Our regular analysis selects one or more news stories from fashion technology, and presents The Interline‘s take on why they matter to our global brand and retail audience – as well as what they might mean for the longer-term future of fashion. As always, this analysis is also delivered to Interline Insiders by email — and signing up continues to be the best way to get a fresh look at the fashion technology news, completely free, in your inbox
Web3: appearance versus reality, and an uncertain future
This week, the results from a survey by Modern Retail and Glossy revealed that 73% of brands feel that the metaverse, VR, NFTs, blockchain, cryptocurrency (more or less what constitutes ‘Web3’) will not have an impact on their business in the coming year. To belabour the point slightly, that’s just over a quarter of fashion businesses who have any real faith in the near-term potential of Web3 – a statistic that stands in pretty stark contrast to a lot of headlines.
Perhaps tellingly, the share of respondents expressing this negative sentiment was up by 19% from 2022 when brands were asked the same question – a significant shortfall in just twelve months, from around half the brands surveyed believing in the possibilities of Web3, to around a quarter.
Of those who do believe that Web3 will affect business, the survey results show that the metaverse is the one place that they are keeping an active eye on. However, there is also a downward trajectory here, with the results dipping from 16% in 2022, to 12% in 2023; a point we can belabour again by pointing out that this means close to 90% of brands don’t see the Metaverse vision being achieved any time soon.
Is this survey necessarily representative of the fashion industry as a whole? Without disclosure of the research cohort it’s difficult to say, but there are still some worrying trends on display.
Does this slump in enthusiasm mean that brands are leaving Web3 behind forever? Maybe. Maybe not. Fashion can be a fickle industry. But The Interline believes that the emphasis in these results should be on “the coming year”. The data on-hand doesn’t indicate anything further in a pure timeline sense, and there are undoubtedly plenty of people who believe strongly in what Web3 could offer. But nevertheless, the immediate impact is looking minimal.
But this disillusionment with Web3 seems to be contradicted by the emphasis that was placed on it around the time of the latest Paris Fashion Week, with the NFT conference NFT Paris happening a few days before, and being reportedly well attended by those in the mainstream fashion and beauty industries – not just a small group of select pioneers. Showing up is not, of course, the same as buying in, but a large crowd certainly indicates that interest in Web3 still exists.
And there’s other evidence for the opposite side of the equation, with some noteworthy brands rolling ahead with their Web3 initiatives. Last month, for example, Puma announced its #SuperPUMA launch: a 10,000 piece collection of PFPs (profile pictures) of the brand’s cartoon mascot that apparently represents a long-term strategy of engagement with its customers through its Web3 activities.
To play devil’s advocate, The Interline would point out that, in practice, selling blockchain-backed profile pictures seems like an unlikely long-term business model given that Meta have this week announced that they’re dropping support for NFTs across Instagram and Facebook – paving the way for other platforms to also publicly (or quietly) abandon their own NFT initiatives.
Ultimately, what fashion seems to have is a disconnect between what Web3 advocates are promising and what the majority of fashion businesses actually believe in – and it’s going to be difficult to sustain that disconnect indefinitely. There are a committed group of companies keeping the Web3 flag flying, certainly, but with dwindling interest from the larger industry, how many will continue building a vision for potentially a decade or more if the intended users keep losing faith in it in the meantime?
That’s also the big question facing Meta’s own commitment to the metaverse idea. How long can one of the biggest companies in tech continue to funnel money into an unrealised future state? A long time, given that company’s war chest – but not forever. Meta’s commitment to that vision may not be directly responsible for its latest round of layoffs, but it’s hard to see how else – besides cutting costs even further elsewhere, on an ongoing basis – Meta can continue to pursue an idea that’s evidently unpopular today. And Web3 in fashion is sure to be asked the same questions very soon.
Investment insight: scrutiny ahead for tech and fashion funding
Either in spite of that disconnect between Web3 evangelism and mass market faith, or as a way to address it more quickly, investment continues to flow into Web3 fashion, with DRESSX announcing a $15 million round this week to “scale its vision of the future of fashion.”
