FASHION AND LUXURY

What the Data Tells Us About Digital Transformation,

by Industry
The key findings for fashion and luxury companies
The overall digital transformation
success rate for fashion and luxury
is near the cross-sector average, but
only 23% of companies have met or
exceeded their target value, well
below average for all sectors, and
the number of companies that
failed to create long-term change is
20% higher than average.
Priorities for the future include
sales digitization, next-generation
customer support and experience,
and product design and
development.
Source: BCG analysis.
Fashion and luxury companies struggle most
with deploying high-caliber talent, establishing
agile governance mindset, and implementing
business-led modular technology.
Leaders’ priorities include e-commerce and
sales acceleration; personalized and targeted
product recommendation for smart sales;
personalized and targeted campaigns for
next-generation marketing; chatbots and
interactive voice response and immersive
in-store experience (metaverse, AR, and VR) in
next-generation customer support; and design
and personalized products and smart ID of
design features in product development.
Three of the four digital
transformation objectives are
customer-facing: sales and
market acceleration, digitizing
the customer experience and
journeys, and marketing and
dynamic pricing.
More than three-quarters of
fashion and luxury companies
plan to increase investments in
ESG (slightly below the
cross-sector average), with the
environment being the top priority
(for example, RFID and blockchain
for traceability, and demand
forecasting for waste reduction).
The data in more depth

Rates of success Topics of focus for Top priorities for The critical The role of ESG
in digital fashion and luxury the future human and in digital
transformation companies tech enablers transformation

Source: BCG analysis.

RATES OF SUCCESS

The number of fashion and luxury winners lags the cross-industry average
by a third, and there are 20% more companies in the worry zone
CASES BELOW SUCCESS SCORE (%)
100

80 Fashion and luxury data points

Fashion and luxury
60 Fashion and luxury
2021 cross-industry Cross-industry
sector average: 7.2
40 average: 7.4 Woe zone (success score <6)
Worry zone (success score ≥6–<8)
20 Win zone (success score ≥8)
0
0 2 4 6 8 10
SUCCESS SCORE1
2021 BCG Global Digital
13% 52% 35%
Transformation Survey overall

15% 62% 23%

Fashion and luxury sector Limited value created Value created but total Target value met or 1.2x companies in the
(<50% of target); no targets not met; exceeded; sustainable worry zone compared with
sustainable change limited long-term change change created cross-industry average
Source: 2021 BCG Global Digital Transformation Survey.
Note: Survey question: “Across the following dimensions, please rate your organization’s digital transformation experience to date on a scale of 1 to 10, using the guidelines in the table below.”
1
Success score is calculated from respondents’ answers on six dimensions of transformation: strategy; leadership; talent; agility; monitoring; and tech and data.
RATES OF SUCCESS

Fashion and luxury companies struggle with deploying high-caliber talent,

agile governance mindset, and business-led modular technology
DISTRIBUTION OF SUCCESS SCORES ON INDIVIDUAL KEY FACTORS1
0 1 2 3 4 5 6 7 8 9 10
7.1
1 Integrated strategy with clear transformation goals

7.3
2 Leadership commitment from CEO through middle management

6.8
3 Deployment of high-caliber talent

6.8
4 An agile governance mindset that drives broader adoption

7.2
5 Effective monitoring of progress toward defined outcomes

6.5
6 Business-led modular technology and data platform

Lower extreme Fashion and luxury average Upper or lower quartile Upper extreme
Woe zone (success score <6) Worry zone (success score ≥6–<8) Win zone (success score ≥8)

Source: 2021 BCG Global Digital Transformation Survey.

