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Algorithms Can’t be the Be-All for the Future of Apparel

Big data has presented big opportunities for retailers and the way they deal with consumers, but relying solely on algorithms to inform actions could pose big misses for companies if they’re too narrowly focused.

The good news about big data is that it’s giving retailers a much clearer picture of who’s shopping their stores than there’s ever been the potential to have.

“The consumer is telling us what they want,” Xcel Brands chief digital officer Kate Twist explained speaking at the Decoded Fashion New York Summit last week. “There’s much more of a platform now for us to listen and respond.”

[Read more from Decoded: Is Fast Fashion a Dirty Word?]

The bad news about big data, however, is that too many companies are either drowning in it or becoming so reliant on the algorithms within it that they can’t get the right understanding of what all that data’s trying to tell them. For many companies, listening and responding is easier said than done.

“I don’t believe that we can serve our customers well if we wholly rely on algorithms, particularly in an industry like fashion that has so much serendipity,” said Tracy Sun, co-founder and VP of merchandising for peer-to-peer marketplace Poshmark.

Getting caught up in data designed to target the consumer by giving them more of what they’re searching for doesn’t work if a company can’t step back and recognize that a frantic search for swimsuits in June doesn’t mean that the shopper wants to be bombarded by more and more bathing suits through to November.

“If you were looking for wedding dresses, six months from now are you still looking for wedding dresses?” Sun posed. “Your preferences change and if you don’t change your algorithms with your consumer, then you’re dead in the water.”

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The idea for big data, as Twist explained, should be to use it to identify trends in real time. That’s at least one of the ways Xcel, which makes product for its brands including Isaac Mizrahi, Halston and C. Wonder, uses it.

“We recently implemented an AI strategy that’s allowing us to validate our hunches and identify what’s going to be the biggest success,” Twist said.

That knowledge can drive product that’s more on the mark, more likely to sell and less likely to be marked down or left as excess inventory. It’s an approach Zara has taken, using data (and staff) at the store level to inform what to make more of right away, or what to perhaps pull back on.

For Bonobos, it’s been about using big data to arm the business for better personalization. The menswear brand is using data to get into its shopper’s mind and even to get a sense of where he’s engaging when he comes into the physical store in order to deliver on what he wants.

Now the question, as Bonobos chief experience officer Dominique Essig said, is, “How do we take all the things that are happening digitally and bring them into the physical space?”

What’s next for big data

The next step—and one way for consumers to realize the benefits of digital data at the store level—will be co-creation, according to Twist. It will be about using data to get feedback from the consumer about what they want to launch, what the products in those stores should be.

All signs to success in retail right now point to rallying around the consumer, and the companies that are agile and quick enough to listen to what consumers want and react to give it to them, will be the ones that win.

The other key to securing that win, according to Facebook’s head of industry, beauty, fashion, luxury and retail Karin Tracy, will be looking outside the box.

“Stop looking at your traditional competitors and start looking at digital disruptors,” she said speaking on a separate panel at Decoded. They are precisely the ones that have positioned themselves as nimble enough to deliver on demand, and are often doing it in new and innovative ways.

Facebook can hardly be beat for the mountain of consumer data it has, and any brand not working with the social platform to benefit from that data is missing a major opportunity.

“We have a front row seat to learning about evolving consumer behavior,” Tracy said. “When we work with a brand it’s about unlocking the value of their data and combining that with what we know about people.”

Consumers—and Millennials especially—expect to be catered to, for the brands they buy from to be up to speed on what they want, how to entertain them, how to improve their lives and how to tell a brand story that appeals to them. What’s more, they want all of this at a time when they have endless information and stories and content before them at all times.

According to Karin, the average person is consuming 300 feet of content in their news and social feeds every day. That means they’re scrolling through content the size of the Statue of Liberty. Every day.

“Earning attention is the most crucial thing you need to figure out right now because the consumer is inundated,” Tracy said. And figuring that all out can’t be a slow-going process. “Speed is everything right now because your consumer is moving faster than you are.”