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Literature Review ASSESSMENT 2 - FINAL PROJECT RESEARCH FSM601 Prepared for: Stephanie Liberman Prepared by: Veronica Maccan S00801544 November 2016

LITERATURE REVIEW

INDEX 1.0 INTRODUCTION……………………………………………………………………………………………..3

2.0 CONSUMERS SHOPPING BEHAVIOUR………………………………………………………………….5 2.1 THE IMPACT OF SOCIAL AND ECONOMIC CHANGES ON CONSUMER BEHAVIOUR…………….……5

2.1.1 ORGANISED RETAILING……………………………………………………………………………5 2.1.2 FAST FASHION………………………………………………………………………………………6 2.1.3 ONLINE SHOPPING………………………………………………………………………….……..6

2.2 CONSUMERS SPENDING HABITS SHIFT………………………………………………………….….………7 2.3 ’UTILITARIAN' AND 'HEDONIC' SHOPPING BEHAVIOURS..…………………………………………..……7 2.4 SHOPPING ORIENTATION………………………………………………………………..…………………….8

3.0 INDUSTRY RESPONSE TO THE CHANGING CONSUMERS’ NEEDS……………………………...9

3.1 RETAILERS ADAPTION TO THEIR CUSTOMER’S DEMANDS………………….………………..………….9

3.2 SHOPPING OUTCOMES…………………………………………………………………………….………….10

3.3 NEW TECHNOLOGIES ENHANCING ONLINE SHOPPING…………………………………….……………10

4.0 TECHNOLOGICAL INNOVATION………………………………………………………………………….11 4.1 REASONS FOR TECHNOLOGY SUCCESS………………………………………………………………..….11 4.2 DEVELOPING INNOVATIONS…………………………………………………………………………….…….12

4.2.1 VIRTUAL REALITY (VR) VS. AUGMENTED REALITY (AR)……………………………………….13 4.2.2 SCANNING RECOGNITION………………………………………………………………………..15

5.0 SOCIAL MEDIA IMPACT ON THE RETAILING INDUSTRY…………………………………………….16 5.1 SOCIAL MEDIA IMPACT…………………………………………………………………………………………..16 5.2 THE RELEVANCE OF SOCIAL MEDIA ADVERTISING………………………………………………………….16

5.3 DIGITAL INFLUENCERS…………………………………………………………………………………………..17

6.0 CONCLUSION………………………………………………………………………………………………...19

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THE IMPACT OF TECHNOLOGY IN

FASHION

1.0 INTRODUCTION

The project proposal analysed and justified how the industry and consumers have

integrated with the world of technology in fashion by further examining their attitudes

towards technological innovations (Chandrawati, & Kung Wong, 2016). The rationale was

composed of two main sections. The first explained how fashion and technology are

coexisting together while exploring emerging technological innovations in retailing. It also

focused on the factors contributing to online shopping success. With clothing becoming the

most purchased product online, it was fundamental to determine self-service technology

employment in the industry (Perks, 2016; Chandrawati, & Kung Wong, 2016; Heck, M.,

2014). The second section concentrates on identifying how brands and consumers are

using their influence on social media. Retailers need to provide a better service in-store and

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via online platforms (Crabbe, 2016). Social media enables consumers to have an insight into

the brand that previously did not exist. In comparison, retailers can study their customers'

shopping behaviour based on their online engagement and thus create more personalised

services (Hahn et al., 2016). The objective of the proposal was to demonstrate how

technological innovations in fashion provided exceptional benefits for both parties.

The following literature review will discuss consumers’ shopping behaviour, social and

economic influences and how the industry is responding to them. Furthermore, as a result of

the proposal findings of emerging technological innovations, the literature review aims to

analyse further virtual reality, augmented reality and and scanning recognition technologies.

Lastly, it will focus on the social media model exploring its impact on the fashion retailing

industry.

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2.0 CONSUMERS SHOPPING BEHAVIOUR

2.1 THE IMPACT OF SOCIAL AND ECONOMIC CHANGES ON

CONSUMER BEHAVIOUR

Consumer's lifestyles and behaviours are changing in response to social and economic

changes (Wahlen & Laamanen, 2015). The substantial growth of organised retailing, online

shopping and fast fashion, indicates that consumers have become used to a constant

stream of new product and services (Crabbe, 2013).

