In anticipation of London Fashion Week's 40th anniversary, we're taking a look at the next innovations in fashion. Once again, this year's event will incorporate digital elements – the dedicated LFW platform will provide a forum for designers to showcase exclusive digital content to the public. So how else might fashion and retail brands use technology to bring consumers closer?
What are Digital IDs and Digital Twins?
Imagine if every product had its own unique digital identity - a passport that travels with it from creation to end-of-life, detailing its origins, materials, and journey through the supply chain. That's the essence of a Digital ID or Product Passport. It is a secure, digital record which provides information about the product, for example, information about the value chain, the product's performance against environmental parameters and even provide information to help recycling facilities (e.g. composition) at the end of a product's life. Some Product Passports may also utilise blockchain technology to track ownership.
In contrast, the "digital twin" is a physical product's virtual doppelgänger. Luxury brands have started to experiment in this space as a practical first step towards digitalising the customer experience, which many anticipate will progress into full metaverse retail. The digital twin is sold with a physical product and can actually be integrated into it. This digital twin mirrors the life of its physical counterpart, and is not just a static digital copy; digital twins can be dynamic and interactive replicas that allow for simulations, modifications, and can offer the consumer an in-depth understanding of the product's composition.
Why are they becoming popular?
The charm of Digital IDs and Product Passports is their ability to tell a product's full story. For example, fashion brands may use Digital IDs to demonstrate sustainable sourcing of leather and cotton, provide detailed composition data on dyes and glues, and promote resale on the second-hand market. Proving authenticity and ownership has the additional benefit of preventing fraud and counterfeiting; a particular issue for brands in fashion.
Beyond the obvious appeals, there are some more nuanced reasons why the market is now paying attention to Digital IDs:
- Incoming EU Eco-design Regulations: From as early as 2026, brands selling in the EU may need to incorporate product passports into apparel, accessories and electronics to improve supply-chain transparency and hold brands to sustainability targets. These passports would contain specific information required under legislation to improve traceability and help consumer's make sustainable choices.
- Changes to cookies: Changes to regulation in the UK mean that third-party tracker cookies are being phased out, and if companies want to use them, they need to ask permission. In November 2023, the UK's data regulator, the ICO, began to crack down on non-compliant cookie practices by writing to top consumer-facing companies and threatening enforcement action. This has sparked greater awareness in the industry and prompted companies to get creative in their efforts to collect customer data and stay legally compliant. The trend is shifting towards empowering customers to be the masters of their own data, sharing it on their terms. Digital IDs create opportunities for customers to voluntarily share data each time they interact with the ID, which can deliver a cache of high quality data straight back to the creators.
Amidst economic pressures, brands are also trying to find ways to enhance the retail experience and drive sales. Digital IDs and Digital Twins allow brands to add value to physical products; they can be used to give consumers a backstage pass to exclusive events, or give access to digital media that is only available when the ID is interacted with.
What are the legal challenges?
Privacy
As companies pivot from third-party cookies to new data collection methods, it is crucial that Digital IDs and Product Passports are designed with consumer privacy in mind. A potential tension becomes evident when, for instance, a luxury watch is accompanied by a detailed ledger documenting its previous owners. While this ledger is instrumental in verifying the watch's authenticity and providing a transparent ownership history, it must be carefully managed to respect and protect the privacy rights of those past owners. Another practical issue remains – consumers are becoming more conscious of their data footprint, and ill-considered attempts to attract more customer data could backfire if perceived as exploitative.
Data Security
If Digital IDs are to achieve their intended purpose, they must be trusted and secure. Blockchain technology is considered secure because it provides a decentralised ledger that is resistant to tampering. Each block in the chain contains a cryptographic hash of the previous block, a timestamp, and transaction data, making it extremely difficult to alter once recorded. However, the systems that interact with the blockchain must also be secure to prevent data breaches. This could prove to be a challenge for brands.
The implications of international data transfers are another legal hurdle. With global supply chains and international customers, data may need to cross borders. This must be done in compliance with data protection regulations such as the General Data Protection Regulation (GDPR) in the EU and the UK GDPR post-Brexit. Transfers of personal data outside the UK and the EEA are subject to strict rules and may require additional safeguards.
Artificial Intelligence
Brands incorporating AI into digital offerings also need to carefully assess associated risks; and may also wish to adopt compliance with the new ISO42001 standard, a recently finalised benchmark of best practice for AI governance.
For guidance on what to consider when incorporating AI, take a look at our AI Resource Centre and our AI Risk Assessment Tool, or reach out to our team.