Note: Survey question: “Across the following dimensions, please rate your organization’s digital transformation experience to date on a scale of 1 to 10 using the guidelines in the table below.”
1
Success score is calculated from respondents’ answers on six dimensions of transformation: strategy; leadership; talent; agility; monitoring; and tech and data.
TOPICS OF FOCUS

The top transformation priorities for fashion and luxury companies include sales
and market acceleration, customer experience, and business model innovation
Strategic objectives Scope of digital transformation1
SHARE OF RESPONDENTS (%) SHARE OF RESPONDENTS (%)

Sales and market acceleration 87

Customer experience and journeys 87
Improvement in
Growth and business model innovation 67
40 customer experience
and go-to-market Marketing and dynamic pricing 67
Digital ecosystem and partnerships 53
Digitizing support functions 53
Innovation and growth
23
in the core and beyond Supply chain 53
Digital manufacturing and operations 47
Performance improvement
25 through the operational Digital procurement 47
value chain Building resilience via cybersecurity
20
and compliance
Performance improvement
12
in support functions New business venture 20

Source: 2021 BCG Global Digital Transformation Survey, n = 15.

1
Respondents were asked to select all priorities that applied.
TOP PRIORITIES FOR THE FUTURE

Digitizing sales is a top priority going forward, as is next-generation

customer support and experience
PLANNED SHARE OF WALLET SPENDING ALLOCATED ACROSS DIGITAL TOPICS IN THE NEXT TWO TO THREE YEARS (%)1
93
Next-generation marketing
21

87
Smart sales
19

87
Digital supply chain
18

Digital support functions 80

and operations 17

Product innovation and 80

smart factory 11

Next-generation 73
customer service 14

Share of respondents allocating any investment toward each digital topic Average share of total investment

Source: 2021 BCG Global Digital Transformation Survey, n = 15.

1
For example, the uppermost pair of bars can be read as “93% of fashion and luxury respondents plan to invest in next-generation sales and marketing, allocating an average 21% of total digital investment.”
TOP PRIORITIES FOR THE FUTURE

Fashion and luxury digital priorities: Next-generation marketing

Digital initiatives (bars indicate relative prioritization of initiatives)

Personalized and targeted campaigns 1.00

Predictive consumer preference (trend detection) 0.97

Social-media-based customer engagement 0.43

Website traffic optimization 0.31

Smart ROI optimization, and advertising and promotion allocation 0.29

Smart customer segmentation 0.26

Digital loyalty programs 0.26

Automated lead generation and handling 0.09

Relative prioritization for all fashion and luxury companies Top priorities for win-zone companies
Source: 2021 BCG Global Digital Transformation Survey, n = 15.
TOP PRIORITIES FOR THE FUTURE

Fashion and luxury digital priorities: Next-generation customer support

and experience
Digital initiatives (bars indicate relative prioritization of initiatives)

Customer support (chatbots and interactive voice response) 1.00

Immersive in-store experience (e.g., AR/VR, digital mirrors) 0.83

Digital self-support 0.60

App- or platform-based after-sales support 0.60

Contactless in-store experience 0.53

Digital tools to recognize counterfeit products 0.30

Relative prioritization for all fashion and luxury companies Top priorities for win-zone companies
Source: 2021 BCG Global Digital Transformation Survey, n = 15.
TOP PRIORITIES FOR THE FUTURE

Fashion and luxury digital priorities: Smart sales

Digital initiatives (bars indicate relative prioritization of initiatives)

E-commerce sales acceleration 1.00

Personalized and targeted product recommendation (online and in-store) 0.71

Pricing optimization and markdowns 0.43

Demand forecasting (improving on-shelf availability) 0.43

Optimized product assortment and merchandizing 0.21

Relative prioritization for all fashion and luxury companies Top priorities for win-zone companies
Source: 2021 BCG Global Digital Transformation Survey, n = 15.
TOP PRIORITIES FOR THE FUTURE

Fashion and luxury digital priorities: Product design and development

Digital initiatives (bars indicate relative prioritization of initiatives)

Improving product recommendations 1.00

Design and personalize products with customer, using digital channels 1.00

Smart identification of successful design features and products 0.81

Digital simulation tools to design and showcase clothing 0.62

End-to-end digital designing for quick concept-to-shelf process 0.35

3D printing and designing tools for fabric texture

0.35
and fitting customization

Design research labs with advanced equipment 0.04

Relative prioritization for all fashion and luxury companies Top priorities for win-zone companies
Source: 2021 BCG Global Digital Transformation Survey, n = 15.
TOP PRIORITIES FOR THE FUTURE

