News & Views

AI in the Fashion Industry – How to Approach the Next Trends

28 April 2021

Authors: Elisabeth Vestin and Linn Alfredsson

As new and emerging technologies are continuously improving, they also play an ever-more significant role in shaping the fashion industry. During the past few years, we have seen fashion brands and retailers implement online solutions to enhance the customer experience through automation, machine learning, and algorithms. Today, artificial intelligence (AI) is revolutionising the fashion industry by fundamentally transforming every element of its value chain – from designing and manufacturing to marketing and sales.

AI is a buzzword in the fashion industry, and industry players are rushing to take advantage of the opportunities that it offers to the e-commerce sector. According to  Salesforce, 25% of retailers and marketers of consumer goods were leveraging some form of AI in 2019 – a figure predicted to increase to 70% over the next two years. AI has the potential to drive improvements in various areas including forecasting, capacity planning, merchandising, and production automation and delivery. Consumers may be the ultimate beneficiaries, enjoying improved product availability, a personalised shopping space, and accelerated fulfilment. However, we need to understand that the ever-evolving technological development also provokes certain risks and uncertainties.

There are already plenty of great examples of brands and retailers utilising AI. For example, UK-based online fashion company Asos uses a tool called Fit Assistance to help its customers to find the perfect size by providing recommendations based on a survey of the customer’s age, height, weight, and body measurements. Understanding customer needs also helps fashion platforms such as Germany-based Zalando in keeping up with the latest trends, using AI-powered fashion designing to generate new items based on its customers’ preferred colours, textures, and shapes. In addition, by employing AI, retail giants such as H&M and Zara are able to reduce wastage and inventory costs by organising and allocating unsold stock to stores with a high demand.

AI and Privacy

The implementation of AI-powered tools in the fashion industry has magnified the debate on consumer privacy. By tracking customers’ previous activities, data-generated solutions can be personalised down to an extremely specific level including, as mentioned above, suggestions on sizes or related items. From a legislative point of view, these privacy risks have not gone unnoticed. The European General Data Protection Regulation (GDPR), which took effect in 2018, was the first large-scale effort to offer consumers more legal protection. The GDPR has been followed by similar legislation in the US, such as the California Consumer Privacy Act (CCPA), which became effective on 1 January 2020.

However, as the volume and variety of data collection continue to expand, it is safe to say that brands and retailers must continue to prioritise consumer concerns on privacy matters. AI and data are two critical components in respect of meeting the raised expectations of today’s conscious consumer. In order to truly benefit from using data, to secure consumer trust, and to meet legal requirements, brands and retailers must be transparent and provide clear privacy policies on how personal data is collected and processed.

Furthermore, data-driven systems have the ability to learn for themselves and make decisions based on the data they are provided. Basically, data-driven systems generally adapt better when they are provided with large amounts of data. This means that in order for data-driven systems to serve their intended purpose, a large amount of data regarding, for example, the consumer’s behaviour on the retailer’s platform, in-store movement, and ordering history is required before the systems can be used effectively. However, the personal data collected, as well as the processing of this data, is subject to the aforementioned data protection laws and regulations.

Technology and Creativity

Some may argue that AI is too mechanical to capture the creative core of fashion. However, the benefits of accepting AI as a creative tool extend across the value chain, covering areas such as design, marketing, and merchandising. That being said, the creation of AI-based fashion items has taken the relationship between technology and creativity to a new level. This development is interesting, as it raises several legal questions, such as who – if anyone – will ultimately own the rights to designs created using AI: the programmer of the AI, the user of the AI, or the AI itself?

Currently, the understanding in many jurisdictions is that while AI programs and algorithms themselves can enjoy copyright or trade secret protection in the same way as other computer programs, AI cannot be an author (in the legal sense) or hold the copyright to the works it generates. However, this does not rule out the possibility that the copyright to AI-generated works could belong to the programmer of the AI or the user of the AI, or that AI-generated works could be eligible for other forms of protection, such as trademark or design protection. In such a case, the answer to the question of which of these parties will own the copyright or other intellectual property rights may also depend on what has been agreed between them. Therefore, brands and retailers procuring AI systems to help in the creative process should be sure to specify in their agreements that the intellectual property rights to anything that the AI creates will automatically belong to them.

Challenges for Brands and Retailers

The main future challenges for brands and retailers will be tailoring the new and emerging technologies to their needs and adapting to consumers’ ever-changing expectations. AI can enhance the customer experience rapidly, but brands and retailers must assess the risks arising from using these tools, and they must also prepare to meet the legal requirements relating to such use. The fashion industry is currently undergoing a technological transformation in an effort to become seamless and digital in all aspects of its supply chain to fit consumers’ need for on-demand services.  In addition, there is a need for brands and retailers to become increasingly transparent with respect to privacy matters.

The main future challenges for global brands and retailers will be tailoring the technology for their purposes and adapting consumer expectations.

Some Practical Aspects to Consider

In light of the above, we suggest that you consider the following when working with AI:

  • be aware of data protection laws and regulations, such as the GDPR, and remember that amendments to privacy policies (and in some cases also the collection of consumer consents) may be needed in order to commence any new collection or use of consumer data;
  • make sure you are aware of where consumers’ personal data is located and stored;
  • look into the different legal means available to protect the AI program or algorithm and the content that it generates;
  • consider the ethical aspects of using AI (so-called trustworthy AI); and
  • consider the related transparency processes.

More articles from the second edition of Hannes Snellman Fashion Law Review are available here.