Barry Libert, cofounder of strategy firm AIMatters, had a splash of cold water for fashion.
He said five companies — Amazon, Apple, Google-parent Alphabet, Facebook and Microsoft — own every customer in the world.
“The physical world lost a long time ago and in your industry and in every industry,” he said. “They have won. Game over. And we in this room made that happen, we turned over all of ourselves, our complete selves to them.”
But in an interactive presentation where Libert asked the audience to stand and greet the people around them — making a little human connection — he also offered a new way forward for an industry that has in many ways been left behind in the economics of the world of big tech.
Libert sketched out the divide in stark terms, noting that as recently as 2006, the physical world was still winning over big tech.
But just five years later, Microsoft chief executive officer Steve Ballmer was admitting that he missed the mobile wave and fell prey to Apple and the iPhone. By 2016, the virtual and data worlds had taken over and now there are companies, such as Amazon, with a market capitalization that exceeds that of the entire fashion industry.
“The physical world, whether it be the clothing world or the auto world, basically sells something once,” Libert noted. “And then they sell something again and investors pay them one dollar for every dollar they sell. [Or less in the case of fashion].”
Tech platforms, like Amazon, on the other hand, get $6 back since they operate as a platform, a “multisided model where there are many people paying the toll keeper to keep track of the dollars of sales.”
“It’s not just what your customers pay you for a dollar of sales, it’s what your investors pay you,” he said.
Libert pointed to venture capitalist Marc Andreessen, who wrote in 2011 that “software is eating the world” and said that’s happened.
“Today, we’re going to talk about what’s left,” he said. “If software ate the world, data models are running it. And the fact that so few [fashion executives are experts in artificial intelligence] tells me how much trouble this industry is in.”
He said fashion needs AI to truly know and understand its customer base, understanding not just why they shop, but who they are.
“It doesn’t matter what you’re going to sell, how you’re going to sell it,” he said. “It’s not relevant.”
What is relevant is understanding both who one’s customers are and why they act the way they do.
“You start with who,” he said. “And the only way you start with who is you accept the fact that every who has his or her own why.”
That requires knowing a lot about one’s customers and being able to understand and appreciate what all the data says about them.
“AI is empathy at scale, it allows me to know you better than you know yourself,” he said. “It allows me to make available to you when you want, when you want it.”
Libert suggested a whole new mind-set for fashion.
“Products don’t matter, they are secondary to relationships,” he said. “The merchant prince is dead.
“You have to change the way you do business,” he said.
To counter big tech, he suggested fashion as an industry band together with the help of artificial intelligence to create a counterpoint.
“Organize as an industry to play this game,” he said. “Change the silos among yourselves, come together as an organizing body to take on the other platforms, create your own Uber, Airbnb.”
The industry needs to appreciate the power of working together and data and create its own network effect.
And, finally, Libert said fashion needs to measure its engagement with consumers.
“It’s really the core of our humanity,” he said. “Understanding that engagement is where we all live, not selling a product once a year or once a month, but it’s in how we engage with each other all the time.”