Daily news and stories covering everything from the Fashion System, Investment, and AI to WEB3 and Crypto that truly matter in Metaverse Fashion.
ADIDAS GAINS GROUND AS NIKE SALES STUMBLE | [FASHION SYSTEM]
FashionUnited
💥 In a surprising turn of events, Adidas appears poised to capitalise on rival Nike's recent missteps, with analysts projecting strong second-quarter results for the German sportswear manufacturer. The resurgence of Adidas' classic Samba and Gazelle models, coupled with Nike's unexpected forecast of declining annual sales, which saw shares fall as much as 18 percent after the announcement in June, has set the stage for a potential shift in the sportswear landscape.
💰 Industry experts anticipate Adidas will report its highest profit margin in three years, Reuters said, with analysts projecting 51.4 percent for Q2, according to LSEG data. Revenue is expected to climb 4.5 percent year-on-year to 5.6bn euros. This positive outlook stands in stark contrast to Nike's recent lacklustre performance and the momentum new brands such as On and Hoka are having.
🧡 In 2023 Nike was rated in 9th place in the world’s most iconic brands, according to Interbrand. Adidas came in at number 42, showing Nike’s strength cannot easily be surpassed. Yet in terms of products, Adidas' popularity can be attributed, in part, to its strategic focus on classic models. The company has successfully revitalised its Samba and Gazelle lines through new colourways and limited editions, tapping into a growing consumer appetite for retro aesthetics. Google Trends data reveals that online searches for "Adidas Samba" have overtaken those for Nike's iconic "Air Force 1" since December 2023, Reuters said.
🦄 While Nike’s brand value is higher, data from Statista show it increased year-on-year since 2010 reaching over 53 billion U.S. dollars in 2023 compared to Adidas at approximately 16.6 billion U.S. dollars, Adidas seems to have the current “cool factor.”
🦎 While Adidas' short-term outlook appears promising, analysts caution against overoptimism. The sportswear industry continues to face headwinds, including weakened demand in China and intensifying competition. As Nike grapples with its challenges, some Wall Street analysts are even speculating about potential management changes ahead of the company's autumn investor day.
UK Digital Industry Job Growth Falls to Lowest in Decade | [METAPHYSICS]
Bloomberg
📈 Job growth in the UK’s digital industry hit its lowest in a decade, prompting the incoming Labour government to pledge to revive the sector as it seeks to stimulate growth.
👾 The number of jobs in the sector grew by just 0.3% last year — the lowest since a decline of 0.1% in 2013, according to Office for National Statistics data released on Thursday. Wider employment across the whole UK economy grew more than twice as fast, the data showed.
🤖 The figures may stoke concerns of a stagnation in the UK tech sector, as employment and earnings stalled in the sector. Digital sector employees – including programmers and tech consultants – saw their hourly pay rise by just over 1% between 2022 and 2023, equating to a pay fall in real terms, the data showed. Nevertheless, the UK’s new Secretary of State for Science, Innovation and Technology, Peter Kyle, promised to revitalize the sector.
🗣 “The UK has a vibrant digital economy, but its potential has not been fully explored,” Kyle, in the job for less than a week after Labour’s victory in last week’s general election, told Bloomberg in a statement. “This government is determined to change that.”
Inside LVMH’s AI Factory | [SINGULAIRTY]
Vogue Business
🕸 For the past few years, LVMH has been building out an “AI Factory”, a library of algorithms for use by its brands, which include Louis Vuitton, Dior and Tiffany & Co. The factory also helps its brands make use of AI, and educates the company’s workforce.
💈 LVMH’s AI Factory team builds and provides modifiable, modular algorithms that can be deployed and tuned according to the brand’s needs, like Legos, to make the team’s work more efficient and the tools more readily accessible. “We don’t want to reinvent the wheel,” says LVMH’s Axel de Goursac, director of the AI Factory. “You can adapt to the business needs and the data, because it’s very important that algorithms adapt to the data, and not the contrary.” De Goursac explained the group’s evolving AI strategy during the recent Vogue Business AI Luxury Summit with Google, held this month at Google’s Paris headquarters.
🌋 The team of data scientists was originally formed in 2020, but it has grown since last year as generative AI tools reached common consciousness. To help guide its strategy, LVMH is working with Stanford University’s Institute for Human-Centred Artificial Intelligence. At a time when governmental regulations and industry-wide best practices are still in development in multiple countries and regions, the goal of the partnership is to proactively establish LVMH’s principles for ethical and responsible uses for AI that will guide how it makes decisions.
