Key Takeaways:
- Meta has announced the discontinuation of third-party AR effects that were previously available through its Meta Spark platform on flatscreen mobile devices, focusing on other platforms to meet future consumer and business needs. This move will impact creators and brands that rely on Meta’s AR ecosystem.
- Peloton’s introduction of a $95 activation fee for secondhand bikes not purchased through official channels has been met with frustration, reflecting a broader trend of brands looking to capitalise on secondary market sales as a way to supplement profit – and demonstrating where consumer pushback might occur.
- Current and former employees of UK retailer Next have secured a win for workers’ rights in a landmark equal pay lawsuit. But garment workers in many of fashion’s manufacturing regions still face severe hardship with little protection.
Meta’s Spark shutdown: a sign of augmented reality’s waning appeal?
Social media platform Meta has this week announced that starting from the 14th of January 2025, any augmented reality (AR) effects built by third parties will no longer be available through its ecosystems. According to Meta, the decision to shut down the Meta Spark platform is part of their strategy to prioritise the products that will best serve the future needs of their consumers and business customers – i.e. pulling talent out of low-performing areas and reallocating it elsewhere.
The company has been careful to state that it isn’t completely abandoning AR. “Meta is committed to our long-term investments in new computing platforms that will bring us beyond today’s 2D experiences on mobile,” it said. “With the decision to shut down the Meta Spark platform, we’re also shifting resources to the next generation of experiences, across new form factors like glasses.”
This aligns with what Meta CEO Mark Zuckerberg mentioned in a late July earnings call, where he expressed plans to integrate more artificial intelligence features into upcoming smart glasses and virtual reality (VR) headsets, making these the platforms to be carried forward, rather than flatscreen AR. He hinted at additional AI-related updates, which are expected to be revealed at Meta’s Connect conference at the end of September.
Alongside similar platforms from Snap et al, Meta’s AR environment has played a crucial business role for numerous creators and brands, allowing them to connect with millions of users through interactive and immersive AR content. Those with current or upcoming projects that extend past the platform’s closure date will particularly feel the pinch. Now, companies and creators will not only be unable to publish their work on the platform, but they also won’t be able to provide Instagram AR effects to their clients or partners. All that is left to be done is to turn elsewhere to maintain their AR presence.
TikTok and Snapchat are the frontrunners, each providing developer tools and incentive programs for flatscreen AR creators. Snapchat in particular is betting big on AR – on its own and its integration with AI. They recently launched new generative AI technology that enhances a user’s environment through AR, promising more realistic lenses for videos and photos in the months ahead. And Meta and Snap are set to go head to head as both prepare to unveil AR glasses at their annual events in September.
Even so, does the closure of their Spark Platform signal a broader waning of interest in AR? This will not be pleasant news for those heavily banking on AR being a strong part of fashion’s future – especially virtual try-on technology companies, who have been targeting flatscreen and mobile experiences as the logical consumer touchpoints for their work.
In theory, virtual try-on AR technology offers an ideal solution for brands and retailers, and their customers. It allows the latter to experiment with different styles in a comfortable environment, free from the drawbacks of traditional in-store shopping. It helps brands and retailers have fewer product returns, and increases engagement that can lead to higher sales. But, at present, for the most part it is lacking the realism and functionality needed to meet customer expectations – particularly those of tech-savvy Gen-Z and millennials who are accustomed to sophisticated filters – and shifting to target VR and mixed reality glasses, which are obviously much smaller platforms than iOS and Android, will not inspire confidence in anyone who already saw VTO as a relatively niche endeavour to begin with.
So there is still a way to go when it comes to AR and it’s mainstream adoption – even Meta and Snap’s glasses won’t be on the shelves anytime soon – but as a brand, it’s worth keeping on the radar and being ready for when that moment arrives down the line.
Monetising the Secondary Market
In its Q4 2024 shareholder letter, exercise machine maker Peloton announced that it will be introducing a $95 “used equipment activation fee” for bikes not purchased from Peloton or its official distribution partners. This charge will be implemented in both the US and Canada.
The official reason is so that new members “receive the same high-quality onboarding experience Peloton is known for.” The subtext? The fee is Peloton’s way of tapping into the revenue from the resale of its equipment to help its struggling balance sheet. The company itself said that the fee will also be a “source of incremental revenue and gross profit” according to The Verge. This is all while secondhand buyers still have to pay a $44 monthly membership fee to access Peloton’s content.