2.1.1 ORGANISED RETAILING

‘Organised retailing’ or ‘modern retailing’, is defined as a number of chain stores, owned or

franchised by a controlling entity, or a large individual storehouse (Reurbanist, 2016). The

success of retail chain stores has affected consumers behaviour due to the offer of lower

prices, range of product and many locations, with the result of being much more convenient

and accessible. Whilst this proliferation has been beneficial to retail chain stores, it has been

a major cause of the failure for many local businesses (Mehra, 2015).

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2.1.2 FAST FASHION

‘Fast fashion’ has dramatically changed the retailing industry, and in turn, forced consumers’

shopping habits and behaviours to change (Rosa, 2013). The phenomenon was born in the

nineties; it consists of middle market or low-cost brands adapting what high-end brands

showcase on their catwalks, into similar garments with lower quality and affordable prices

(Casu, 2016).

Retailers such as Zara, Topshop and H&M, regularly replenish their products in their stores

following the latest catwalk trends. This system entices consumers to view the new stock

and quickly shop before they sell out (Black & Black, 2008). This speedy production process

reflects consumers’ growing demand for buying affordable and fashionable styles inspired

by premium and luxury brands (Casu, 2016). "Fast fashion" is considered to be the key

element in the process of fashion democratisation, the economic phenomenon that has

allowed "la mode" to be accessible to everyone (Rosa, 2013). However, research affirms

that this system is reaching its limit as it is highly unsustainable and therefore it cannot

continue endlessly (Farley et al., 2014).

2.1.3 ONLINE SHOPPING

Another significant innovation profoundly affecting both the social and economic field is

online shopping (Perks, 2016). E-commerce became a primary characteristic of the modern

era and a unique and irreplaceable retailing platform (Chen, 2009). It is essential to study the

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internet phenomenon as it has profoundly impacted both consumers and retailers

(Nwaizugbo & Ifeanyichukwu, 2016). Online shopping success is due to ease, convenience,

flexible prices and a broad range of services with the constant focus on making its users' life

easier (Chandrawati, & Wong, 2016; McDermott, 2016).

Consumers frequently look online for products that they have seen in-store, from friends or

family, in social media, on tv and other forms of media, before purchasing online or in-store

(Payling, 2016). The success of the internet has therefore generated a new type of

consumer, the “Liquid Consumer” moving with no limits from one media platform to another

at any time and anywhere (WGSN, 2016).

2.2 CONSUMERS SPENDING HABITS SHIFT

Consumers spending habits are shifting. They are evolving according to circumstances such

as age, gender, location, income, family status, etc. (Wahlen & Laamanen, 2015). Shopping

habits and lifestyles are becoming more sophisticated and diverse and consumer groups

are not as broad as they used to be (Crabbe, 2016). Industries now have to satisfy more

niche groups, creating a wider range of products and services suiting their needs and

demands (Steen, 2016).

2.3 ’UTILITARIAN' AND 'HEDONIC' SHOPPING BEHAVIOURS But what are the factors that influence consumers when shopping both online and in the

conventional brick-and-mortar? The more lifestyles and spending habits are changing so

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too are the shopping behaviours (Wahlen & Laamanen, 2015). Two factors are playing a

significant role in the buying behaviour: people buy for 'utilitarian' and 'hedonic' purposes

(Kang & Park-Poaps, 2010). 'Utilitarian' objects can be defined as the functional, practical

and necessary reasons while the 'hedonic' characteristics include aesthetic, sensitive and

self-fulfilment goals (Rahman et al., 2015, Cardoso & Pinto, 2010). However, these two

values are not to be considered as contrasting as they frequently are linked and

complementary factors (Michon et al., 2015). For example, if a consumer needs a rain coat

they may look for a fashionable one, which is fit for purpose thus protecting them from the

rain but makes them look stylish too. Therefore the consumer is influenced by both utilitarian

and hedonic motivations.

2.4 SHOPPING ORIENTATION Aspects such as the shopper's styles, activities, opinions and interests can be summarised

with the definition of "shopping orientation" (Moschis, 1992). Shopping orientation is a

construct of personal, social, economic and recreational impulses affecting the consumers’

demands (Rahman et al., 2015). In order to understand why people shop, it is important to

consider values such as the satisfaction and the utility provided by shopping activities

(Nwaizugbo & Ifeanyichukwu, 2016).

