Retail Sustainability: The Power of Personalization

The Reality of Recycling and the Rise of Personalization

Conventional wisdom emphasizes the importance of recycling. However, the effectiveness of current recycling systems is significantly overstated; only 9% of plastic waste generated in 2018 actually underwent the recycling process.

The cosmetics industry contributes substantially to waste, generating over 120 billion packaging units annually, with a limited proportion being successfully recycled.

Globally, the amount of discarded textiles is also alarming, with approximately 92 million tons of textile waste deposited in landfills each year.

Waste Reduction Through Personalized Experiences

Minimizing waste is crucial for achieving environmental objectives. A growing number of retail companies are focusing on personalization as a novel strategy to decrease the amount of products consumers ultimately discard.

Effective personalization directs customers toward the most suitable products, thereby reducing waste and simultaneously boosting both conversion rates and customer loyalty.

Investment in Personalization Technologies

This year, personalization is projected to be the leading area of technological investment for major brands and retailers.

The appeal of personalized experiences is demonstrably high. A survey conducted by Epsilon revealed that 80% of consumers are more inclined to engage with companies offering personalized interactions.

Furthermore, 90% of respondents expressed a positive view towards personalization, indicating its broad attractiveness to consumers.

Categories of Sustainable Personalization Startups

Startups focused on delivering sustainable personalization solutions that also benefit retailers and brands can be categorized as follows:

• AR virtual try-on technologies, including precise shade matching capabilities.
• Sophisticated virtual fitting rooms leveraging VR/AR for the fashion industry.
• Smart packaging solutions incorporating IoT and distributed ledger technology.

Augmented Reality Virtual Try-On and Accurate Shade Matching

Mapping facial features is relatively straightforward, enabling the virtual application of cosmetic colors like lipstick. However, leveraging AR and AI to accurately recommend makeup products that complement individual skin tones has proven a significant hurdle for many companies specializing in virtual try-on technology.

Alexia Inge, co-founder of Cult Beauty, notes a long-standing search for an effective foundation shade-finding tool. She states that no digital solution has replicated the precision of a professional in-person color match in natural daylight until the advent of MIME. Numerous factors complicate the process, including lighting conditions, skin tones, undertones, device variations, screen settings, formula characteristics, and individual preferences regarding coverage and finish.

MIME's Focus on Color Accuracy

Christopher Merkle, founder and CEO of MIME, explains that while virtual try-on has seen substantial growth, it often fails to address the core consumer challenge: finding the correct shade. From its inception, MIME has concentrated its research and development efforts solely on achieving color precision.

Merkle’s goal is to ensure customers receive a foundation or concealer that perfectly matches their skin tone upon application, eliminating the disappointment of an incorrect shade. This commitment to accuracy aims to improve the overall online shopping experience.

The MIME Shade Finder AI and its Impact

MIME’s Shade Finder AI empowers consumers to upload a photograph, answer a brief series of questions, and receive a personalized makeup color recommendation tailored to their skin tone. This technology demonstrably boosts purchase conversion rates for both online and brick-and-mortar retailers, with increases of up to fivefold reported.

Industry statistics reveal that over 22% of beauty product returns are attributed to incorrect color selections. However, Merkle asserts that MIME can reduce return rates to as low as 0.1%.

Introducing the Guide to Inclusive Skin Tones (GIST)

The company is developing a Guide to Inclusive Skin Tones (GIST), a color handbook analogous to the Pantone standard. This resource will provide brands with valuable insights into which shades are likely to perform best and assist retailers in ordering appropriate shade ranges for their local stores.

Licensing GIST scores and ratings will enable consumers to easily identify their ideal shade matches across different brands, fostering greater transparency and customer satisfaction.

Recent Acquisitions in the AI-Powered Beauty Tech Space

MIME has already secured partnerships with prominent retailers and brands, including Charlotte Tilbury and Cult Beauty, which was recently acquired by the Hut Group. These collaborations highlight the growing demand for accurate shade-matching solutions.

Last month, Il Makiage, backed by L Catterton, completed the acquisition of Voyage81, a two-year-old Israeli company specializing in deep tech AI and computational imaging, for $40 million.

Il Makiage announced that Voyage81’s algorithms can extract 31 channels of hyperspectral data from standard RGB images captured by smartphone cameras with 98% accuracy. The software analyzes skin and hair characteristics, detects facial blood flow, and generates melanin and hemoglobin maps from simple smartphone photos.

Voyage81's Technological Advancements

Prior to its acquisition, Voyage81 had successfully raised a Series A funding round led by True Ventures, Next Gear Ventures, and Maniv Mobility. This investment underscores the potential of its innovative technology in the beauty industry.

