Summary of Research Findings

In June 2022, Yano Research Institute sent a corporate questionnaire to 63 businesses in the domestic apparel industry (manufacturers, retailers, wholesalers, and trading companies) to find out their current status and challenges they face in digital fashion, which has been highlighted internationally, particularly regarding their attempts in the metaverse (virtual space online) and NFT.

To a question asking in what aspect the metaverse and NFT attract them (multiple answers), many companies chose “digital business can be borderless and global” (37.1%) and/or “growth of digital fashion market looks promising” (30.2%), indicating their hopefulness towards digital business. Some respondents selected “design created with 3D software can be utilized for both physical clothing and digital clothing” (17.5%), which points out the benefit of introducing 3D CAD technologies (such as 3D modelling software). Meanwhile, a certain proportion of respondents showed reluctance towards digital fashion, saying “(it is not attractive because) it is just a temporary frenzy” (20.6%).

The survey also revealed that only 3.2% of the leading domestic apparel companies are currently in the metaverse and/or NFT business. A little less than 20% said they are “considering the market entrance” (15.9%), and more than 60% are “not considering the market entrance” (61.9%). 

In summary, despite the attraction of metaverse and NFT business, only a fraction of apparel companies is involved at present. More than 60% of the companies are not even considering the entrance to the market. 

Noteworthy Topics

Background of Emergence of Digital Clothing for Avatars in the Metaverse

Apparel industry is said to be falling behind in digital transformation when compared with other industries. The delay is due to the complexity of supply chain, which makes it difficult to consolidate data from design (starting point) to sales (end point).   

Besides, as a result of business model that pursue mass production and mass consumption based on demand prediction, the industry has been overproducing, creating unthinkable quantities of unsold garments ending up on landfill or incineration. The industry is condemned for being unsustainable.

Amidst the global trend of sustainability, apparel industry is expected to increase precision in demand forecast by lean production. In this sense, digital transformation and sustainable actions are directly connected.

While digitization has advanced in product management (inventory management) and sales (sales management, sales promotion, and marketing) of finished goods, it fell behind in planning and designing. However, apparel companies are increasingly streamlining production of conventional clothing (‘physical’ clothes) by deploying 3D CAD to reduce sample creation process and shorten lead time. Meanwhile, the 3D data in planning and designing can also be used for digital clothing. 3D technology is expected as an enabler of “double cropping” * for fashion manufacturers and brand designers that are facing predicaments in generating a new revenue stream.

The advantage of digital fashion is liew in the fact that it is digital data on the metaverse. Cost of reaching customers around the world is considerably lower for digital fashion compared with that of conventional ‘physical’ garments. In line with the growth of global enthusiasm for the metaverse, apparel companies and surrounding industries are focusing on digital fashion and counting on its future.

*The expression “double cropping” here refers to the state where apparel industry generates two revenue streams using 3D modeling software, by streamlining production of physical garments and by designing digital fashion (virtual clothing for avatars).

Research Outline