Latest / The Interline Podcast / BNPL Meets Repair, An AI-Shaped Holiday, Tech ROI Analysis, And In-Store VTO

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BNPL Meets Repair, An AI-Shaped Holiday, Tech ROI Analysis, And In-Store VTO · The Interline Podcast

• speaker-0: So welcome to the edit from the Interline, the show where we run a quick fair analysis on our pit of the most important fashion and beauty technology stories from the last seven days. I'm Grace, the social editor, and I'm joined by Ben, the editor in chief, and together we have around twenty five minutes to give you our analysis on the stories that we think really matter. speaker-1: Hey Grace, good to see you again. I am marginally better rested than I was this time last week, but ⁓ only by an hour or two. I think I've had two and a half hours sleep last night as opposed to one hour sleep last week. ⁓ but I am here. I am raring to go. ⁓ there's a bunch of very different things to talk about this week. It's not all about AI for a change. So let's let's get into it. Hit me. speaker-0: So I know in previous weeks of the edit you've spoken about some of the issues that come along with buy now pay later services like Klarner. This week Klarna was in the headlines again, but for a slightly more positive reason, I think. So I'm intrigued to get your thoughts on it. So, in collaboration with Save Your Wardrobe, Klarna has introduced a new feature that allows shoppers to assess the different repair options that are available for that. Piece. So now shoppers can use Klana, they can look at all of their order history and they can search for a specific repair they want. So this could be alterations, it could be cleaning, or it could be traditional mending. And then Klarner with Save Your Wardrobes infrastructure will give all of the services that are available. Klarna says this is a really important service because it's not that shoppers don't want to repair their clothes or don't know that they're able to do it. It's more that they don't have that knowledge of what brands actually offer this service. So since it is about buy now, pay later in a way, I wanted to get your take on this and what you make of this story. speaker-1: So I'm gonna try not to be cynical. I'll I'll get a bit cynical at the end of the answer, I think, maybe as we go with this. So ⁓ I know the team at Save Your Wardrobe. ⁓ I've I've previously interviewed ⁓ Hasna ⁓ on stage and off, ⁓ I believe. And the work that Save Your Wardrobe does is really interesting because they they started life as a more consumer-facing application and then built out their B2B ⁓ infrastructure over time. So this report or or this partnership announcement at the very least hints at the fact that people don't know which brands offer repair services. And behind that is the issue that the majority of brands don't have their own repair services. What they do is they either offer white label repair services or they partner with a company like Save Your Wardrobe, which acts as a kind of intermediary layer between the brand and local repair. Companies, tailors, ⁓ and and so on, people who are able to fix up garments so that the customer gets an end-to-end service that ⁓ extends the value and the lifespan of their clothes. And the brand or retailer doesn't have to necessarily invest in setting up all of that infrastructure and that business unit themselves. Because not everybody is gonna be ⁓ a Patagonia is the the example that always comes to mind where you will have like a seamstress in store and ⁓ you will take back clothes. You'll take back a Patagonia outdoor jacket for its entire life and repair it even if it's twenty years old. ⁓ there are a lot of companies that don't want to do that because they don't keep things in their product mix that long, they don't keep materials and things in circulation that long, and they don't want to invest in that kind of setup. So from a pure repairability point of view, great. Like dn definitely a net positive. And from the point of view of having this exist tied to somebody's buy now pay later profile, again, fine, because if you are this isn't something that Visa on MasterCard or any other payment processor is gonna do. So if you buy things from multiple retailers ⁓ and multiple brands, like most people do, it would be quite hard for you to try and keep on top of which things you can get repaired where. ⁓ if you buy things through Klarna, What you get is not only the deferred payment credit, but you get the ability to centralize all of this and to say, okay, I bought things from a bunch of different places. I would like to get five of the ten of them repaired. The other five I'm gonna let languish or throw away. So again, a net positive there. The thing that I zeroed in on with my Cynix eye a little bit with this was ⁓ is as part of the announcement, they they said that something like three in