Shopper Experience

5 ways tech will push fashion forward

A new McKinsey report says the fashion industry is set to double its tech investment by 2030.

black and silver laptop computer on white table

The next wave of fashion is tech. (Photo by ThisisEngineering RAEng on Unsplash)

Welcome to Data File. In this weekly feature, The Current shares key findings shaping the ecommerce landscape. At The Current, we comb industry, analyst and economic sources for the data that matters to ecommerce professionals, and include it throughout our work. This feature is one of the ways we’re sharing what we find.

Style trends may come and go over the next decade, but investment in fashion technology will see steady gains all along the way.

A new report from McKinsey says fashion companies are set to roughly double investments in technology over the next eight years.

In 2021, companies invested between 1.6 and 1.8% of their revenues in technology. By 2030, that will roughly rise to between 3 and 3.5%, according to the management consulting firm’s State of Fashion Technology Report 2022.

This is coming as a result of a pair of converging trends, the report states.

For one, technology is advancing rapidly. Improvements in AI, cloud computing, automation of work functions and 5G networks are creating new capabilities for companies. It is also affecting bottom lines.The McKinsey analysis states that the fashion companies that are already embedding AI into their business models could see a 118% cumulative increase in cashflow by 2030. Those who start now stand to see a 13% increase in cashflow, per McKinsey. By contrast, there’s risk of a 23% decline over the same time period for those that are slower to invest.

At the same time, shoppers are turning to digital channels as they seek to stay on trend. They are finding fashion there, as 72% of customers said they interacted with brands online in 2021, though that figure is expected to stabilize to 66% in 2022. They are also doing so because of the many benefits offered by ecommerce. Of customers who turned from in-person to digital shopping in 2021, 48% did so because of the pandemic, 27% cited convenience, 11% cited product availability and 11% cited promotions.

Ecommerce already receives 55% of tech investment, and technology investments will be directed toward further improving shopper experience. Yet the coming investment will also be a result of fashion companies making technology-oriented upgrades to operations, and harnessing these capabilities to follow through on sustainability commitments, the report states.

The report said the tech expansion in fashion will be driven by the following five key areas:

Metaverse reality check

Digital goods and NFTs are on the rise, and a focus on the metaverse could help brands generate 5% more revenue over the next 2-5 years, McKinsey found. But brands will need to “separate hype from the concrete opportunities” to turn virtual interactions into sustainable business offerings, the report states.

One of the more thoughtful early strategies is coming from PacSun, where CEO Brieane Olson thinks its metaverse presence will help not only with sales, but also sourcing of new products.


About 70% of customers want personalized experiences, and around three-quarters are disappointed when they aren’t offered, the report states. Brands can use big data and AI for one-on-one experiences and loyalty. We're already seeing how machine learning is meeting the fitting room through solutions like those made by

Connected stores

Digital tools can be used to improve in-store experiences, and physical assets can help to expand opportunities in quick commerce, the report states. Those who use digital technology in a store are likely to spend up to four times longer shopping, the report states. It's a big reason why retailers are making big moves to scale software teams and invest in startups.

End-to-end upgrade

Brands and retailers can bring together digital tools and analytics to more fully integrate technology offerings. This will be a top-five priority for more than 60% of executives in the coming years, the report states. It's why Levi's Chief AI Officer Katia Walsh is thinking across the organization as she considers uses for machine learning.

Traceability first

Tracking software and data will power sustainability initiatives, enabling a better understanding of product lifecycles. More than 50% of fashion decisionmakers believe this will be a top-five enabler to reduce emissions in their supply chains, the report states.

We're already seeing an example of this from Higg, a startup that just raised $50 million to expand tools for sustainability measurement that the company says already have 50,000 brand and manufacturer users.

Subscribe to The Current Newsletter

Trending in Shopper Experience


US imports expected to fall 22% in first half of 2023: NRF

Labor disputes on the West Coast could cause further disruption heading into peak season.

aerial view of boat on water
Photo by Venti Views on Unsplash

When the first half of 2023 is complete, imports are expected to dip 22% below last year.

That’s according to new data from the Global Port Tracker, which is compiled monthly by the National Retail Federation and Hackett Associates.

Keep reading...Show less

Latest from Shopper Experience