AI-Driven Virtual Fitting Rooms

A significant challenge in online apparel retail is the high rate of returns. In 2020, over 60% of shoppers engaged in “bracketing,” purchasing multiple sizes of the same item to ensure a proper fit and subsequently returning the ill-fitting ones. This practice contributes to average return rates of 15-40% for clothing, and a substantial 80% for women’s dresses bought online.

A key factor driving these returns is the inconsistency in sizing standards. Variations occur not only between different brands, but also within a single brand across its various product lines. Existing virtual try-on solutions and size recommendation tools often overlook the crucial interaction between a garment’s three-dimensional properties and the individual consumer’s body shape.

Many current systems rely on simply overlaying a flat image of clothing onto a user’s photo. However, this approach fails to account for how different fabrics – like jersey compared to silk – and garment construction impact fit, drape, and how the item complements a person’s skin tone.

Perfitly offers a sophisticated virtual fitting room solution powered by virtual reality, augmented reality, and artificial intelligence. This technology integrates directly into the e-commerce platforms of major retailers.

The system empowers consumers to make informed purchasing decisions by eliminating uncertainty in size selection. By utilizing just a few photographs or body measurements, customers can generate a highly accurate virtual avatar – boasting over 97% accuracy.

How Perfitly Works

• Customers can visualize how garments will fit and appear on their unique body shape.
• The 3D visualization feature allows for zooming and adjusting sizes to accommodate individual fit preferences.
• The platform was developed using extensive data on garment design, size distribution, and diverse body types.

The surge in online shopping has significantly increased demand for Perfitly’s services, leading to partnerships with several publicly traded retailers. Co-founder Raghav Sharma anticipates substantial growth, stating, “We expect to double or triple our number of clients by the end of this year.”

Perfitly reports a 64% reduction in returns and an impressive 80% increase in conversion rates for its clients. This demonstrates a clear benefit for both businesses and consumers.

The global virtual fitting room market is projected to experience considerable expansion. Forecasts indicate it will more than double, growing from $3 million in 2019 to $6.5 million by 2025.

Industry Activity and Acquisitions

Several retailers are collaborating with companies like Perfitly or utilizing Apple’s ARKit for iOS applications. Others are independently developing their own virtual fitting room software or pursuing strategic acquisitions.

Amazon patented its own “blended-reality” mirror technology in 2018, leveraging augmented reality capabilities. This patent publication followed Amazon’s acquisition of Body Labs, a 3D body scanning technology company, for an estimated $50 million to $100 million.

Founded in March 2013, Body Labs had secured $13.2 million in funding across two investment rounds, including an $11 million Series A round in November 2015, as reported by CrunchBase.

In May 2021, Walmart acquired Zeekit, an Israel-based virtual fitting room startup, for an undisclosed sum. Zeekit had previously raised approximately $9 million in funding before the acquisition.

Revolutionizing Packaging in the Beauty Sector with IoT and Blockchain

The cosmetics industry generates an estimated 122 billion single-use sample packets each year, with limited options for recycling. A shift is now required to cater to the demands of environmentally conscious and digitally engaged consumers. This necessitates a transition from purely transactional customer relationships to ones built on engagement and personalization.

Employing durable, reusable packaging offers a substantial opportunity for long-term positive change. Szentia delivers a business-to-business solution, integrating AI, the Internet of Things (IoT), and distributed ledger technology to collaboratively develop reusable, tokenized smart packaging alongside retail partners.

This comprehensive service also incorporates a sophisticated hair and skin analysis tool, a dedicated brand platform, and a direct-to-consumer mobile application.

Ignacio Longarte, Founder and CEO, explains that the entire experience is founded on a principle of equitable digital exchange. The core concept is that consumers will willingly share data, not merely in exchange for product purchases, but for tangible value.

Szentia asserts that significant environmental benefits can be achieved, potentially reducing a brand’s carbon footprint by up to 71% and lowering water consumption by 50%. Currently, Szentia is unique in its ability to monitor the complete lifecycle of packaging – from manufacturing and distribution, through consumer use and reuse, to eventual recycling.

Key Features of the Szentia Platform

• Personalized beauty recommendations tailored to individual needs.
• Engaging content designed to educate and inspire.
• A “smart coach” integrated into the packaging itself, aiding in precise product measurement.
• A robust loyalty program to reward consumer engagement.

To date, Szentia has secured contracts with two major beauty conglomerates and a prominent professional beauty salon network as initial clients.

Addressing global sustainability issues demands a collaborative approach, drawing on expertise from diverse fields. Innovative, systems-level thinking is crucial for fostering advancements in sustainability practices. Technology-driven personalization represents one such innovation, fostering a more considered consumer experience.

This mindful approach is vital for minimizing packaging waste, curbing overconsumption, and reducing the practice of 'bracketing' – purchasing multiple items with the intention of returning some.