five UK consumers spend less than 50 pounds. So My maths is bad, but something in the region of 70 US dollars on individual clothing items intended for long-term wear. Now, that to me doesn't that to me seems weird. ⁓ I I understand it from an economic and a behavioral point of view. People don't have a huge amount of discretionary ⁓ income to spend on fashion. Something costing 50 quid is not designed to last. And with my Cynix hat on, I would say Are we feeding into a kind of not obsolescence cycle, but into a cycle where people buy things with deferred payment credit? They keep those things for a long time. So they have less, they're they're happier to keep paying them off for a longer time because they feel like they keep value for a longer time. And they also feed into a repair cycle for brands and retailers that is It has a finite endpoint on it. There's only so many times you can repair something that was not designed for quality to begin with. I I don't think I have a solution for that, and I really don't want to seem like I'm just poking holes in the whole thing. But that would be that would be the slight negative I would see here is that it's I'm not gonna bring in Terry Pratchett into this podcast very often, but there is ⁓ like a famous ⁓ I forget what it's called, like a the boots theory of luxury versus ⁓ like why poverty persists. ⁓ and it goes that if you only have the money to buy cheap boots, you end up spending more on them over time because the cheap ones break and then you have to replace them, but you don't have the upfront money that somebody rich would have to spend on better quality boots that would last for 10 years. You can read this one of two ways. You can read this as helping to avoid that cycle, or you can read this as helping to kind of codify that cycle a little bit. But Right, repair, very noble goal. Love the folks that save your wardrobe. speaker-0: The next story we're slightly talking about buy now, pay later again, but in a slightly different context. So we're moving to that time of the year where Cyber Monday is coming about and also Black Friday. Now, a new report from Adobe Analytics is actually predicting that this year. Online sales are set to hit $275 billion this holiday season. And really interestingly, Adobe put this down to AI traffic and also buy now, pay later, which is also really contributing to this. So they said that AI traffic to US retail sites is set to rise 130% year over year. And this is because more consumers are. Adopting AI shopping, as we know. They also said that buy now pay later is expected to drive $21 billion worth of sales, and this is up 6.6% year over year. So this really shows the impact of impulse shopping and how it's driving the adoption of these kinds of payment options. So again, I know you have a lot of thoughts about buy now pay later. So what do you make of this story as well? speaker-1: I have ⁓ one thought about buy now pay later. It's just a very consistent one, like ⁓ week over week. I'll get into what I think about it in a minute. I would I would say for anyone who wants to just unpick some of the buy now pay later deferred payment credit stuff. I did an interview with ⁓ Alex Forsyth Thompson, who's the CEO of Float, which is a ⁓ card-linked instalment deferred payment credit provider. And I grilled him a whole bunch about the whole deferred payment ⁓ space. So if you're if you're interested in like ⁓ some deeper stuff on how I feel about that and whether I'm right or wrong, I would encourage people to listen to that episode. The thing I wanted to ask you with this, as somebody who I'm throwing some barbs your way here, but somebody who buys a lot of clothes. ⁓ do you use buy now pay later services at any point in that journey? speaker-0: So I've definitely been very tempted to use them in the past when I've been online shopping, but I have always resisted it. A lot of that is because I actually found setting up the payment method and actually doing the whole process became quite complicated. So that put me off. But a lot of my friends definitely do. So it is definitely a widely adopted behavior. I just personally don't. speaker-1: Do it. Fine. I mean neither have I. But again, like some s but there's some measure of privilege on both of our parts where we're like, well, we don't need to. We can we could afford to buy the things that we're after without without doing it, whether that's comfortable or not is is is personal. But those statistics do show that it's it sounds like a lot. It sounds you know, it sounds like buying our pay later is driving twenty one billion in sales or expected to this holiday season up six percent year over year. It actually only really amounts to if you take that two hundred and seventy-five billion as the holiday target, it amounts to like seven and a half percent or something of overall holiday sales volume. So my one primary