Consumers are influenced by other factors within the utility and aesthetic, when shopping

(Steen, 2016). The customer values the relationship between the quality of the product, the

quality of the service and a reasonable price (Nwaizugbo & Ifeanyichukwu, 2016; May,

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1989). Brands who connect with consumers, share their value and offer a broad range of

products are more appealing to buyers (Black & Veloutsou, 2016). These growing demands

are challenging for the retail industry as they need to adapt as fast as possible to the

changing frame of the consumer market (Crabbe, 2013).

3.0 INDUSTRY RESPONSE TO THE CHANGING CONSUMERS’ NEEDS

3.1 RETAILERS ADAPTION TO THEIR CUSTOMERS’ DEMANDS It is crucial to understand this new diversity of groups to comprehend the ever-changing

needs of the consumer based on social and economic changes. Retailers that adapt

products and services to their customers’ needs are more likely to see a growth in brand

relevance likelihood in success (Bughin, 2015). Hence, it is imperative for the industry to get

an insight into their customer's shopping behaviour as it will allow them to further improve

their brand personality and thus engage with current clients while also attracting new ones

(Jin & Kim, 2003). This strategy will also enable brands to differentiate with hypothetical

competitors (Rahman et al., 2015). Research states that the consumers’ perception of

brand personality strongly influences their shopping behaviours towards that brand

(Rahman et al., 2015).

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3.2 SHOPPING OUTCOMES In order to respond to consumers’ demands, the retailing industry needs to communicate

closely with their customers so that they learn what they desire and how to adapt to their

needs. This strategy will require elements such as the use of product feedback, survey data

and encouraging communication through social media and advertising (Yang et al., 2016;

Bughin, 2015; Hudson et al., 2016). Industries have started to focus on shopping

outcomes, such as the customer's level of excitement, engagement and satisfaction (Jin &

Kim, 2003). For example, details such as the time spent browsing and exploring the store,

the reason why they return to that store, how much they spend (if it is more or less that they

budgeted) and if they would recommend the store, need to be considered and analysed

(Sweeny & Wyber, 2002). These general shopping outcomes are significant for both in-store

and online shopping as they permit brands to understand their clients’ needs and create

strategies in consequence (Nwaizugbo & Ifeanyichukwu, 2016).

3.3 NEW TECHNOLOGIES ENHANCING ONLINE SHOPPING As 33% of clothing sales are purchased online, it is crucial for retailers to start embracing

new technologies such as shopping apps or websites with options that encounter

shoppers’ demands (WGSN, 2016). The majority of consumers are willing to receive more

personalised offers and recommendations based on their past shopping behaviour before

buying (Payling, 2016). However, according to marketing research, brands need to be

careful not to invade the online social space as there are notable anxieties concerning

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security in online shopping (Perks, 2016; Hasan, 2016). Furthermore, previous customers

reviews also play a significant role during the purchasing decision process (Retail

Technology, 2014). For this reason, many websites have started using recommendation

tools. For example, many brands’ websites create a selection of various styles based on the

customer browsing and purchasing history to recommend it as a possible purchase. In

addition to this, more and more brands are giving their customers the option of rating

purchased items and leaving feedback, this, in turn, increases consumer confidence and

encourages them to buy the product (Yang et al., 2016).

It is clear that this connection benefits both retailers and consumers, but it also means

retailers need to learn more about shoppers changing lifestyles and influences (Crabbe,

2013). A positive shopping experience, a pleasant environment (considering both the store

or a website) and a good service, are the reasons why consumers will remain loyal and/or

recommend a retailer (Michon et al., 2008).

4.0 TECHNOLOGICAL INNOVATIONS

4.1 REASONS FOR TECHNOLOGY SUCCESS One of the primary cause of technology's success in fashion is that nowadays many people

are concerned about their appearance as they want to convey the best image of

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themselves to their friends, family and colleagues, they want to select the appropriate

garment for every occasion (Goh et al., 2011). This selection can be challenging and takes

time. Additionally, there is a constant need, especially for millennials, to look good on social

media as technology plays a pivotal role in their lives (Mitskavets, 2016). For this reasons,

many companies are investing in new technologies implementing virtual reality. These

technological innovations aim to help people to easily create their styles trough computer,

smartphones, tablets and the internet (Fukuda & Nakatani, 2011; Perry, 2016).

Enjoyment, ease of use, usefulness and saving time are the key reasons of why consumers

use technological devices and also why technology has been so successful in fashion

retailing (Chandrawati, & Kung Wong, 2016; Perry, 2016). Technology optimism indicates

the positive view of technology of consumers and brands as it offers them control, flexibility

and efficiency (Parasuraman, 2000).