👠 Going forward, LVMH plans to continue educating its workforce, upskilling all 10,000 in AI in the coming years, and has worked with Google on an internal AI tool, called MaIA, that can provide business insights and answer questions. Part of its training includes how to successfully write prompts for generative AI. Already, 1,500 staff have received training.
💸 Expect more generative AI pilots soon; during this summer’s LVMH Innovation Award, two companies that use generative AI to create content — Fancytech, which creates marketing videos (that are especially useful in the China market), and Bling.AI, which creates photorealistic 3D renders — were awarded prizes. Future projects might also help address sustainability, with plans underway already for a way to detect “end of life” products and produce quantities accurate enough to reduce unsold products.
WHY RETAILERS MUST HELP REBUILD SOCIETY | [FASHION SYSTEM]
The Business of Fashion
👾 Today we stand on the cusp of an entirely new era of competition. One in which we will see these current and comfortable competitive pillars crumble and be replaced by a new (and much needed) set of competitive pillars. Pillars that are already being laid in place.
💀 If in 1994 someone had told you that by 2024 competitive advantage would mean that retailers begin producing their own fuel sources, you’d have thought they were crazy. However, Amazon is doing just that. In a partnership with Plug Power, Amazon is now using an electrolyzer in its Aurora Colorado warehouse, turning water into green hydrogen that is being used to power the hundreds of forklifts and tow motors at work in that facility. It’s all part of the company’s push toward the goal of net-zero carbon emissions by 2040. But before you jump to the conclusion that Amazon is simply doing a solid for the environment, it’s important to understand that while the price of green hydrogen today exceeds that of carbon-based fuels, that is projected to be reversed by as early as 2030, with green hydrogen becoming not only more efficient but also more cost effective than carbon-based alternatives. An innovation that, at scale, will afford Amazon a formidable, long-term cost advantage over its rivals.
⛽ More remarkable perhaps is that in this one move, Amazon has managed to do three important things; it’s introduced an asymmetrical competitive tactic that steps outside the norms of conventional retail strategy, thereby throwing its competitors a knuckleball. Secondly, it’s built the potential for a long-term advantage in the sense that producing hydrogen is not simply something competitors can easily replicate or reverse engineer as doing so requires an intrinsic organisational mindset and learning curve. Thirdly, and perhaps most importantly, it’s a tactic that contributes to repairing a broken societal system, rolling back the damage done to our natural environment by fossil fuels.
🚀 The bottom line is this: the future of competitive advantage is not about shaving another tenth of a percent off labour costs by offshoring. It’s not simply a new cool store makeover. And it’s not about replacing people with robots or AI. The future of competitive advantage is a mindset. One based on the clear-eyed recognition that we, as an industry, have reached a critical fork in the road, where there is more risk in adhering to the status quo than there is in rethinking it entirely. As I often say, futurism isn’t about guessing at the future we get. It’s about engineering the future we want.
EU ENDS APPLE PAY ANTITRUST PROBE WITH BINDING COMMITMENTS TO OPEN UP CONTACTLESS PAYMENTS | [METAPHYSICS]
TechCrunch
📢 The European Union has accepted commitments from Apple over how it operates Apple Pay to settle a long running competition investigation. Commission EVP Margrethe Vestager, who heads up the EU’s competition division, announced the development in a press conference Thursday.
📱 Apple has until July 25 to implement changes that will allow developers of rival mobile wallets to offer contactless payment by the predominant technology used in the EU (NFC) — enabling them to offer their users “tap and go” payments, she said. They will also be able to access key iOS features, such as double click to launch their apps as well as Face ID, Touch ID and passcodes for authentication.
👾 The bloc’s competition division opened a formal investigation of Apple Pay, Apple’s mobile payment and mobile wallet technology, back in June 2020, following a number of complaints. Initially the probe was scoped to look at Apple Pay as a whole. Later the case narrowed to focus on the use of Apple’s technology for contactless payments.
💲 Reporting preliminary findings two years later in May 2022, the EU’s said it had found Apple abused a dominant position to block competitors from providing NFC-enabled contactless payments on the iPhone — meaning they were unable to develop rival mobile wallets and compete fairly with Apple Pay.