objection to buying our pay later is that ⁓ I I I'm concerned that fashion uses it as a growth crutch and gets people to buy things they can't afford and that's the only way to to meet metrics. This is evidence against ⁓ that feeling. This is ⁓ you know, if if 93% of holiday shopping is done without deferred payment credit, then that would seem like a net positive ⁓ for me. Now, the other thing I wanted to ask you about was the AI side of things. We've talked a bunch about AI influencing shopping online and off. We talked about it physical stores last week. How far have you gone down the road of helping AI? Because I know you mentioned previously you're kind of using it to help with some outfit building and things along those lines. As we go into the holidays and you're shopping for more than just yourself, you're shopping for other people. ⁓ do you foresee yourself talking to Claude or Chat GPT or Gemini and using it as more of an aid to shopping? 'Cause I'm I'm not there yet, but I do use AI a lot more than I used to. speaker-0: I think a couple of weeks ago I would have said definitely not, but I also would have said I would never have used AI for any kind of fashion recommendation, which I now have done to find different pieces. So I'm definitely not gonna say that I wouldn't use it. And I could see it being useful shopping for parents or knowing that if someone wants something within a category that I don't have a lot of expertise on, so I I'm definitely not saying I wouldn't use it as we move closer to the holiday season. speaker-1: Yeah, I think I'm I think I fall into so sometimes when you watch AI company demos and things, you're like, who the hell are these people? Everybody seems so out of touch. Everybody seems so busy. Like, are these real lives that people have that they that they're required to do these things? ⁓ I'm starting to see more of myself in that now. I'm starting to see like ⁓ I can imagine rocking up at a store in my car on the way back from dropping the kids at school or on the way to pick the kids up at school and being like, I know that I've got a birthday list for my eldest. in my Apple notes. ⁓ I could manually pull it up or I could just have a quick voice conversation with ChatGPT as I pull into the car park and be like, what what what did she have on her list again? What are the things that I'm going in here to look for? And then I could also, it would be a natural next turn to go, is this the cheapest place to get those? Could I get these on Amazon? ⁓ like some of that showrooming stuff that we that we talked about. And again, I'm aware that makes me seem out of touch and a bit privileged from from that point of view. But I also find myself using it for stuff that I didn't think I would use it for in my personal life increasingly these days. Although, as we get into our next story, which I'll hand back to you for, ⁓ I think there's some s statistics that suggest that while this kind of explosion of AI influencing shopping seems very large, there's a bit more nuance to it than that. So let's let's talk about the next thing, because the the next thing is one that I found. ⁓ so quiz me on that. speaker-0: So, next we're going to be talking about a new report from Andreessen Horowitz. They put out their state of markets report and they also did a Substack post about it. One of the things that stood out to me was the argument that even though tech is taking over the stock market, AI adoption is actually still quite early and small. So they point out that while around 30% of SP 500 companies Do report some kind of quantifiable impact from AI. Only around 2% are actually tracking a specific metric. And also consumer paid adoption is still very low. So the broader argument is that we're moving from a bits world, so software and SAS, into more of an Atoms world where AI is driving demand for physical infrastructure like GPUs. data centers, chips, and eventually robotics as well. At the same time, the piece also argues that traditional software isn't necessarily dead, but it's more that companies now have to prove that AI is creating real measurable value. So I know you just touched on this, but I'm really interested to hear on your perspective about what this specifically means for fashion. And where you think fashion sits on this AI adoption curve? speaker-1: Yeah, and there's there's two places that it sits on the adoption curve, right? One is for the businesses and one is for the consumer. ⁓ and it was the consumer one I was just hinting at in that previous question that we had. If we think about the expected growth in AI influencing shopping, it seems, on the face of it, like Everybody is using AI, right? It seems like everybody has their own personal agentic shopper, AI assistant, and that's what's driving all of this. But the statistic you just mentioned, which is that ⁓ a very small number of people, I