Alternatives To Search, And A Pointed New Edge For Brand Acquisitions

Free webinar: Why digital materials matter to fashion’s future

On 15th November (9AM New York time, 2PM London, and 3PM Paris) The Interline will host a one-hour webinar, in collaboration with Cotton Incorporated, and with a unique brand perspective from J. Crew, focused on the future business case for digital product creation in fashion – and spotlighting the pivotal importance of digital fabrics to wider industry transformation.

Register to attend to listen to – and have the chance to quiz – three different industry experts. Or find out more about the webinar here at The Interline.

What might a “post search” era of online shopping look like?

There is, as we know, no technology sector attracting more outside investment – or doing more direct spending on expansion, R&D, and customer acquisition – than generative AI. From OpenAI raising the largest funding round in history, to millions (and potentially future billions, pending regulator approval) flowing into Anthropic – makers of Claude – from Google, there’s no bigger bet being made in technology today than the bet that artificial intelligence is going to redefine how we interact with computers.

But before getting to the “let AI use your computer for you, and do mundane tasks on your behalf” part of the equation, though, AI companies are going after a slightly lesser stepping stone – but a no less lucrative or impactful one, especially when we look at it from a fashion perspective: search and product discovery.

The Interline has written about the future of search – and what it’s going to look like for consumers to find fashion products in the near future – many times, but no matter how often we talk about, the scale of the impact that AI could have on how brands and retailers sell remains gigantic. 

And as we build up to a holiday season where, by all accounts, social media is going to continue vying for its own share of the marketplace pie with aggressive live-selling all over TikTok Shop, it’s more vital than ever for our readers to remain aware of how the different routes to their ecommerce channels are changing.

The splashiest of the two announcements from this week in the AI search space is OpenAI’s integration of its previously-separate “SearchGPT” product into the core of ChatGPT. As of yesterday, paid users of ChatGPT now get a completely re-architected web search experience which brings the humble chatbox much, much closer to being a viable replacement for Google, but without the ads – at least for now.

The Interline conducted some testing, and ChatGPT is now more than happy to recommend products to you. But in the absence of sponsored links, its default approach appears to be to aggregate recommendations from across reviews sites and enthusiast blogs and forums. A search for “a winter jacket for hiking,” for instances, brings up a series of detailed recommendations – with photos – that are collected from (with clear citations) deep-dive reviews from different publications focused on outdoor pursuits, hiking, and winter sports.

Now, this says nothing about the ethics of those publications. Hopefully each of them is clear about how it approaches reviews, and hopefully each is also aware of when traffic flows to it from ChatGPT, and why. But it does raise a fascinating question: if the search paradigm shifts to de-emphasise sponsored results and the gatekeeping organisation Google Shopping has now been designated as, how will brands approach the challenge of getting their products into the right reviewers’ hands, and making sure their attributes are intelligible for AI search engines.

The Interline sees this as distinct from influencer and creator marketing. But the second of this week’s AI search announcements – this one more specific to fashion – is targeted at exactly that demographic. 

The launch of Aesthetic, which coverage claims is trying to be the “Shazam for clothes” (Shazam being the Apple-acquired music search engine that became synonymous with ‘listen to a snippet of music and identify it’ as a verb) is predicated on the idea that AI can be applied to the act of shopping influencer and curator content. Users copy a deeplink to an Instagram or TikTok post, which they then send to Aesthetic’s agent via a direct message through those social platforms themselves, and Aesthetic then builds a “Lookbook” that serves as a springboard for customers to go and buy the products it contains. 

This is roughly analogous to the “build a custom webpage” approach that AI-centric web browsers have taken, where the idea of search is to serve the user a bespoke portal that contains the information or products they need. Commercially speaking, though, using AI to match photos in Instagram posts and generate shoppable links raises a lot of questions about how recommendations will work when the model can’t find an exact match – and around how brands can optimise the way they describe and market products to make this discovery more likely. 

At the risk of becoming one-note where this topic is concerned, The Interline continues to emphasise that direct to consumer brands and retailers need to be paying attention to how quickly the paradigm of product discovery is changing. The way consumers find the things they want to buy could look extremely different a year or two from now, and understanding how to get products in front of people as that shift happens should be one of the industry’s most pressing concerns.

Two new edges come to fashion acquisitions

We’ve covered the recent run on “big tech” regulation pretty extensively, but the quick summary is that both the US and EU are tilting heavily towards curbing the reach and dominance of big platform owners like Alphabet (Google’s parent company), Meta, Microsoft and more. 

To push through big acquisitions, these companies have needed to make large concessions, in both markets, and the European Union in particular is imposing a set of restrictions on Apple that is progressively breaking down the company’s fabled “walled garden” by forcing universal charging standards, demanding the availability of alternative app stores, and more.