Their methods so far seem to be working, as the company recently reported year-over-year revenue growth for the first time in two years. Even so, their overall market cap ($1.7 billion) is still well below their all-time high of $62.9 billion reached during the pandemic.
And it’s important to note that the consumer backlash to these “wringing as much revenue out of the extended product lifecycle as possible” strategies can be extreme. In other sectors, Logitech recently had to walk back its idea for a “forever mouse” that would require a subscription for software updates after shoppers found the idea preposterous.
As the luxury fashion market struggles, though, just how far will fashion brands go to capitalise on the secondary market for additional revenue? Will we see fashion businesses walking the same tightrope?
A report from Boston Consulting Group and Vestiaire Collective, estimated that the value of the apparel, footwear, and accessories resale market was already between $100 and $120 billion worldwide in 2022, with a projected growth of between 20% and 30% annually. If their predictions were right, in 2024 that number is now around $172 billion. This has been driven by a rising consciousness around sustainability, leading consumers to opt for pre-owned luxury goods as a way to lessen their environmental impact; the desire for find unique, limited-edition, or vintage pieces no longer available in regular retail channels; and the move towards the democratisation of luxury opening up high-end fashion to a wider audience.
Brands have been exploring various strategies to tap into this goldmine. Some are establishing in-house resale services or curating their own vintage collections, while others are collaborating with resale platforms or investing in them to leverage their established infrastructure. But, much like Peloton, it may only be a matter of time before concerns start to grow – and action starts being taken – about items being sold on unaffiliated marketplaces – especially given the current downturn in the luxury market and the uncertain outlook ahead.
The timeline for brands wanting to own their share of the secondary market is short. And that kind of rush is when desperate moves end up being played.
Wins in fair pay domestically, but ongoing struggles for worker safety worldwide.
There are very different kinds of battles for worker rights being fought at different ends of the value chain at the moment. Downstream, over 3,500 current and former employees of UK high street retailer Next have secured a victory in a six-year equal pay lawsuit against the company. An employment tribunal found that the retailer could not prove its practice of paying sales consultants, who are mostly women, less per hour than warehouse operatives, (who are predominantly men) was not discriminatory. The total amount payable by Next as a result of the win is currently estimated to be in excess of £30m.
But upstream, the situation is bleaker. On Thursday, a court in Dhaka, Bangladesh, granted police permission to question two journalists in connection with the murder of a garment worker who participated in recent student protests against former Prime Minister Sheikh Hasina. The police have accused the journalists of inciting the Hasina government to target and harm protesters – and given the historic ill-treatment of garment workers, despite their critical status to the country’s economy, it’s little wonder that people from that industry were galvanised into protest.
Unfortunately, the situation is a reminder of the broader context of how political and social risks intersect with labour issues in some of fashion’s most important manufacturing regions. Many countries where garment manufacturing is concentrated, like Bangladesh, China, and Myanmar, face significant political turmoil, creating dangerous environments for workers in general, and even more so for workers that speak out against historic and current injustice.
As The Interline has previously spoken about, brands have a large role to play in the safety and wellbeing of their employees, as well as the manufacturers that they work with – especially in countries with more volatile conditions in terms of the climate and politics. This should include enforceable codes of conduct that go beyond compliance and actively promote ethical practices. Brands should also establish independent auditing systems to oversee their supply chains and create grievance mechanisms that allow workers to report abuses anonymously.
Ideally, the government should also take responsibility for safeguarding workers’ rights. With all eyes on Bangladesh, unions and labour advocates within the fashion industry are renewing their calls for fair wages, the right to collective bargaining, protection against intimidation, and initiatives to help workers acquire new skills for a more sustainable industry. Once more, brands need to back these groups and support meaningful conversations between them and governments. This could happen, as Chief Advisor Muhammad Yunus of Bangladesh’s interim government is a long-time advocate for garment workers.
The best from The Interline:
Kicking off this week, Refabric’s Co-founder & CEO on integrating AI into every stage of the product lifecycle.
Next, a new report from TradeBeyond providing a comprehensive look at the emerging trends and economic indicators that will define the second half of the year.
Centric Software’s CTO on leveraging AI to optimize decision-making, enhance efficiency, and drive profitability in the fashion and retail industries.
And closing this week, a collaboration between The Interline and Oritain – a global leader in applying forensic and data science to verify the origin of products and raw materials – explores how the makeup and the fragility of the global textile supply chain has complicated the task of identifying the origin of natural fibres such as cotton.