think about two percent of US households are actually paying for an AI service, complicates that in two ways. So one is That presumably means this huge subset of people, you know, OpenAI claim 1.2 billion ⁓ monthly active users, something along those lines. Presumably that means 98% of the people using it are ⁓ using the free tier. Now, I'm not saying that that's necessarily a bad thing. I'm not saying everybody has to pay for AI. I wish we our token budgets and stuff weren't as high as they are sometimes, but using the free version adds two complicating layers to this. One is if you're using the free version to do shopping on your behalf, it uses older, cheaper models. ⁓ it restricts your usage quite a lot. You're essentially having a second rate, second tier kind of stylist assistant shopping ⁓ experience, right? So there's already a gap emerging between people who can afford to pay. To do the sort of showrooming and ⁓ and and real like cross-shopping and everything else that you get with with AI and people who are stuck with the the second class version of it. Then you have, well, okay, what's the incentive to continue to offer the second-class version from OpenAI's point of view? It's ads. ⁓ and there's there's been a lot of progress in the way that ads are working their way into Chat GPT conversations specifically. ⁓ there's more frameworks and stuff in place now there. There's more in the way of individualized conversations with ads. We also saw very recently YouTube adding ⁓ like ⁓ conversational agents to YouTube ads so you can go and and talk to an advert. what what product is getting recommended to you there? Who is the winner? Who is the beneficiary in that kind of ⁓ value exchange? Is it the advertiser? Is it the retailer that pays to ⁓ put products in front of you or the man that pays to put products in front of you? Is it the consumer? Do you end up with a better product? Do you end up with a cheaper product? Do you end up with a better deal? so to me, that's a very interesting point of tension here. Is that we talk a lot and big companies like Adobe and Stripe and Shopify talk a lot about agentic commerce and everybody having their own agent with their own wallet? The Precondition to that to me right now is that the economics don't justify that being done for every free subscriber around the world. And there's a whole lot of free subscribers around the world. Then the other part of the adoption curve is the business one, as we talked about. And it this this is just a bit of validation for the relatively narrow survey that we ran as part of the AI report 2026. So we only talk to about 100 brands and retailers. This is this is larger. But if you look at the SP 500, so standard and poor's ⁓ 500 representative of the US stock market essentially, only a third, or slightly less than a third of them say there's a quantifiable impact of AI. And Only two percent are really tracking those according to metrics. ⁓ both of those are worse than what we found for fashion. So the wider picture is actually less encouraging than it is within fashion. We found that about a quarter of companies had a sort of rubric for scoring their return on investment in AI. And we found that Actually, most companies believed that there was some impact from AI. It happened to be concentrated in particular areas, but there weren't many people who believed it wasn't having an impact at all. So this is a weird one because ⁓ A16ZZ and Reese and Horowitz, ⁓ they have a vested interest in making it seem like tech is the solution to everything. They also have a vested interest in making it seem like there's a big gap still to go because that's why people will continue to funnel money into AI companies and so on. But ⁓ industry adoption. Is is worse than I expected it to be and consumer adoption is lower than I expected it to be. And given the amount we talk about AI, given the amount other publications talk about AI, I think it's important to bear some of these statistics in mind, is that we are still talking about a small, small subset of the population. Just because you might sit there or I might sit there in Cloud Desktop or Codex all day or whatever, doesn't mean that's regular behavior for regular shoppers. speaker-0: So next we're going to be moving into more of the luxury fashion sector. So it's no secret that luxury has had a tough couple of years. So people are really realizing the diminishing quality of luxury products, also the prices of luxury products have really been hiked recently as well. And also just generally the economic state of the world. Has prevented even the wealthiest shoppers from buying luxury. Now, recently there has been a report shared by Reuters, and they said that LVMH has unsurprisingly lost its place among Europe's top 10 largest companies. And they also interestingly explained that the cosmetics creep L'Oreal has actually become