LONDON, United Kingdom — We expect personalisation to be one of the major themes in the fashion industry next year. Fashion companies will deliver personalisation in many forms — from more-customised products, to curated recommendations, to communications and storytelling that connects to individuals. Indeed, respondents to the BoF-McKinsey Global Fashion survey identified personalisation as the number one trend in 2018. According to a Linkdex survey, more than 70 percent of US consumers expect some sort of personalisation from online businesses. Salesforce.com reports that consumers claim they are happy to hand over data to get a more tailored experience. Executives seem to be listening.

One reason for this development is consumers' growing desire to use their fashion choices to express their own style, self-image, and values. The exploding use of social media plays an important role here. Many consumers — in particular younger generations like Millennials and Gen-Zers — share close to everything on social media. In pursuit of "likes" and building their own personal brands they seek one-of-a- kind items. However, other consumers are tiring of the facades people often project on social media, and want to express more honesty and realism in their streams and style choices. In either case, consumers prefer brands that align with their values, and so they seek authenticity from the fashion companies they engage with. "Customers today want businesses with purpose," believes Tory Burch. "Obviously the product has to be A-plus but it's also really what you stand for and what you believe in." For this reason, fashion companies are likely to use more authentic storytelling and realism in their communications with customers.

Stitch Fix | Source: Courtesy

Consumers are also becoming more picky. This boosts demand for more unconventional and signature items, and for products with higher quality, better prices, exclusivity and authentic and engaging stories. Consumers know what they want, and are not hesitant to shop around for it — choosing products ideally suited to their needs from a variety of brands and companies. To connect with these empowered consumers, fashion companies should think about how to offer products and experiences that are perceived as unique. “More and more people are looking for niche brands or niche SKUs,” says Richard Liu of JD.com. “No one wants to [put a bag on the table] when a lot of ladies have the same bag with the same style. They want to and something special. Something you cannot and in your circle or in your neighbourhood or in your company.”

Some companies’ response has been to broaden the product portfolio and become essentially an umbrella lifestyle brand. In many cases, though, it may be beneficial for companies to refocus on their strengths and value proposition — concentrating on the areas where they can truly distinguish themselves, whether high product quality and signature items, refined price strategies, or more carefully selected product ranges. In other words, rather than taking a scattershot approach, to think carefully about what consumers actually want.

Many companies seem to struggle with turning customer data into intelligent and actionable insights.

In search of convenient solutions, consumers will look to new sources to help them manage their product selection — and to help process the growing amounts of impressions they face each day. Increasingly, consumers are trusting others to curate the information for them. Many consumers perceive the lifestyle of the influencers they follow to be more authentic than traditional company branding efforts, as illustrated by the fact that 9 out of 10 consumers trust an influencer more than traditional advertisements or even celebrity endorsements. This has led to more in influencer endorsements, in addition to product reviews and referrals from peers becoming an important source for curation. In our view, fashion companies will begin to think more about how best to leverage influencer marketing, peer reviews and social media engagement for results that are most relevant to the modern customer. Yet, while influencers are a powerful channel, working with them is not always straightforward. The wrong ambassador can undermine a brand’s authenticity.

The year 2018 will also witness more fashion brands that successfully use data to provide personalised curation. One example is Stitch Fix, which serves as a personal stylist, using an algorithm to deliver personalised packages of pre-assorted clothing and accessories to consumers monthly. With this business model, Stitch Fix in 2016 realised revenues estimated at $730 million. Another example is Affinity, which has a vision of creating a “Pandora for fashion,” recommending styles and looks based on algorithms. But being personal is not enough — personalisation must be experienced as relevant and timely, ideally offering surprising and complementary items, and done in a way that does not feel intrusive.

MyTheresa Gucci DIY sneakers | Source: Courtesy

Consumers will appreciate products that are tailored to their individual needs. Mon Purse, for example, offers customised handbags, partly enabled by new technology such as 3D printing, 3D knitting and laser censors, as shown by Adidas's "Knit for you" pop-up store that produces bespoke products in just a few hours. Mytheresa.com offers customers the opportunity to personalise Gucci trainers online. Customisation will range from smaller adaptions (like embroidery in store) to pre-designed items such as colour combinations that bring a personal touch, to products designed almost completely by the customer.

The concept of personalisation — from webpages and promotions to customised products — has been around for a while. Yet even though demand for individualised and curated fashion is evident, most fashion companies are not yet providing it at scale. Many seem to struggle with turning customer data into intelligent and actionable insights, and few have managed to implement one-to-one tailoring or deploy the technology effectively. But many fashion brands have recently made big advancements in digital, data analytics, and mass-customisation in production, the prerequisites for delivering personalisation at scale.

We expect 2018 to be the year when leading fashion companies will begin delivering on personalisation in earnest, and when the ability to create individualised products will become a source of differentiation. The leaders of the pack will leverage data and technology like machine learning to provide cutting-edge individualised curation and tailoring for consumers that takes into account purchase journeys and customer feedback; to increase relevance of their storytelling and contextual channels; and to refocus on creating products that are distinctive.

This article first appeared in The State of Fashion 2018, BoF and McKinsey & Company's in-depth report on the global fashion industry. Download it here.