Report Overview
Artificial Intelligence (AI) In Highlights
AI in Fashion Market Size:
The global AI in fashion market is forecast to grow at a CAGR of 42.2%, reaching USD 20.9 billion in 2031 from USD 3.6 billion in 2026.
The incorporation of AI is one of the significant factors influencing the growth of several segments of the fashion business. AI technology boosts client satisfaction and loyalty via personalized shopping experiences using data analysis. AR & AI Virtual Try-On and Fitting Room solutions enhance the customer shopping experience, reducing return times and ensuring a high level of certainty. The industry will continue to benefit from supply chain optimization, dynamic pricing, fraud detection, trend research, and new product innovation, focusing on sustainability. These initiatives will help address rapidly changing customer expectations by improving secure transactions and operational efficiency. The fashion market is a fluid environment that also improves standards, although the introduction of AI has a broader impact on driving this industry.
Furthermore, according to the USCC data of April 2023, it is anticipated that more people will be shopping online and being influenced in their buying decisions by social media. By 2022, the fast fashion business was expected to account for $106.4 billion in revenue. Using a centralized and fast-moving supply chain and leveraging the search histories of consumers on its app, Shein is taking major market share in the United States, competing with rivals such as Zara and H&M, according to the same source. Other fashion-related Chinese businesses are taking an interest in this AI business model.
Governmental investments in the AI-based technology sector witnessed major growth within the past few years, especially in countries like the USA, UK, India, Canada, and Japan. The UK Government introduced AI Tech Missions Funds, under which the government allotted about GBP 110 million, whereas about GBP 900 million was allotted for AI Research Resources.
Some of the major market players operating are Microsoft Corporation, Amazon Web Services Inc., IBM Corporation, Intelistyle, Stylumia Intelligence Technology Pvt. Ltd., LALALAND, True Fit Corporation, Stitch Fix, Inc., ZMO.AI, Zalando SE, Neural Fashion AI, and Resleeve, among others. Growing ownership of smartphones worldwide is also among the major factors pushing AI in the fashion market forward. Increasing governmental investment in the AI-based sector is among the key factors propelling the market’s growth during the estimated timeline.
AI in Fashion Market Growth Drivers:
The increasing popularity of AI in the fashion industry is presumed to aid in market growth.
The adoption of AI is expected in fashion, with more picky customers seeking unique style preferences and experiences. AI-led recommendations, influencer inspiration, and customizable products are driving a growing proportion of this shift. Rather than thinking about a one-size-fits-all, current times focus more on the individual. As such, consumer demands lean towards personalization, and brands respond by adopting innovative technologies. It demonstrates a significant shift in how people connect with the industry they engage with and also deeply offers their input for advancements through data insights.
AI will largely facilitate these aims, and the white paper will ensure that the UK is positioning itself as the world's leading location for developing, testing, and using AI technology. As per the UK government's updated data of 3 August 2023, about the recent announcements of £110 million for our AI Tech Missions Fund, £900 million to create a new AI Research Resource, and £8 million to establish an exascale supercomputer that can run large AI models. This is all backed by a further £117 million of funding and an £8 million AI Global Talent Network, which would be utilized to award AI researchers hundreds of new PhDs.
In addition, Mango, one of Europe's top fashion companies, is pushing the boundaries for its digital transformation with the introduction of Lisa. Lisa is an in-house conversational generative AI platform that was introduced in October 2023. In under nine months, the fashion company developed its conversational generative AI platform that uses a spectrum of models Lisa works with, some proprietary and others open-source. This new platform is built on the backbone of Mango's tailored interface, similar to ChatGPT, and intended for use by its partners and workforce.
Increasing global ownership of smartphones
The major factor propelling artificial intelligence (AI) in the fashion market’s growth is the increasing ownership of smartphones worldwide. With the increasing ownership of smartphones, consumer accessibility to the fashion sector is increasing rapidly. In the fashion sector, various global retailers introduced AI-based try-on features that enable the consumer to try clothes and accessories virtually, increasing the demand for AI in the fashion industry. Smartphones also enhance the customer experience and feature data-driven insight into the latest trends.