France's most valuable company, surpassing Louis Vuitton, which is an LVMH brand. So I wanted to get your take on why this has happened and also what the connection to tech is here. speaker-1: Yeah, so you there there is I think there's a connection to tech here. Maybe, maybe I'm stretching my ⁓ expertise a little bit, but ⁓ I've had enough of conversations with people like ⁓ Hannah, who leads the BOF professional in BOF insights ⁓ for business of fashion, where we've talked about overall kind of fashion industry growth, the s some of the s challenges facing the luxury market and so on. I think uniquely captured most of them, which is that. Perceived value is the whole luxury game. ⁓ and d I hate to kind of refer people to other podcasts again, but when I interviewed ⁓ Ashley McDonnell, who is the CEO of ⁓ Vico Group, which is ⁓ Ireland's f first and newest ⁓ luxury group, she and I get into what actually constitutes luxury and what that promise is. But you're correct in that when people's money is squeezed, when luxury conglomerates start to encounter these sorts of market challenges, product challenges and things. It is inevitable at some point that some of that perceived value rubs off and that people start to see they they'll start to say, is this worth spending money on? ⁓ luxury has always been France's biggest export. It's been France's biggest export certainly for most of my lifetime. So this is quite an upheaval. I think it's it's the first time in at least a decade, I think, where the where this has been the case, where it's not LBMH or a luxury house that is ⁓ France's biggest company. The reason I think there's a tech slant to this is that I think beauty has much, much more to offer to the kind of tech savvy consumer than fashion does at the moment. ⁓ and I don't mean that in an experiential way. I mean that in a pure product level. So yes, be beauty has more affordable categories, right? You can go by some cosmetics, you can go buy some lipstick, you can go buy some fragrance. You they have a lot of like entry points to luxury brands, l to be luxury beauty brands, high-end beauty brands that don't require you to spend a fortune. Luxury fashion does that to some extent with scarves and belts and ⁓ and and that kind of thing, but so certainly not the same way. I think the bigger thing is that beauty can sell you devices and beauty can sell you tech facing experiences in a way that fashion can't. You can sell people devices to mix foundations at home, for instance. You can put really technologically advanced ⁓ operations into clinics and things that are close to or and retail settings that are close to the consumer. You can engage people with things like AI virtual try-on and ⁓ AI driven like hyper personalization in beauty in a way that you can't in fashion. So I'm Admit that I'm tilting things into the tech sphere, because that's what I know more than I know them the full dynamics of luxury and beauty. But to me, it seems like the beauty industry has a way of engaging people who use technology every day and who are more open to buying device categories and buying kind of different products than they would be in fashion. ⁓ and L'Oreal is at the forefront of a lot of that innovation. We've done a profile on their ⁓ presence at Viva Tech and things before. But I have a podcast episode, an interview coming out quite soon with ⁓ the CEO of ⁓ HOT or HOT AI, which is all about ⁓ hyperpersonalization and ⁓ feedback loop for beauty. So I would encourage people to come back and listen to that one because I think you can read it in context of this news. speaker-0: The final story this week is the fact that Tesco is trialing virtual try on. So in the brand Sandhurst Store, they've now introduced a new customer experience which allows any shopper to virtually try on 1500 items from FF, which is their in store brand. And customers can do this by either taking a picture of themselves. And visualizing the garment on themselves, or they can also use a virtual model and see the pieces in different sizes. On top of this, it seems that Tesco is also expanding its other retail experiences. So they now have changing rooms, they also have introduced other technology into their retail experience, and they've also just launched their online store as well for clothes. So I wanted to get your take on this story. Why is it interesting? And do you think that this is a new era for virtual try-on for fashion? speaker-1: okay. So this is an interesting one. It's a very, very narrow story, this. You and I both agreed that when we when we picked it up, because it relates to one big retailer. So Tesco, for anybody who who is not familiar, is a a big supermarket that does ⁓ t I assume they do homewares. They certainly do a lot of food and groceries and they've had their own ⁓ fashion label for a while. It's not been a big priority. They're putting a renewed emphasis