Last April, McKinsey and Business of Fashion consulting companies released a new report on Fashion industries investments in technology in the next years.

The study stated that, in 2021, Fashion companies invested between 1.6% and 1.8% of their revenues in technology. By 2030, that figure is expected to rise to between 3.0% and 3.5%. Behind the predicted increase is a conviction among many that technology could create a competitive edge in customer-facing activities, where companies have mostly focused to date, and, more increasingly, in operations.

Technologies such as robotics, advanced analytics, and in-store applications may help streamline processes and support sustainability, as well as create an exceptional customer experience.

Digital technology in Fashion

McKinsey analysis shows that Fashion companies that now embed AI into their businesses models could see a 118% cumulative increase in cash flow by 2030. Conversely, those that are slower to invest in digital technology will lag behind—and could see a 23% relative decline.

Over the next 3 years, potential key areas in which Fashion executives could make digital investments are personalization, store technologies, and end-to-end value chain management — areas in which digital can make a real difference to performance.

As Fashion industry executives consider how to maximize their technology resources, McKinsey and the Business of Fashion have identified 5 key themes that could help the industry address some pressing challenges, as well as unlock potential opportunities: metaverse reality check, hyper-personalization, connected stores, end-to-end upgrade, and traceability first.

5 key themes that could help the Industry address some pressing challenges


Global spending on virtual goods reached more than $100 billion in 2021, more than doubling the total in 2015, with around 30% of revenues attributed to virtual fashion assets. Amid demand for products such as virtual fashion and NFTs, fashion companies focused on metaverse innovation and commercialization could generate more than 5% of revenues from virtual activities over the next 2 to 5 years.


Advancements in AI, analytics, and cloud computing mean that businesses have the tools to work with all types of data across channels in real time. This could support a move to hyper-personalization, in which technology could help search-based e-commerce transform into individualized discovery of products and styles. This may enable customers to routinely access curated websites and marketplaces, from landing pages to payments. To make that vision a reality, decision makers may need to optimize their data and analytics capabilities and roll them out at scale.

Connected stores

The coming years will likely see many brands investing in in-store functionality and experiences, bridging the gap between online and offline channels — and moving away from stand-alone technologies such as magic mirrors, connected hangers, and interactive holograms. Beyond the shop floor, robotics and stock optimization software can help brands and retailers set up microfulfillment centers, integrating physical stores as digital nodes in their distribution and delivery networks and cutting fulfillment costs by up to 90%.

End-to-end upgrade

From demand forecasting to transport operations, a critical element in expanding the role of technology could be to apply digital tools to make end-to-end improvements in the value chain. More than 60% of fashion executives believe creating integrated digital processes throughout their organizations will be among their top five areas for digitization as they look to 2025. By adopting digitally enabled value chain solutions, brands could see a 50% reduction in time to market, an 8% rise in full-price sell-through, and a 20% decline in manufacturing costs, our analysis shows.


More than 50% of fashion decision makers say traceability will be a top-five enabler of reducing emissions in their supply chains, but many brands currently have visibility over only direct supplier relationships. As they aim to cut emissions and meet their environmental, social, and governance (ESG) targets, brands could benefit from a common data language to enable comparability, as well as new labeling standards and tracking software. Brands could consider joining forces with peers, start-ups, and industry bodies to establish a common data standard and to share data and knowledge via software platforms, open ledgers, and big data technologies.