The global smartphone ownership witnessed a major growth, with about 4.3 billion individuals, or about 54% of the total global population owning smartphones, as stated by the GSMA. GSMA further stated that in developing countries like India, Indonesia, and Bangladesh, the ownership of smartphones grew significantly. In India, the urban ownership of smartphones was recorded at 52%, whereas in Indonesia and Bangladesh, the urban ownership of smartphones was recorded at 68% and 41%, respectively.
AI in Fashion Market Segmentation Analysis:
By application, the deep design segment is expected to grow significantly
Integrating AI technologies within fashion design, where deep design plays a major role, is changing how fashion is conceived, produced, and marketed. In fact, some of the changes are taking their cue from technological developments, others from changing consumer preferences, and others from investments that stakeholders are making into the business.
AI algorithms sift through huge amounts of data (say, consumer preferences or trends in social media) to project future styles into the future and accordingly allow designers to develop collections that are relevant. Generative AI tools are helping designers create unique patterns and styles, moving beyond traditional fashion design by way of encouraging innovation. AI facilitates better resource utilization, demand prediction, and inventory management, which recognizes and helps remove waste and encourages greater sustainability in future practice.
Moreover, as AI is introduced in the industry, governments worldwide will establish regulations and policies for its ethical usage, protection of data, and consumer protection. For instance, the General Data Protection Regulation by the European Union holds any processing of data very seriously, defining clear protocols for them on how exactly they collect and use consumer information through AI. Moreover, the United States Federal Trade Commission issued guidelines on the use of AI in business operations, urging transparency and fairness. Although government statistics on AI adoption in fashion are sparse, the augmented regulatory focus denotes its increasing importance in the industry.
Several fashion brands and tech companies launched their own AI-driven products and services in 2024. For instance, Shein uses artificial intelligence to dynamically make changes to its supply chain and consumer demand. Up to 600,000 listings for a global market are sold. Using this AI reduced unnecessary inventory and costs associated with predictions of style and preferences. Moreover, Misela used generative AI to create images of handbags set against global backdrops, which combined real images of their handbags with AI-generated settings for marketing purposes.
By technology, the machine learning segment is rising substantially
The demand for ML in the fashion world has gained hefty momentum in the past few years, propelled by the requirement for personalization, more efficient supply chain management, and innovative customer engagement strategies. Fashion brands employ AI more than before as a mechanism to streamline operations while remaining competitive in a lively, changing market.
The demand for personalized shopping experiences has long powered AI in the fashion industry. The machine learning algorithms apply to vast datasets of consumer data to provide custom product recommendations. Some of the big players, such as Amazon and Zalando, have employed ML-powered recommendation engines to improve their customer satisfaction and loyalty. Besides the increased sales, this personalization builds an even stronger brand-consumer relationship with a more tailored shopping experience.
Machine Learning revolutionizes the fashion supply chain. It lets brands more precisely forecast demand, optimize inventory, and eliminate waste. Fashion retailers such as Shein rely on AI to predict trends and quickly modify production, greatly shortening lead times and excess stock. The ability to pivot rapidly in reaction to market changes is crucial for industries that move quickly. For instance, Mango, a fashion industry pioneer, developed a campaign for its youth line's limited-edition Sunset Dream collection that generative AI entirely powered. The launch is part of Mango's Strategic Plan 2024-2026, which focuses on creating value through technological development, data management, and operational excellence. With a strong commitment to innovation, Mango has developed over fifteen machine learning platforms (MLEs) since 2018, which use artificial intelligence at various points along its value chain, including pricing and personalization.
The worldwide e-commerce landscape has seen substantial expansion. The U.S. Census Bureau anticipated that e-commerce sales in the third quarter of 2024 would be $300.1 billion, accounting for 16.2% of total retail sales. This is a 7.4% rise from the same quarter in 2023, demonstrating the growing consumer preference for online purchasing.
Moreover, VisioNxt is a fashion forecasting initiative launched by the National Institute of Fashion Technology (NIFT) in September 2024. It seeks to promote healthy global competition while also propelling Indian culture and design to new heights worldwide. The fashion industry will benefit from VisioNxt's AI and Emotional Intelligence (EI)-based trend insights. Its mission is to identify, map, and analyze geo-specific trends reflecting India's positive plurality, cultural diversity, and socioeconomic nuances while compiling comprehensive trends and insights.