🖤 The EU took specific issue with Apple restricting the ability of rivals to build wallet apps that can wirelessly communicate with NFC payments terminals, as Apple Pay can. It suspected the restriction of enabling Apple’s contactless payment tech to gain market share unfairly. And the EU said it wanted Apple to provide full access to NFC to allow competitors to develop alternative wallets.
🌵 Apple was invited to respond to the EU’s May 2022 Statement of Objections. The next major development came in January 2024 when it offered to make changes aimed at settling the case. Its proposal offered to let third parties developing mobile wallet and payment services gain fuller access to NFC functionality on iOS devices, free of charge, via a set of APIs without having to use Apple’s payment or wallet tech.
🗣 Reached for comment, an Apple spokesperson sent this statement: “Apple is providing developers in the European Economic Area with an option to enable NFC contactless payments and contactless transactions for car keys, closed loop transit, corporate badges, home keys, hotel keys, merchant loyalty/rewards, and event tickets from within their iOS apps using Host Card Emulation based APIs."
BEAUTY BRANDS NOW SELL REAL PRODUCTS IN ROBLOX. WILL LUXURY FOLLOW? | [FASHION SYSTEM]
JingDaily
🌵As luxury brands take a break from their digital roadmaps, Web3-native labels are pushing ahead to keep up the momentum. This week, for example, Syky dropped the second release from its monthly Syky drops series; this time tapping 3D artist and hot collaborator Marc Tudisco.
👾Virtual fashion platform Rtfkt is also creeping back into the spotlight with its most recent personalization tool for sneakers. In a video released earlier this week, the Nike-acquired brand teased a new add-on feature that allows wearers to customize the front of their shoes. But not everyone is convinced by its utility.
🚀In other news this week, E.L.F. Cosmetics has begun selling its real world products in Roblox, allowing players to purchase their favorite items from an in-game virtual kiosk as opposed to its online e-commerce site. The development marks a watershed moment for the beauty industry in the digital world, but will luxury brands follow its lead?
E.L.F. Cosmetics' stellar Roblox playbook is a lesson for brands looking to engage with the ultra-online native demographic of Gen Alpha. According to Geeiq, the brand's "E.L.F. Up!" experience has ammassed over 13 million visits since launching last November. As e-commerce faces its own challenges, caused by outdated infrastructure and dwindling consumer loyalty, Roblox's entry into the space points towards a more engaging and interactive future for online shopping.
UNFAIR FASHION | [FASHION SYSTEM]
Interline
For years, Zara was the fashion king that reduced time to market to just one month (as opposed to the 12 month industry average). But there’s a new kid in town, SHEIN’s time to market is just 2 weeks – and SHEIN’s revenue is catching up to Zara’s. But SHEIN isn’t the only one coming for more established brands. Temu operates similarly to Shein, sourcing products directly from suppliers engaged in small-scale production runs, based on demand. Unlike Shein, which directly engages suppliers, Temu serves as an intermediary connecting suppliers to consumers. How are these (formerly) Chinese retailers changing the landscape of affordable fashion? And is their meteoric rise sustainable?
While Temu is already publicly listed under PDD’s holding, SHEIN (now statutorily in Singapore) is amping up for its targeted $63 billion IPO. A monumental sum and an attractive prospect for the London Stock Exchange
While Amazon’s Fashion revenue (albeit the highest of them all) is stabilising, SHEIN is quickly catching up to the more established brands, as is Temu. These retailers unfortunately don’t share any data on breakdowns of revenue streams, so it is difficult to assess what share of the revenue is attributable to apparel sales (both in units and dollars).
Shein’s direct-to-customer (DTC) business model has thrived due to the trade policies of China and the US since 2018. That year, China began waiving export taxes for DTC companies after the US imposed additional tariffs on Chinese firms. Additionally, the US Trade Facilitation and Trade Enforcement Act of 2015 allows imports up to USD 800 per person to be duty-free. As a result, Shein and Temu have been exempt from export and import taxes since 2018. Temu manages shipping costs by prioritising sea freight over air freight, despite longer delivery times for customers. Temu takes a notable risk by using air freight for faster delivery, unlike AliExpress, which uses slower and cheaper sea freight. To mitigate these costs, Temu reportedly collaborates with J&T Express, an Indonesian logistics company seeking market share, which may be subsidizing shipping costs temporarily.
Daily news and stories covering everything from the Fashion System, Investment, and AI to WEB3 and Crypto that truly matter in Metaverse Fashion.