by Enila Elezi and Deborah Paracchini
It’s not a new thing that the pandemic’s advent has radically changed our lives, affecting our buying habits, even our daily ones. First, the temporary closure of physical stores during the lockdown and the stringent prevention measures adopted by governments have led consumers to prefer online shopping experiences. We are witnessing a real boom in e-commerce: digital channels’ presence has become an essential element for any company operating also – and especially – in the fashion industry.
Recent estimates from the B2C e-commerce Observatory by Polimi and Netcomm show that in 2020 there was a significant increase in the clothing e-commerce market, recording a significant +22%. These estimates have also undergone a substantial boost following the pandemic, which has brought digital users closer to the use of e-commerce. In fact, from the pandemic outbreak to the present day, fashion brands are investing more and more in the so-called digital transformation to offer their customers innovative products and services, to be able to manage a distance relationship with the customer effectively. Not only that, but fashion houses are also reinventing their websites and e-commerce channels to allow customers to take advantage of renewed shopping experiences: virtual sales assistants, e-concierge services and chatbots interact with customers to help them choose and try on – even from home – their favourite outfits.
In particular, as stated by the Polimi and Netcomm Observatory, the factors that have made these estimates possible are mainly to be found in the significant opportunities for savings compared to a physical clothing store, and the simplified and accessible management of returns, as well as the significantly reduced delivery times. In this regard, fashion brands must pay attention to the regulations protecting consumers’ rights, which provide, among other things, specific information obligations (with respect, for example, to the adoption of terms and conditions of sale that must include provisions on shipping and return procedures), as well as guarantees for defective products or the possibility for the consumer to exercise their right of withdrawal.
In any case, the connection between the fashion world and digitization, represents a link that, through the profiling of digital users, can contribute to increase precise and practical data analysis, with the consequence of affecting the markets’ logic. In the fashion industry, thanks to the users’ profiling, it is possible to determine which are the most popular clothing items and predict new trends. The main driver of the fashion industry could be found in the use of Big Data through the collection and analysis of this information: the fashion industry is highly dependent on trends that are rapidly changing.
Prior to the e-commerce expansion, the identification of trends relied on analysis of sales data from previous years, which affected retailers and brands’ choice of new styles and trends. Although it led to the identification of recent trends relatively quickly, this process was not reflecting effectively what customers expected from the following year. In contrast, today, the data collected by fashion brands on the use that their customers and users make of e-store, apps and social networks play a fundamental role. In fact, from the data collected – also through artificial intelligence systems – fashion companies can profile their customers, their interests, and tastes, to offer them a personalized service. Moreover, Big Data analysis allows the acceleration of this process and a prediction of future trends even before they break out, by providing information derived both from the quantities of products purchased within e-commerce and from searches made online by users. In this way, it is easier to identify the styles, colors or fabrics for which the public’s interest is concentrated, and it is also easier to meet consumer demand in a shorter time frame. Moreover, understanding through Big Data analytics what consumers’ interests are, and consequently offering an increasingly personalized experience, allows brands to maximize sales while lowering the returns’ rates.
However, the profiling of digital users through the analysis of Big Data with through mean of algorithms is considered to be a processing of personal data. For this reason, fashion brands must take into account the obligations and principles provided by the legislation on the protection of personal data. In this regard, in fact, the EU Regulation 2016/679 (“GDPR”) provides that companies that intend to use personal data, must collect only the data strictly necessary to achieve their purposes and process them only as long as they are useful, in compliance with the principle of minimization outlined in Article 5 of the GDPR. Not only that, to lawfully collect and process personal data, fashion houses are required to identify the correct legal basis which – for profiling of this type – must be found in the consent of the data subject, which must be free, specific, informed and unequivocal. Moreover, the GDPR provides for specific information and transparency obligations: in fact, Aricle 13 GDPR requires the data controller to provide certain information on the processing carried out, on its purposes and methods, as well as on the existence of an automated decision, including profiling, and on the logic underlying the adoption of these automated procedures and the consequences that may result for the data subjects. Not only that, pursuant to Article 22 of the GDPR, the data subject also has the right not to be subjected to decisions based solely on automated processing, including profiling, when they produce legal effects concerning them. Lastly, it is also essential to carry out a Data Protection Impact Assessment pursuant to Article 35 of the GDPR, as this type of processing, could be invasive, entailing a high risk for the rights and freedoms of data subjects.
However, despite the countless obligations that brands must comply with to in order to do business online, digitization is now fashion and is the new trend that all the major brands operating in the fashion industry are trying to conform to.
If you would like to know more about this topic, please contact deborah.paracchini@dlapiper.com and enila.elezi@dlapiper.com.