Introduction
At the moment, the use of innovative technologies that make it possible to improve the activities of companies significantly is becoming widespread in many industries. These transformations have not bypassed the fashion and clothing industry, in which the use of such technology as artificial intelligence gave impetus to the development of a new and attractive niche for buyers. Hence, a company like Stitch Fix appeared on the market, which is engaged in providing consumers with a personal styling service based on information collected using artificial intelligence. The study of Stitch Fix’s activities and position in the market provides an opportunity to determine the further development of the company in the modern market.
Disruption Caused by Stitch Fix
Before proceeding to the analysis of the company that is the center of this research work, it is necessary to gain an understanding of what it is and how it contributed to the transformation of the industry. Thus, Stitch Fix is a personal style service for men and women, which provides its services based on the preferences, needs, and lifestyles of customers (Kim et al., 2019). Research indicated that “by filling out a style profile and providing feedback on their purchases, customers can easily discover new styles and try out new clothing without ever having to leave the comfort of their own homes” (Pereira, 2023, para. 2). Thus, the main reason for disruption in the industry is the use of such innovative technology as artificial intelligence for the analysis and interpretation of data from individuals filling out questionnaires. In addition, the ability to receive clothes with home delivery adds an advantage to the company by providing convenience and comfort for customers.
External Analysis
Direct and Indirect Competitors
Of particular importance in the analysis of the company is the identification of the company’s competitors. As part of the fact that Stitch Fix provides a relatively underdeveloped niche in the industry, it has a small number of direct competitors. It is noted that the primary opponents of the company in the market are the Wantable Style Edit and Trunk Club. These subscription services range in price from $20 to $25 per month and also provide individuals with the opportunity to get clothes selected by a stylist (Lanphear, 2022). One of the main indirect competitors for the company under study is Amazon, which sells clothes, shoes, and accessories online. Despite the fact that it does not include the services of a stylist, it provides an opportunity to find affordable items and receive them with home delivery.
Opportunities for Stitch Fix
When analyzing Stitch Fix using the PESTEL framework, several opportunities were identified that can improve the company’s activities. The use and improvement of the technologies used by the organization becomes the leading one in this context. Research showed that this advancement already “secured 2.7 million customers worldwide, earning 1.5 trillion won in annual sales last year, seven years after its establishment” (Lee, 2021, p. 258). Thus, the introduction of new approaches to analyzing information and creating a more unique experience for consumers is a significant advantage. Another possibility for Stitch Fix is the social factor, which is based on people’s buying patterns. In this way, the company can contribute to changing the attitude of buyers to clothing and contribute to limited fast fashion and overconsumption.
Threats for Stitch Fix
One of the main threats facing Stitch Fix is the regulatory and legal factors. At the moment, the main problem in the fashion and clothing industry is the growing number of scandals related to regulations related to labor, environmental sustainability, and intellectual property. Companies face legal proceedings that cause them significant harm due to non-compliance with these requirements. Therefore, in order to limit this issue, Stitch Fix faces the task of complying with legal and regulatory norms. Despite the fact that an organization can influence buying patterns, it is strongly dependent on customer preferences. Thus, the main threat in this context is the change of preferences and trends in society regarding fashion.
Forces from the 5 Forces Analysis
One of the forces that can make the company weaker is the rise of rivalry among existing competitors. This is due to the fact that the fashion market is constantly replenished by companies that meet the requirements and needs of a modern audience. In other words, more and more brands are introducing their services to online platforms, which poses a threat to Stitch Fix as it increases competition. On the other hand, the aspect that strength can bring to a company is the threat of substitutes. This aspect is supported by the fact that, at the moment, there is a low number of services that provide similar services.
Internal Analysis
Unique Capability of Stitch Fix
When considering an opportunity or resource that can bring uniqueness and advantage to a company under research, it becomes the improvement of artificial intelligence and data analytics technology. First of all, this is due to the provision of great value, which is based on a focus on the preferences and needs of customers. In addition, the use of this kind of advancement contributes to the acquisition of competitive advantage due to its rarity in the market (Mikalef et al., 2020). This is also supported by the fact that the use of artificial intelligence and data analytics technology is quite a difficult initiative to implement. Thus, it meets such a criterion as difficulty for imitation by opponents. The last factor for the company’s competitiveness is that it has built the organization in such a way as to get as much as possible from the use of the analyzed resource.
Stitch Fix’s Strategic Weaknesses
Compared to its main indirect competitor, Amazon, Stitch Fix lacks access to the global market. First of all, this is due to logistical and management difficulties in expanding the personal styling business abroad. Thus, despite the fact that the company is successful with its American consumers, it is still inferior to some of its competitors. In addition, it is worth paying attention to such a weakness of the company as a strong dependence on technology. It can manifest itself in the fact that the organization may encounter breakdowns or problems in systems malfunction, misinterpret customer preferences, and breakdowns on the website.
Conclusion: Going Forward
Based on the information provided, several recommendations can be selected that will contribute to Stitch Fix’s continuing to be innovative and challenge competitors. One of them is the improvement of artificial intelligence technologies that analyze the personal data of customers. This will provide an opportunity to increase the probability that customers will be more satisfied with the services and will be more loyal to the brand. In order to challenge such a competitor as Amazon, Stitch Fix can expand its activities by attracting partner deals. This will help spread awareness about the company and attract the most interested target audience. This kind of collaboration can be implemented through working with other fashion brands, influencers, or retain businesses.
References
Kim, W., Mauborgne, R., & Pipino, M. (2019). Artificial intelligence: Stitch Fix – A blue ocean retailer in the AI world. Blue Ocean Strategy. Web.
Lanphear, B. (2022). The 8 best Stitch Fix competitors and alternatives. The Manual. Web.
Lee, J. H. (2021). Changes in marketing brought by AI. In 2021 21st ACIS International Winter Conference on Software Engineering, Artificial Intelligence, Networking and Parallel/Distributed Computing (SNPD-Winter) (pp. 257-259). IEEE.
Mikalef, P., Krogstie, J., Pappas, I. O., & Pavlou, P. (2020). Exploring the relationship between big data analytics capability and competitive performance: The mediating roles of dynamic and operational capabilities. Information & Management, 57(2). Web.
Pereira, D. (2023). Stitch Fix business model. The Business Model Analysist. Web.