Geek chic: Why fashion brands are turning to start-ups for help

Retailers such as Asos, Topshop and River Island are tapping into the expertise of technology start-ups in the search for innovative ways to deliver a better customer experience.

Why fashion brands are turning to start-ups for help

Fashion retailers are warming up to technology, with Asos and Topshop putting calls out to start-ups to help them differentiate themselves online and in-store.

Topshop launched Top Pitch this month to find a start-up with a viable wearable technology proposition. The retailer claims wearable tech has yet to take the fashion world by storm so, throughout June, Topshop will house five start-ups at the Fashion Retail Academy, close to parent company Arcadia’s headquarters.

All five start-ups will get to pitch to Arcadia owner Sir Philip Green, although there’s no guarantee the winning idea will receive investment or even get to appear on Topshop’s shelves.

The retailer has teamed up with technology investment fund L Marks, which also helps run William Hill’s accelerator and John Lewis’ JLAB start-up programme.

Asos, meanwhile, has turned to TelefO´nica-owned Wayra to find start-up partners – but it has specifically ruled out "gimmicky" innovations such as 3D printing and wearable technology.

Instead, it is promising a £34,000 cash investment, office space and mentoring for each of three start-ups tasked with improving Asos’ back-end site technology by focusing on personalisation, filtering and search, particularly on mobile.

Why is this happening now? Martin Newman, founder and chief executive of ecommerce consultancy Practicology, thinks it might be more economical for retailers to turn to start-ups than to develop ideas in-house.

"It could be cheaper and could generate good ideas that deliver a better customer experience and enable retailers to serve customers more cost-effectively," Newman says. "Start-ups will be more agile and will find existing solutions that could otherwise take retailers a lot longer to develop and cost a lot more."

But retailers should not rely on tapping start-up thinking in perpetuity, he adds: "I’d like to see them leverage this to transfer knowledge to an internal team so they can have this capability within their own business in time."

Does that mean retailers are currently looking for good ideas on the cheap to avoid the expense of in-house innovators and developers?

No, according to Cliff Cohen, chief information officer at Asos, who says the company is expanding its own tech team at the same time as launching the start-up programme.

Does that mean retailers are currently looking for good ideas on the cheap to avoid the expense of in-house innovators and developers?

Asos has hired more than 100 additional tech staff, he says, and is aiming to employ another 120 before the end of this year. The brand has also launched its own iOS app, which it developed internally.

Following the trends

As BHS falls into administration and Marks & Spencer’s womenswear division flounders, there are important lessons to be learned when retailers fail to innovate to meet customer needs.

For Asos, innovation means keeping up with customers on mobile and social media. Last month, the company reported that more than 50% of orders – not just traffic – came from mobile. And its new app, released in March, had been downloaded 7.5 million times.

There is an obvious challenge here – Asos hosts more than 80,000 products but has less screen "real estate" in which to show them off.

"The [start-up] brief is looking at advanced search, personalisation and more," Cohen says. "We are also very focused on mobile – but not exclusively."

Cohen adds future programmes could focus on more tangible technological innovations, such as wearables. "We are simply looking at other areas for this initiative and want to keep it focused to achieve the best outcome," he says. "We have not ruled anything out for future initiatives."

Topshop’s motivation is less obvious but it has dabbled with wearables in the past, linking up with Barclaycard’s contactless brand, bPay. The pair launched a line of accessories equipped with near field communication technology, allowing the wearer to make contactless payments with a phone cover, keyring or bracelet (pictured below).

Topshop's wearable tech bracelet

Sonia Wieser, programme manager with L Marks, says: "The possibility of having wearable items in the Topshop store is really exciting. Wearables are not necessarily geared to female adopters. We feel that we can add value through this project. Wearable technology isn’t just about the tech – fashion can have a say in it."

There is also a risk that promising start-ups commit to a single brand, compromising their own growth.

River Island has been ahead of the curve in this respect, partnering accelerator TrueStart to gain early access to start-ups. Its model differs from those of Asos and Topshop – River Island is one of a number of TrueStart partners and won’t necessarily invest in or partner the start-ups.

TrueStart’s chief executive, Baz Saidieh, says that although start-up partnerships are "in vogue", not every model will work. He criticises Top Pitch for asking too "specific" a question about wearable tech. "You start to reduce your final size automatically and that isn’t sensible from an investment perspective," he says. "Although, for Topshop, it might be fixing a problem." In other words, chasing potentially gimmicky ideas, such as wearable tech, could prevent Topshop from learning about other, more interesting start-up ideas.

There is also a risk that promising start-ups commit to a single brand, compromising their own growth. "It is fantastic to get on Topshop’s shelves but it’s better to provide technology for Topshop, TK Maxx and all the retailers," Saidieh says.

Regardless of the model, Newman, Wieser and Cohen are united in their belief that fashion’s love-in with start-ups will continue.

Cohen says: "The potential is significant. Online fashion is still a small percentage of the entire fashion market and new technologies will have a significant impact on this."