4.2 DEVELOPING INNOVATIONS According to market research, there are new technological innovations that consumers

would be more likely to use in the future, such as virtual and augmented technologies,

virtual searching apps and clothes with fabric innovations allowing the connection with

smartphones (Sender, 2016).

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4.2.1 VIRTUAL REALITY (VR) VS. AUGMENTED REALITY (AR) 'Virtual reality' is a simulation generated by a computer, of a three-dimensional

representation or background from which a person can interact in a seemingly real or

physical way using specific equipment (Aldenton, 2015). On the other hand 'augmented

reality' is similar to the first one but the difference is that it combines virtual reality and real

life. The main distinction is that with AR, users can interact with virtual contents in the real

world, and can distinguish what is real and what is digital. (McKalin, 2016). VR and AR are

considered to be the ultimate forms of interaction between humans and information in the

digital world (Kuang, 2016). A newly developed way of connecting virtual and real in the

same space (Javornik, 2016).

In the last three years, virtual reality has improved rapidly, and more and more consumers

are willing to try it (Sender, 2016). For example, Topshop adopted the VR glasses Oculus

Rift during its catwalk show in 2014; shoppers could experience the show from a 360-

degree perspective live in the Oxford Street flagship store (Aldenton, 2015). Last year,

Balenciaga live streamed their show using 360-degree VR footage on their app (Business

Source Complete, 2016). Fashion industries are implementing and pushing the

technological boundaries further, VR is expected to generate a global sale of $5.2 billion by

2018 (Business Source Complete, 2016; Aldenton, 2015).

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'Augmented reality' is emerging in the marketing sector especially in retailing (Javornik,

2016). This technology supplements the real world with the virtual (computer-generated)

one; real objects are enhanced (augmented) by adding virtually generated information to it.

The AR system has the properties of combining real and virtual objects in a real

environment; operating interactively, and aligning physical and virtual objects with each other

in real-time (Azuma et al. 2001; Van Krevelen & Poelman 2010; Carmigniani et al. 2011). For

example Ikea, the famous Swedish furniture retailer, created an online catalogue app with a

feature implementing AR (Williams, 2016). The user can point its device's camera to the

selected space and see the representation of the furniture on display with the approximate

dimension that it would have on the real world. The app was created due to 14% of Ikea's

clients purchasing furniture which turned out to be the incorrect size for the planned location

(Ridden, 2016). Converse created an AR-fueled app to display how shoes will look like;

customers select the shoes then direct the device towards their feet to see how they look

virtually represented on them (Williams, 2016). AR technology is foreseen to reach $56.8

billion by 2020 (Javornik, 2016).

It is predicted that VR and AR will play a big part in our daily life, we could try clothes on

without actually wearing them or watch a live catwalk from the model point of view (Kuang,

2016).

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4.2.3 SCANNING RECOGNITION Consumers are influenced by friends or family, social media, tv and other media (Crabbe,

2016; Payling, 2016). Virtual searching app using smartphones or tablets are among the

leading technological innovations that consumers believe to be next in the world of fashion

(Sender, 2016). For this reasons, visual recognition technology is being used in the creation

of apps, permitting users to find out what someone is wearing just by snapping them on the

street (VentureBeat, 2016).

ASAP54 is an example of an app implementing this technology; users take a picture of

someone, a piece of garment or an image in a magazine and the app scans it, search

through its databases and find the match. If it is incapable of finding it, it recommends

similar products with the selected budget that is directly purchasable from the link (Mulshine,

2016). Furthermore, a team of personal stylist will create similarly suggestion within 24 hours

if requested by email (Milligan, 2016; Sedghi, 2016). The American retailer Macy's and the

European Zalando, incorporated scanning recognition and virtual search software creating

similar apps that allow consumers to take a picture with their phones of any image and the

app will instantly find a similar garment available from the retailer (Retail Technology, 2016).

Visual recognition technology is predicted to grow to $25.65 billion by 2019 (VentureBeat,

2016).

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5.0 SOCIAL MEDIA

5.1 SOCIAL MEDIA IMPACT Social Media has emerged as a dominant group of channels for interaction, information,

communication, recreation and online shopping (Hudson et al., 2016; Chen, 2015). Over 2.7

billion people are online which means nearly 40% of the global population (ICT, 2014).

