Will virtual dressing rooms push Walmart to the forefront of fashion?
Walmart detailed its plans to acquire virtual fitting room startup Zeekit last month in an effort to address some of the most common issues consumers have when shopping for clothing online: fit and unmet expectations. Bentonville, Arkansas, retailer acquired Zeekit a startup founded by a woman based in Israel for an undisclosed amount. Zeekits technology allows consumers to virtually try on clothes before purchasing them by uploading photos of themselves or choosing from a selection of styles that best represent their body characteristics. The acquisition of Zeekit is Walmarts latest offering to focus more on fashion. Walmart has attempted to reinvent its fashion reputation in recent years, expanding its clothing offering through acquisitions, launch of private brands and hire an award-winning designer Brandon maxwell as the creative director of two of his exclusive brands. This startup combines fashion and technology through a dynamic virtual dressing room and underscores the desire to aggressively grow our apparel business, said Doug McMillon, president and CEO of Walmart. during a recent call with investors and analysts. Throughout the pandemic, several companies have invested in some sort of testing technology as physical dressing rooms closed, and concerns about the potential spread of the virus on surfaces have prompted retailers to pull out product testers off the shelves. Walmart is the largest in-store retailer in the United States, but like all other brands and retailers, they are increasingly looking to e-commerce for growth. Benjamin schneider Fashion and Luxury Research Analyst at Euromonitor International  Snapchat acquired Fit Analytics in March as part of its long-term goal of mix augmented reality and e-commerce.Google too launched its own AR testing tool for beauty in December. With cleanliness and safety in mind earlier in the pandemic, clothing rental company Armoire released a digital locker room for members, nicknamed Looks. It was the perfect time for many retailers and brands to participate in innovative ways to market their wares, said Benjamin Schneider, fashion and luxury research analyst at Euromonitor International. The virtual try-on in particular taps into some of the aspects of shopping that consumers have missed during the pandemic, he said. It also resolves size inconsistencies based on the brand and provenance of the clothing (Asian sizes, for example, are typically smaller than US sizes). Walmart is the largest in-store retailer in the United States, but like all other brands and retailers, they are increasingly looking to e-commerce for growth, he said. Not only will virtual dressing rooms help customers feel more confident in their purchases, but customers will be much less likely to return items because they have already been able to try them on virtually, which is a win-win for both. . Walmart customers and also for Walmart.   A tool adapted to the long term  Virtual trial technology not only alleviates some of the problems with online shopping, but it also gives Walmart access to valuable data that could potentially identify consumers clothing preferences or that gravitate towards certain models, Schneider said. . Walmart can use [this data] to inform future product and brand decisions and to make the tool truly profitable, not only in the short term, driving sales, but also in the long term, said Schneider. The effective use of this data would really help promote loyalty, repeat customers for the retailer.   The technology was well on its way to the mainstream market, said Ronald Goodstein, associate professor of marketing at McDonough School of Business in Georgetown. The pandemic has only exacerbated the speed at which the retail industry has started to embrace it, he added. Zeekit attempted to make virtual dressing rooms more mainstream before it was acquired by Walmart in past partnerships with Adidas, Macys and Asos. They basically take [Zeekit] out of everyones market, Goodstein said. The global virtual dressing room market is expected to reach approximately $ 15.4 billion by 2028 according to a recent report by Grand View Research. The market is expected to grow from 2021 to 2028 at a compound annual growth rate of 25.2%, according to the report. Heres the disconnect: this technology, if you look at how well it matches the brand that bought it  is pretty high-end and great for consumers, but I think this technology would be used for brands of. next level, Goodstein said, suggesting that Walmart may be trying to go a bit further upstream.   The retailer, known for its affordable prices and not exactly for mass-market goods, has indeed been busy making a breakthrough in the fashion segment. Walmart Launch of the Free Assembly private label in September and the revived fashion brand Scoop in 2019. In recent years, it has broadened its range of clothing by acquire bonobos, Moosejaw and the plus size brand DTC expert. A few years ago, they published an article saying they were trying to acquire killer brands to increase their e-commerce efforts, said John Harmon, senior analyst at Coresight Research. The acquisition of Zeekit was a change of direction for Walmart, he added. They bought Jet.com four or five years ago for their e-commerce technology, but Walmarts other acquisitions have been brands, but now theyre branching out and looking at technology.  The right solution for returns  Tailored and unmet expectations, two issues Walmart said Zeekit could fix, are in the top half of the list of reasons shoppers return items, according to Incisiv and Newmines recent retail returns report. . Buyers typically dont buy products with the intention of returning them, but when they do 73% of the time the retailer could have controlled it, according to the report. With Walmart Online Sales keep growing Even after 2020, the financial issues associated with disappointed online shoppers and returns are getting harder to ignore. To put it simply, if you make it easy for people to shop online, they will, and they [make a] back to three to four times the rate of brick and mortar stores, said Tony Sciarrotta, executive director of the Reverse Logistics Association. The increase in returns is directly related to unmet expectations, and if retailers find a way to make sure you meet or exceed your customers expectations when that package hits their front porch, then youve found the holy grail. .   When the pandemic drove e-commerce spending to record highs last year, so did the number of returned items. The rate of online returns in 2020 has more than doubled from 2019, estimates the National Retail Federation. Buyers returned $ 428 billion in goods across all retail categories last year, clothing was the second most returned product category, the January report said. An internal 3DLook case study said its technology could reduce returns by 30%. Zeekit himself told Insider pre-acquisitionthat it decreases returns by 36% and states on its website that it has a 20% conversion rate. Still, there are some aspects of the returns that virtual dressing room technology wont solve, Sciarrotta said. For example, the color or material of the product may appear different on the computer screen than in real life. And then there are consumers who purposely buy different sizes of the same garment with the intention of keeping the one that fits them best and returning the rest. Most of the world, they pay a little more attention to buying, and the cultural differences are that they dont tend to make things they live with. We tend to make things because that s what. is easy, said Sciarrotta. Walmart is trying to figure out how to reduce the impact because they cant stop [returns].   The widespread adoption of virtual dressing rooms  Some of the biggest players in retail have yet to embrace this relatively new dressing room technology in their operations. Sciarrotta said more common use is needed for this technology to have a significant impact on returns. Not only do you need widespread adoption, you need precision, he said. If we disregard those other reasons for return and you generalize this program, I would say you could impact maybe 20% to 25% of returns, not that you could reduce it by 40% to 20%, but you could reduce the volume.   Then there is the question of whether consumers would actually use the dressing room tool as a shopping tool rather than for entertainment purposes, like how consumers have used some of Snapchats AR filters. over the years. Gucci has partnered with Snapchat last year for an AR filter that allows users to try on and buy shoes, for example. It definitely helped build brand awareness, Euromonitors Schneider said. While the dominant demographic of Snapchat users, Gen Z, may not be able to afford Gucci products just yet, he said the luxury brand has at least improved its presence on the platform. Maybe as soon as they have the purchasing power to buy something like this, theyll go with a brand that theyve already connected with at an earlier stage.  While some consumers arent tech-savvy enough to think about using virtual dressing rooms just yet, Schneider said consumers will naturally adapt to tools that make their shopping experience easier. I think it really speaks to consumers familiarity with using all of these tools. I dont know how long it would have been now, but people were like, I would never buy clothes online because how are you going to know if this is going to be right for me, he said. Sooner or later, consumers realized that it wasnt too difficult to try.