Fashion and luxury digital priorities: Digital support functions

and operations
Digital initiatives (bars indicate relative prioritization of initiatives)

End-to-end procure-to-pay digitization for procurement 1.00

End-to-end order-to-cash digitization for

1.00
management of accounts receivable

End-to-end record-to-report digitization of finance activities 0.83

End-to-end hire-to-retire digitization (including

0.74
integrated training) for HR

End-to-end source-to-contract digitization for contracting 0.61

Automated shift management for store staff 0.43

Relative prioritization for all fashion and luxury companies Top priorities for win-zone companies
Source: 2021 BCG Global Digital Transformation Survey, n = 15.
TOP PRIORITIES FOR THE FUTURE

Fashion and luxury digital priorities: Digital supply chain

Digital initiatives (bars indicate relative prioritization of initiatives)

Demand forecasting 1.00

Dynamic inventory planning 0.51

Real-time inventory tracking 0.35

Omnichannel order fulfillment 0.27

Real-time product and supplies tracking 0.22

Route/network optimization 0.14

Automated warehouse 0.11

Capacity planning 0.08

Relative prioritization for all fashion and luxury companies Top priorities for win-zone companies
Source: 2021 BCG Global Digital Transformation Survey, n = 15.
THE CRITICAL ENABLERS

Fashion and luxury companies intend to invest across broad range of tech
and human enablers
Eight out of ten fashion and luxury companies plan to invest in modernization of tech architecture, AI and big data, modernization
of tech organization, and continuous learning, allocating about 58% of total enabler spending

PLANNED SHARE OF WALLET SPENDING ALLOCATED ACROSS ENABLER DIGITAL TOPICS IN THE NEXT TWO TO THREE YEARS (%)1

Tech Human
87 87

80 80
73 73 73
67 67
18
15 15
10 10
8 8 7 7

Infrastructure Modernization AI and big data Cybersecurity Modernization of New ways of New talent and Continuous Integrated
and cloud of tech technology working leadership learning ecosystems
enablement architecture organization and models
operating model

Share of respondents allocating any investment toward digital topic Average share of total investment
Source: 2021 BCG Global Digital Transformation Survey, n = 15.
1
For example, the leftmost pair of bars can be read as “73% of fashion and luxury respondents plan to invest in Infrastructure and cloud enablement, allocating an average 10% of their total digital enablers spending.”
ROLE OF ESG IN DIGITAL TRANSFORMATION

77% of fashion and luxury companies … with the strongest emphasis

plan to invest more in ESG, slightly on E
below the cross-sector average
Share of respondents planning to increase/decrease/ Leading digital initiatives being prioritized
maintain investment toward ESG in coming years to support E, S, and G goals
SHARE OF RESPONDENTS PRIORITIZING (%)
PROVIDER AVERAGE (%) CROSS-INDUSTRY AVERAGE (%)
· Digital supply chain optimization

Environment
Significantly · Improving measurement and
33 25 ~53
increase traceability through control towers

Moderately · Increasing supply chain transparency

44 56
increase through supply chain control tower

Social
· Improving employee collaboration ~47
Maintain as in through digital platform
previous year(s) 22 17

Decrease vs. · Real-time tracking/monitoring of risk

Governance
previous year(s) 0 1 · Predictive risk analytics to improve
~40
preparedness and mitigation

Source: 2021 BCG Global Digital Transformation Survey, n =15.

If you would like to discuss this topic, please contact one of the authors:

AMANDA LUTHER FILIPPO BIANCHI

Managing Director & Partner, Austin Managing Director & Partner, Milan
luther.amanda@bcg.com bianchi.filippo@bcg.com
+1 214 850 4916 +39 342 3912381

DRAKE WATTEN JAVIER SEARA

Managing Director & Partner, Bay Area – San Francisco Managing Director & Senior Partner, Amsterdam
watten.drake@bcg.com seara.javier@bcg.com
+1 650 269 7310 +31 6 48389130

TAYLOR SMITH
Managing Director & Senior Partner, New York
smith.taylor@bcg.com
+1 917 327 1829