Oh, what a year it has been for developments in the fashion-tech space! As you all know, we cover many aspects of technology and the lifestyle sector, but fashion has become the most prominent focus in the past year, for a good reason. A tough market, a tsunami of upcoming EU regulations, and an increased awareness of industry inefficiencies—straining both sustainability and profitability—have led to an awakening among fashion brands.
Nowhere is this more evident for us at Scandinavian MIND than in the RSVP lists for our annual Transformation Conferences, which were held in Helsinki, Stockholm, and Copenhagen, the latter a new addition. More and more of the bigger fashion brands in the Nordics are making sure to attend the event to learn more about regulations, Digital Product Passports, and data sharing in general.
This increased awareness has created a kind of clonedyke mentality among many fashion-tech startups. When regulations drive the need for data sharing, data-sharing services rise to the occasion. At this intersection of technology and fashion, we operate at Scandinavian MIND, helping to facilitate conversations and knowledge sharing at our events and conferences and assisting a handful of tech companies in navigating their go-to-market activities as consultants.
These developments are, however, in what I call a “twilight zone” in the fashion-tech transformation.
It seems to me, and to many people I talk to in the industry, that fashion brands are increasingly taking a wait-and-see approach to implementing things like Digital Product Passports. Even the largest fashion companies—like Bestseller in Denmark and H&M in Sweden—hesitate to commit to a fixed set of data sharing services, DPP platforms, and other necessary technologies.
The ESPR regulations went into effect on 18 July 2024, and the industry is expected to start reporting data in the Digital Product Passports by 2026. This gives us exactly one year until lift-off, but many brands are not even in the starting blocks.
I fear this hesitation will continue during next year, making 2025 a “twilight year” in fashion tech.
There are ways fashion-tech companies can act that will help them thrive. Here are a few key insights from which to take lessons.
It’s not about the tech but the industry insights
The technologies required to meet compliance demands are not rocket science. Most of it is simple data-sharing solutions. I speak to many if not most, fashion-tech companies in the Nordics, and too many times, I come across something that sounds like this: ”We have the perfect technology; we just can’t understand how to make the fashion brands understand it.” This is another way of saying that we have only done half of the job. The most successful fashion-tech companies will be the ones that have a deep and integrated understanding of how the fashion industry works and operates, including its history of data hesitancy, its unique combination of business and creativity, and its heavy reliance on personal relationships.
Onboarding is key
Building on the above; I have yet to meet a fashion-tech company that does not have to apply a thick layer of onboarding services to make their tech work within the fashion ecosystem. Having a suitable technical solution is just half the job; building an intense onboarding process, including a significant human element, is needed to create a solid implementation. I spoke to one fashion executive who was frustrated with the ”VC-driven startups that don’t prioritise customer service”. That’s a statement many fashion tech companies should reflect upon.
There is no sustainability without profitability
As evidenced by the latest State of Fashion report by the Business of Fashion and McKinsey, sustainability is becoming a decreased priority in the fashion industry. Say what you will about this, but it’s a cold fact that when times are tough, companies put more focus on profitability than sustainability. The flip side to that coin is that there is no lasting sustainability without profitable business. This is very important for data-driven fashion-tech companies to learn, and it goes back to the lack of clarity we get from the EU legislation. We know DPP is coming. We know traceability will be crucial. However, we also know that if we start tracking the products in the fashion value chain, it will become much easier to build a profitable business with less waste. You can view digital twins as a massive new cost for fashion brands. You can also view it as an opportunity for more revenue streams and a more efficient business. For fashion-tech companies, it’s crucial to frame their service as the latter.
Collaboration is crucial
There can’t be an industry-wide transformation without deep and integrated partnerships between fashion brands and tech companies. This also means that fashion brands must collaborate with other fashion brands, and tech companies must collaborate with other tech companies. The Digital Product passport doesn’t give any fashion brand a competitive advantage; the more the industry can come together and unite behind standard practices and tech stacks, the better.
There you have it. These insights are just starting points to what needs to be continued development and collaboration inside companies and within the industry. At Scandinavian MIND, we will play our part as the moderator and facilitator of knowledge-sharing and conversations within the industry. We are already planning the subsequent editions of the Transformation Conference in Stockholm and Copenhagen in August, and we are lining up a string of other events and programmes where the fashion industry can interact with tech, starting with our Nordic Retail Innovation Talks in New York at the beginning of January.
If you are a fashion brand or a tech company that wants to participate in or help host one of these events, don’t hesitate to contact us.
With that, I wish you happy holidays and a successful 2025.
See you on the other side!