AI in Fashion Market Geographical Outlook:
The North American region is expected to hold a substantial market share in the AI in the fashion industry
Recently, owing to the increasing number of AI companies in the country, like IBM and Microsoft Corporation, the market for AI in fashion is flourishing tremendously, especially in North America, where the fashion industry has witnessed exponential growth. Moreover, the increasing penetration of social media and the adoption of local businesses in the country are contributing towards market spillover for the envisaged time frame. Additionally, there is a more prevalent focus on ensuring that companies are increasingly AI-ready across all sectors of the area, with fashion being one of the fastest-growing divisions covering the market.
Introduction of new products in the market of AI in the fashion industry. For example, in June 2023, Google announced a new AI shopping feature that allows one to try on clothes virtually. This is a new generative AI model that can take one image of a dress and show how it will be draped, folded, clung to skin, stretched, and wrinkled on different real models in different poses. In June, this was only available for shoppers in the USA, and women shoppers could try women’s tops across Google, including brands such as Anthropologie, Everlane, H&M, and LOFT. Hence, as the brands are releasing the real importance of AI in the fashion industry, coupled with the increasing focus of companies, it is anticipated to provide an edge for market growth in the projected period.
Additionally, investments in the AI industry are increasing in the country. For instance, in May 2023, the U.S. National Science Foundation, in collaboration with other federal agencies, higher education institutions, and other stakeholders, announced an investment of US$140 million. This investment will establish seven new National Artificial Intelligence Research Institutes (AI Institutes) in the country.
United States AI in the fashion market will witness a major expansion in many fashion industries, especially in the AI technology aspect of fashion, which is emerging and commonly adopted in product design, virtual fitting, customization, and supply chain management. The new generation of startup companies from the United States is embracing AI to redesign and reinvent modes of manufacturing, selling, and merchandising clothes, helping customers to buy clothes smartly and provide customization.
During Fashion Week New York in the Americas in September 2022 and DMEXCO in Europe, MySize Inc., a United States-based technology company, presented its FirstLook Smart Mirror and MySizeID to the global retail customer base. MySize’s technologies and products offer an innovative business value proposition focused on increasing revenues and decreasing costs for fashion business clients using AI measurement solutions. By participating in international exhibitions, MySize can introduce AI-based size measurement solutions to the United States fashion industry, thus expanding the client base of American companies interested in its service. Such a technological breakthrough can foster innovation and investment in AI-based goods and services in the US market and introduce appealing new possibilities of the United States AI to the fashion technology market.
Advancements in technology, particularly AI, are shaping the country's supply chain, which will positively impact the fashion industry. Machine learning models factor in large data sets, including order history, social media activity, and weather, to forecast variation in demand and assist brands in fulfilling customers’ requirements promptly and efficiently while significantly cutting waste and expense. Specifically, the US fashion industry is utilizing technologies to advance sustainable and ethical practices. Fashion is a large industry in the US, and each year, people discard 21.6 billion pounds of textile waste. Hence, to cater to the rising demand, designers are looking for sustainable solutions that offer regional market growth opportunities in the coming years.
AI in Fashion Market Key Developments:
September 2023- With the growing interest in AI-powered consumer technologies, Humane Inc. unveiled the complete form factor of its first product, the Humane AI Pin. Before its official release on November 9, the Ai Pin was showcased at Paris Design Week in 2024 as part of a partnership with the design label Coperni. It is a screenless, stand-alone device and software platform made just for AI called the Humane AI Pin. Incorporating a considerable range of sensors, the wearable made up of intelligent clothing is designed to integrate with users' daily routines, thereby allowing for more natural and intuitive computer interactions.
April 2023- The first beta of a fashion assistant powered by ChatGPT, made available on the app and website of Europe's leading online clothing and leisure goods retailer, Zalando. With this, Zalando carved out a niche by adopting generative AI to enhance the online clothes shopping experience. Despite having one of the widest selections available, clients occasionally need extra assistance provided by Zalando to choose the ideal item.
June 2022- Pinterest announced that it had finalized the acquisition of THE YES, an AI-powered fashion purchasing platform that lets users browse a customized feed based on their active input regarding brand, style, and size. The YES team has developed a thorough taxonomy of fashion that utilizes human experience and machine learning to fuel an algorithm encompassing hundreds of brand merchants on its platform.