, extreme sports, military and space industries.

This means you can have fabrics that light up such as when you’re jogging in the dark, or that can gather energy from environmental sources and can be protective in extreme conditions. So where does blockchain come in? Using the platform to transfer data, safely, securely and anonymously while providing users who exchange their data a deeper form of a loyalty scheme.

Take Loomia, a fashion tech company whose brand is based on the blockchain. It has a digital tag (Loomia Tile) that collects data and companies can sew the tag in to garments. Data is stored anonymously and transferred securely from the cloud using a mobile phone.

However, this isn’t data collection by stealth as users choose what data they are willing to share with a brand in exchange for tokens or experiences provided by the brands.

LOOMIA heated boot concept charged via sole induction Source: LOOMIA

As Janett Liranio, CEO of Loomia explains in a recent interview, “We’re allowing consumers to harness their personal data. Brands on the other side get meaningful data they improve their products on, which right now is a $100bn problem in terms of misappropriating inventory and not understanding what people really need.”

For example, LL Bean announced it would incorporate Loomia Electronic Layer (LEL) into merchandise such as jackets and boots. The LEL is composed of flexible circuitry and can provide heat or light, or can be a sensor, all while remaining washable, dryable, and discreet.

LL Bean said it would research implementing Loomia’s circuitry to collect data from apparel including information around temperature, motion, and frequency of wear. Once this data is collected, consumers will be able to share it back with the brand for rewards via the Loomia TILE – a component that allows for the secure and anonymous transfer of data.

3. For the sake of transparency

Conscientious shoppers, businesses and even non-profits can benefit from the cotton bud to garment traceability afforded by blockchain through the global mission of one tech start-up called Provenance. The company wants to enlighten the masses to know more about the things we all buy and to make it a part of everyday life.

The London-based organisation comprises a collective of individuals in software design, product manufacturing and data science all with the “common goal to deliver meaningful change to commerce through open and accessible information about products and supply chains.”

The startup has already captured more than 200 retailers and food producers that aim to inspire greater trust in businesses along a fashion supply chain. Consumers get greater transparency by tracing the origins and histories of products using Provenance’s technology.

Shoppers get verified information about the materials, the process and the people behind the products through Provenance placing a unique ID that enables the tracking of each item and provides access to a secure digital history and verified claims. But it doesn’t stop there –additional content is also available in the form of stories from other actors in the supply chain.

Making transparency fashionable

Incentives for transparency draw from the same stakeholder interests as companies producing smart wear and smart mirrors to build customer loyalty, increase risk management and reputation protection and to tell a story at the point of sale. Neliana Fuenmayor, founder of A Transparent Company, outlines in a blog the statistics that bear out these goal.

A Transparent Company Project with fashion designer Martine Jarlgaard, tracking alpaca from farm to end garment

The Globe Scan Radar 1997-2017 & Sustainable Brands Trust Research Report claims that ‘two-thirds of consumers and shareholders value purpose and 65% of consumers globally try to support brands that are purposeful. While 63% of retail investors globally believe purposeful companies are more profitable but 55% of people globally are unable to name a company with a strong purpose’.

There are opportunities for retailers to reap benefits from providing transparency but the complexity of the apparel industry means technologies will take longer to integrate. In an experiment testing blockchain’s ability to implement the kind of end-to-end traceability, Provenance worked with Danish fashion designer, Martine Jarlgaard.

The designer presented garments at the Copenhagen Fashion Summit in 2017 made from organic British alpaca, holding tags that could be scanned to disclose each garment’s respective history of the supply chain. Provenance used its software and suppliers were able to connect and transfer assets along the chain, using blockchain technology to create the story with verifiable real-time data.

A consumer could see photos of the specific alpaca whose coat supplied the garment they donned.

Despite the success of the experiment there is still work to be done to bring it to scale. And, the goal of ultimate transparency may seem a glimmer on a distant horizon, because a big barrier the industry still has to contend with is cooperation. Industry experts say the best solution is adoption of a unified blockchain standard.

However, the industry is known for players wanting their own empires, maintains Charles Beckwith, director of communications at Save The Garment Center. In an op-ed he writes: “Business as usual in the fashion industry – everyone wants their own little empire – so a unified blockchain standard looks unlikely for the foreseeable future.”

He is bleak about the prospects for change. He says in a decade we may have the ability to see:

  • Cotton growth tracked in a field by satellites
  • Harvest data from tractors
  • The time it took to drive a bale to the gin
  • Manufacture, distribution and retail
  • Who bought the eventual T-shirt
  • How many hours has it been worn

But we’re not yet here. “The number of systems that have to be built to support a total blockchain solution for the fashion industry is mind-boggling,” says Beckwith.

They say fashion is fleeting, but style is forever. Are there enough visionaries angling to make blockchain in fashion a statement of style rather than a passing fad?

Post written by Chris Wheal
Chris Wheal is editor of OpenLedger's news and features service. An award-wining business journalists himself, he runs a team of freelance journalists from across the UK and north America.

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