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, andthe number of companies thatfailed to create long-term change is
20% higher than average.

Fashion and luxury companies struggle mostwith deploying high-caliber talent, establishingagile governance mindset, and implementing
business-led modular technology.

Three of the four digitaltransformation objectives arecustomer-facing: sales andmarket acceleration, digitizing
the customer experience andjourneys, and marketing anddynamic pricing.

Priorities for the future include
sales digitization, next-generation
customer support and experience,and product design anddevelopment.

Leaders’ priorities include e-commerce andsales acceleration; personalized and targeted
product recommendation for smart sales;
personalized and targeted campaigns fornext-generation marketing; chatbots andinteractive voice response and immersive
in-store experience (metaverse, AR, and VR) in
next-generation customer support; and design
and personalized products and smart ID ofdesign features in product development.

More than three-quarters offashion and luxury companies
plan to increase investments in
ESG (slightly below thecross-sector average), with theenvironment being the top priority(for example, RFID and blockchain
for traceability, and demand
forecasting for waste reduction).

Source: BCG analysis.

The data in more depth

Rates of successin digitaltransformation

Source: BCG analysis.

Topics of focus forfashion and luxurycompanies

Top priorities forthe future

The criticalhuman andtech enablers

The role of ESG
in digitaltransformation

RATES OF SUCCESSThe 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

60

Fashion and luxury

Fashion and luxury
sector average: 7.2

40

Cross-industry

2021 cross-industry
average: 7.4

Woe zone (success score <6)
Worry zone (success score ≥6–<8)

20

Win zone (success score ≥8)

002

4

68

10
SUCCESS SCORE1

2021 BCG Global Digital
Transformation Survey overall

Fashion and luxury sector

13%

52%

35%

15%

62%

23%

Limited value created(<50% of target); nosustainable change

Value created but total Target value met ortargets not met;
exceeded; sustainable
limited long-term change change created

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.”
1Success score is calculated from respondents’ answers on six dimensions of transformation: strategy; leadership; talent; agility; monitoring; and tech and data.

1.2x companies in theworry zone compared withcross-industry average

RATES OF SUCCESSFashion and luxury companies struggle with deploying high-caliber talent,agile governance mindset, and business-led modular technology
DISTRIBUTION OF SUCCESS SCORES ON INDIVIDUAL KEY FACTORS1Integrated strategy with clear transformation goals

2

Leadership commitment from CEO through middle management
Deployment of high-caliber talent

4

An agile governance mindset that drives broader adoption

5

Eﬀective monitoring of progress toward deﬁned outcomes

6Business-led modular technology and data platform

12345678

9107.1

130

7.3
6.8
6.8
7.2
6.5

Lower extreme Fashion and luxury average Upper or lower quartile Upper extremeWoe zone (success score <6)

Worry zone (success score ≥6–<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.”
1Success score is calculated from respondents’ answers on six dimensions of transformation: strategy; leadership; talent; agility; monitoring; and tech and data.

Win zone (success score ≥8)

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 (%)

40

2325
12

Improvement incustomer experienceand go-to-market

Innovation and growthin the core and beyond
Performance improvement
through the operationalvalue chain
Performance improvementin support functions

Source: 2021 BCG Global Digital Transformation Survey, n = 15.
1
Respondents were asked to select all priorities that applied.

Sales and market acceleration

87

Customer experience and journeys

87

Growth and business model innovation

67

Marketing and dynamic pricing

67

Digital ecosystem and partnerships

53

Digitizing support functions

53

Supply chain

53

Digital manufacturing and operations

47

Digital procurement

47

Building resilience via cybersecurity
and compliance20

New business venture

20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 (%)193

Next-generation marketing

2187

Smart sales

1987

Digital supply chain

1880

Digital support functions
and operations
Product innovation andsmart factory
Next-generation
customer service

1780
1173
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.
1For 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
Relative prioritization for all fashion and luxury companies
Source: 2021 BCG Global Digital Transformation Survey, n = 15.

0.09
Top priorities for win-zone companies

TOP PRIORITIES FOR THE FUTURE

Fashion and luxury digital priorities: Next-generation customer supportand 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
Relative prioritization for all fashion and luxury companies
Source: 2021 BCG Global Digital Transformation Survey, n = 15.

0.30
Top priorities for win-zone companies

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
Relative prioritization for all fashion and luxury companies
Source: 2021 BCG Global Digital Transformation Survey, n = 15.

0.21
Top priorities for win-zone companies

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 clothing0.62

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

0.35

3D printing and designing tools for fabric texture
and ﬁtting customization

0.35

Design research labs with advanced equipment

0.04

Relative prioritization for all fashion and luxury companies
Source: 2021 BCG Global Digital Transformation Survey, n = 15.

Top priorities for win-zone companies

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
management of accounts receivable

1.00

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

0.83

End-to-end hire-to-retire digitization (includingintegrated training) for HR

0.74

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

Automated shift management for store staﬀ
Relative prioritization for all fashion and luxury companies
Source: 2021 BCG Global Digital Transformation Survey, n = 15.

0.61

0.43
Top priorities for win-zone companies

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
Route/network optimization

0.22
0.14

Automated warehouse

0.11

Capacity planning

0.08
Relative prioritization for all fashion and luxury companies

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

Top priorities for win-zone companies

THE CRITICAL ENABLERS

Fashion and luxury companies intend to invest across broad range of techand human enablers
Eight out of ten fashion and luxury companies plan to invest in modernization of tech architecture, AI and big data, modernizationof 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 (%)1Tech

Human
87

87
80

80

7373

73
1518

10

Infrastructure
and cloudenablement

67
158

Modernizationof techarchitecture

AI and big data

67

Cybersecurity

8

Modernization oftechnology
organization andoperating model

Share of respondents allocating any investment toward digital topic

New ways ofworking

107New talent andleadershipmodelsContinuous
learning

Average share of total investment

Source: 2021 BCG Global Digital Transformation Survey, n = 15.
1For 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.”

7
Integratedecosystems

ROLE OF ESG IN DIGITAL TRANSFORMATION

77% of fashion and luxury companies
plan to invest more in ESG, slightly
below the cross-sector average… with the strongest emphasison E

Share of respondents planning to increase/decrease/maintain investment toward ESG in coming years

Leading digital initiatives being prioritized
to support E, S, and G goals

33

Moderatelyincrease44

Maintain as inprevious year(s)Decrease vs.
previous year(s)

25

220

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

56

171

SocialSigniﬁcantly
increase

CROSS-INDUSTRY AVERAGE (%)

Governance

PROVIDER AVERAGE (%)

Environment

SHARE OF RESPONDENTS PRIORITIZING (%)· Digital supply chain optimization· Improving measurement andtraceability through control towers· Increasing supply chain transparency
through supply chain control tower· Improving employee collaboration
through digital platform· Real-time tracking/monitoring of risk
· Predictive risk analytics to improve
preparedness and mitigation~53~47~40

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

AMANDA LUTHER

FILIPPO BIANCHIDRAKE WATTENJAVIER SEARAManaging Director & Partner, Austin
luther.amanda@bcg.com+1 214 850 4916

Managing Director & Partner, Bay Area – San Francisco
watten.drake@bcg.com+1 650 269 7310

TAYLOR SMITH

Managing Director & Senior Partner, New Yorksmith.taylor@bcg.com+1 917 327 1829

Managing Director & Partner, Milan
bianchi.ﬁlippo@bcg.com+39 342 3912381

Managing Director & Senior Partner, Amsterdam
seara.javier@bcg.com+31 6 48389130