But funding on this scale may soon be harder to come by as the tech sector eyes up the possibility of further disruption following the collapse of Silicon Valley Bank’s (SVB) operations in the US, UK, and Europe. Quite how a bank collapse and tech investment are so interrelated isn’t immediately obvious, but in the latter of those regions, SVB served as something of a support system for technology and science startups, as Wired explained in their breakdown of the implications of this week’s financial turmoil:
“The reason that Silicon Valley Bank was so popular was because it filled a role that no one else would. It was part bank, part networking community, part venture capital firm. In some countries it was a major investor. In Ireland, the bank had planned to invest more than $500 million in technology and life science startups by 2024. In the Netherlands, the bank was in discussions about how to finance more local companies. Europe’s tech sector was already struggling with funding shortfalls, mounting losses, and widespread job cuts. The loss of Silicon Valley Bank only deepens the gloom.”
What might this mean for the tech sector, and moreover, for fashion tech startups in the EU (as well as the UK, US, and Asia)? In all these cases, it seems that the era of relatively easy access to investment may be coming to an end. This doesn’t necessarily mean that investment in tech (and especially in fashion tech) will dry up, but rather that as ‘easy’ money is replaced by ‘hard’ money, tech startups and scale-ups will have to present much more compelling business models, shorter timelines to profitability, and will face considerably more scrutiny from investors.
All of that extra due diligence could potentially prove difficult to comply with if the addressable market for, say, a Web3 platform is on the record as not believing in what they’re being sold (see the survey results analysed above).
Why multi-modal AI matters in a mixed-media industry
Advancements in AI are happening much quicker than almost anyone expected, as evidenced by the rapid roll-out and the assessment of the capabilities of OpenAI’s new GPT-4 model. The multimodal AI model (meaning that it can accept text and image inputs, mixed and separately, and return a text output) shows “human-level performance on various professional and academic benchmarks,” according to OpenAI, who cite the example that it can pass a simulated bar exam (including Uniform Bar Exam, the Law School Admission Test (LSAT), and the Graduate Record Examination (GRE)) with a score around the top 10% of test takers. By comparison, GPT-3.5’s score was around the bottom 10%.
This is a leap in subjective AI capabilities in record time, sure, but crucially it’s also being accompanied by high-speed adoption of the same new AI models by consumer-facing companies like Duolingo. In a very short span of time, AI has gone from being an academic field to being one that has instant applications for the wider population almost immediately.
But while the speed of consumer roll-out is impressive, there’s also the enterprise side of the equation to consider. So far, it’s been relatively easy to compartmentalise AI’s impact on fashion with use cases like AI chatbots changing the way shoppers interact with brands, and generative visual models like Midjourney providing design inspiration – with a side order of copyright infringement.
But the more interesting new capabilities of GPT-4 could arguably make a much bigger difference behind the scenes in fashion. The key advancement here is the model’s ability to parse both text and image inputs – allowing an assistant built on GPT-4 to become much more useful to a visually-oriented industry like fashion, without straying into the same legally questionable areas as off-the-shelf models like Midjourney.
There’s been a lot of attention paid to AI’s role in generating images (and the fashion industry should be approaching these capabilities with caution, to stress a point here) but creatives, marketing teams and other professionals don’t just create new images – they make use of a lot of visual reference material from both in-house and other sources. One easy application springs to mind: invoking AI to encapsulate the themes of a mood or concept board, without the designer having to write a single word.
And the same principles could be applied to generating product copy for eCommerce – solely from images, telling text-based product stories without having to be fed text inputs. Or consider the use of AI to consolidate a company’s knowledge base, as Morgan Stanley did, which in the fashion world would undoubtedly comprise many images that, taken together, make up a complex, mixed-media corpus of heritage, brand identity, and product data.
The key element to consider here is how differently companies feel about AI today than they did just a few years ago – a trend that represents the exact inverse of Web3. According to two surveys run by MIT Sloan Management Review and Boston Consulting Group, and New Vantage Partners, only between 30% and 48% of companies were realising a return on their investments in AI in 2019, versus 92% in 2022.
And as off-the-shelf AI becomes increasingly capable of addressing all the constituent parts of fashion’s back-end processes (across different media) that value is likely to be demonstrated in our industry sooner rather than later. Meaning that, as an executive with budget to assign, AI is starting to look like a sure bet when compared to Web3 speculation.
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