Brands are adopting this vehicle to analyse and engage with their customers (Berger &

Milkman, 2012). For instance, the company General Motors has moved its global market

spending into digital and social media platforms for the promotion of Cadillac brand from

17% to 25% in three years (Learmonth, 2012). John Lewis had a 10-point lift in recall and a

14-point lift in purchase intent after publicising its Christmas campaign on Social Media

(Aldenton, 2015). Additionally, consumers are using this engagement to communicate with

the brand and express their needs (Hahn et al., 2016).

5.2 THE RELEVANCE OF SOCIAL MEDIA ADVERTISING Research shows there is a connection between consumers trust and the emotional

responses to advertisements on social media (Hudson et al., 2016; Dobele et al., 2007). A

positive emotional response to ads on social media causes the rise of consumers trust

(Hahn et al., 2016). For this reason, the retail industry is investing in this tool to promote their

brand socially and reach existing and potential customers (Neff, 2014; Bughin, 2015; Smith

et al., 2012). Not only can they get an immediate insight into the consumer interests, but are

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also likely to raise brand awareness through the rapid spread of opinions and service

experience (Berger & Milkman, 2012). The win-win is that social media satisfies consumers

desire of engaging with brands and at the same time it helps brands to build a connection, a

sense of belonging with consumers (Hahn et al., 2016; Hudson et al., 2016).

Instagram and Facebook are among the most used social media across all generations

(Kallas, 2016). These platforms are now capable of associating consumers social behaviour

giving brands the possibility of understanding their audience based on browsers

engagement (Hahn et al., 2016). Social media advertising is the most direct and visible

element for marketing communication. This has led to the 'democratisation of the

information' by turning people from just using content to sharing opinions about it (Creative

Business Agency, 2016).

Social media is a relationship tool, a promotional tool and a sales channel accessible at any

time and any place (Neff, 2014). Although it is essential for retailers to use it to create

appropriate marketing strategies, the emotional response to advertising can cause both

positive and negative responses, depending on the content (Lee et al., 2009).

5.3 DIGITAL INFLUENCERS One of the main benefits from the use of social media advertising is the ability to generate

video or photo campaigns showing models or/and a blogger experiencing the product

(Aldenton, 2015). For instance, the Victoria Secret Instagram page features video

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campaigns of models exercising wearing VS active wear; this approach aims to make

customers perceive the brand to be more real and authentic. Digital influencers such as

bloggers, vloggers and models, are embraced by retailers as brand ambassadors; the aim

is to use the social influence of this up-and-coming talent creating exposure for both parties

(Chen, 2015).

Chiara Ferragni is an Italian blogger, her blog 'The Blonde Salad' was founded in 2009, and

now it is the world's most popular fashion blog, and also became a Harvard case study (The

Blonde Salad, 2016; Keinan et al., 2015). The blog incorporates an online marketplace

where she is selling her collection plus exclusive collaborations with brands such as Levi's,

MSGM and Giuseppe Zanotti (Keinan et al., 2015). Furthermore, everything she wears on

her Instagram page (with 7,2 millions of followers) is directly purchasable with a link directed

to her website. Chiara Ferragni is the most relevant example of media influencer with over

$9 million revenue in 2015 (Sowray, 2016).

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6.0 CONCLUSION

As stated in the research, with organised retailing and fast fashion, the product choice has

become far too broad (Reurbanist, 2016; Black & Black, 2008). For this reason, industries

should invest in online shopping as it answers the consumers' need to keep up with the

latest trends and helps them narrow down the choice (Casu, 2016). Consumers are

demanding for convenience, flexible prices and a broad range of services suiting their more

sophisticated and individual needs. Online shopping can, therefore, satisfy all of these

requests (Chandrawati, & Wong, 2016; McDermott, 2016; Crabbe 2016).

If consumers are looking to connect with the brand, it is clear that the retail industry can use

the popularity of social media as the most direct and visible element for marketing

communication (Hudson et al.; Berger & Milkman, 2012). As demonstrated in this literature

review, this platform will help brands to understand and interact closely with their audience

and will allow consumers to communicate and express their needs to the brand (Hahn et al.,

2016).

Looking at the evidence, it is also essential for the fashion industry to explore and invest in

new technologies such as VR, AR and scanning recognition, which are connecting the

virtual world with the real one (Javornik, 2016; Kuang 2016). Furthermore, these developing

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technologies are expected to see a substantial growth in global sale in the next few years

(Business Source Complete, 2016; Aldenton, 2016; Venture Beat, 2016).

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