In line with the story we just ran down, perhaps the most impactful example of this hunger is the United States progressively working towards, for all intents and purposes, splitting up Google and disrupting the search and search advertising markets.

Some of that same appetite has also been on display in the US FTC (Federal Trade Commission) taking a dim view of consolidation and the building of new conglomerates in what it deems to be markets where competition is at risk. This was shown in 2022, when the FTC objected to Microsoft purchasing videogame publishing giant Activision Blizzard (a gigantic acquisition, at close to $70 billion), but the trade body was then overruled by a US judge who allowed the purchase to go ahead. 

But this month the fortunes went the other way in a fashion-specific case where the judicial ruling fell against the brands themselves.

Last August, Tapestry Inc. – a company that owns several of what we would class as “premium” brands, but which the official lawsuits refer to with the slightly oxymoronic “accessible luxury” – announced that it planned to acquire Capri Holdings, the owner of Jimmy Choo, Michael Kors, Versace and others. While this wasn’t exactly publicised (not least in the hope of avoiding regulatory scrutiny) the plan was seemingly to shore up the American luxury (or near-luxury) industry to compete with the massive conglomerates that dominate luxury here in Europe.

Then, this April, the FTC filed to block the acquisition – citing, specifically, the handbag category as being the place that consumer choice would be eroded, and consolidation would lead to a lack of competition.

At the time, a fair few suggested that this amounted to regulatory overreach. After all, if Europe is allowed to have gigantic luxury businesses, why is the US not given the same leeway? (This ignored the fact that the likes of LVMH and Kering would have little chance of emerging in the EU if they were conducting their early-stage expansion today.)

Nevertheless, that objection worked its way through the courts, and last week a judge ruled in favour of the FTC, effectively stopping the acquisition pending appeals and concessions being made.

There is a complex tapestry (forgive the pun) of context here. The most salient thread of which is the trend towards the protection of domestic industries and the rise of enterprise nationalism. See the US trade approach to the import of Chinese electric vehicles, subject to a 100% tax levy since last month, for an extremely contemporary example.

But while regulators have focused on the consumer end to try and prove these anti-competitive threats, comparatively little is being made of two other key elements of brand building, from which brand monopolisation can flow: technology and supply chain reach.

Luxury conglomerates are known for investing in both of these. Innovation is a big piece of the luxury (and premium / near luxury) value proposition, and lately software and hardware adoption have become key pieces of the industry’s invention pipeline. Acquisitions, as a consequence, can lead to the consolidation of newness – or at least the capability to create newness. 

And the same is true of how closely the success of brands is anchored to their ability to secure supply chain capacity and capabilities. Again: merging multiple brands, each with their own ringfenced share of the global supply chain, has the potential to essentially consolidate manufacturing and material development under fewer roofs than ever – something that, by definition, would lead to a reduction in the ability of other companies to compete.

Perhaps not coincidentally, we are also seeing similar attempts at consolidation in the UK encounter headwinds. 

In the same premium accessories space, earlier in October Mulberry turned down a two-stage offer from retail giant Frasers to acquire its business – probably rightly reasoning that its combined brand position, growth potential, tech estate, and supply chain reach were being undervalued.

On the rebound, Frasers is this week working to parlay its position as the largest shareholder of Boohoo into a more aggressive position within the company, demanding the current CEO step down and be replaced by Frasers’ founder. Crucially, for The Interline’s readers, this is a prime example of a move towards consolidation that emphasises supply chain dominance and price / market positioning over brand value, with the latter being assailed from several sides in Boohoo’s case.

Sourcing, PLM, and supply chain professionals: share your perspective!

Are you a user of PLM, supply chain management, or sourcing technology? Right now, The Interline is collecting anonymous perspectives from professionals who work in these areas.

In exchange for five minutes of your time, you can help shape another forward-looking report (from The Interline and Bamboo Rose) that will contain actionable insights for your sourcing strategies and the solutions you use.

Take part in the survey today, or take in the key findings from last year’s edition here at The Interline.

The best from The Interline

This week on The Interline, we published an extensive report from The Interline’s visit to Lectra’s Bordeaux campus – explaining how the business case for “Industry 4.0” has developed, and how the advent of AI is changing the perception and utility of “fashion data”.

Next, we had the standalone release of Sophie Benson’s investigative piece where she assessed the risks of skilled workers falling through the cracks (and their skills being lost) as fashion begins to move more towards circularity. 

Still on the sustainability subject, we then interviewed Dr. Sam Lind of Oritain about the scientific foundations of verifiable traceability, and how the mechanics of isotopic fingerprinting can support a clearer picture of product provenance. That latter point is something The Interline and Oritain have collaborated to talk about in the past, and that deep-dive into the fundamentals of traceability is still essential reading.