on it. ⁓ so it's one one retailer and it's in one store. In the UK. ⁓ and cards on the day, I don't actually know where Santhurst is. So this is this is one of those UK stories where I'm like, I'm talking about this and I don't know where it is in the country. The reason I think this is interesting is that AI Virtual Tryon has been, well, Virtual Trion in general has been through really rocky road. We had the CEO actually of ⁓ I Ayuta, Ayuta, however you pronounce it, which is the company behind this. ⁓ they wrote an opinion piece for us a couple of months ago. ⁓ and she was also interviewed in our AI report. and they've they're pretty candid as we have been about the fact that virtual try-on has been a lot of up and down and that fashion's never really found the right balance of technology, outcomes, and user experience to make it compelling enough for people to continue to use. There's been a lot of different tr attempts at it. AI seems like it might be the moment where it starts to work for people. ⁓ I went to a runway show that was put on by Topshop with support from Google Cloud. A few months ago we reported on it. ⁓ and Google had something like this there. They had a showcase like this, which was stand in front of a screen, stand in front of an installation, take a photo of yourself and Try on some garments and then have those garments sent to you ⁓ either via email or ⁓ or just just look at them then and there and place orders if you want to. Bringing this into stores for me is the interesting part. ⁓ because if if we haven't quite found the right mix of technology and behavior online, do we find the right mix of technology and behavior in store? my mind would go to If you're in store and you're already open to the idea of going into a fitting room, this is probably a better place to do it than it is online, or at least to do it as well as you as you do it online. I would probably use this, to be honest. If ⁓ if if there were more I I don't go shopping a lot. If I did, I would happily give this a go. ⁓ because I'd be like, I don't want to take fifteen items into the changing rooms. ⁓ I'm I'm very happy to just try these on virtually with the understanding that the drape isn't going to be ac exactly accurate, the fit isn't gonna be exactly accurate. But I'm gonna get some visibility into how this thing would would look on me. So narrow story, but I think with some broader implications if this new turn in virtual try-on ends up getting embedded more into physical stores as much as it is into e commerce. So my ending question to you for this week is would you use it? May I'm not saying you shop at FNF, I don't shop at FNF. But if if you went if you went and found somewhere where there was a store you went into and you're like, there's a wide selection here, I don't feel like trying on twenty different things. I'm just gonna see do a quick AI simulation. Maybe that narrows it down to three things that you then try on. I don't know. But I'm I'm keen to see what you think about it. speaker-0: It's funny because I think if it was in a different store, if it was in any other kind of fashion shop that I enjoy shopping from, I probably wouldn't. But the fact that it's in a supermarket and it's the F and F line, I would use it because I think I would be less it's more about, yeah, just knowing that it generally looks okay. It's a less of a purchase that I would need to mull over and think about a lot. So I would use it in this setting. And I think I would use it in other multi brand stores like a T K Mats, like a discount store as well, where I don't want to spend too much time there. But in a more traditional, more luxurious fashion shop, I wouldn't use it, which is quite interesting. speaker-1: Yeah. And I think where you may end up with is, and we've seen this done before, is store associates in higher end companies doing this for you. ⁓ so ⁓ making it part of like a clientele experience if you go and shop in a premium or a luxury store and have them go, I've picked out these ten things for you. You can try them on in person, or we can filter it in the first instance and I can show you what those looks would look like you look like on you with AI. And then you narrow it down to the three that you like. And then I will put those in the the fitting room for you. And then I'll make some other recommendations via email or after afterwards. I can see it both ways. I can see it being a convenience thing in those convenience settings. I can also see it potentially being a good tool for premium stuff, but not self-serve more as part of a clientelling experience. All of this would require me to go shopping more than I do, so maybe that's my task for the the coming week is to actually go and buy some clothes in store, which is a rare, rare experience for me, but I know is not one for you. Grace, good to talk to you as always. Have enjoyed this.