Changing the game to compete: Innovations in the fashion retail industry from the disruptive business model

Unprecedented competition and emergent technologies have posed a challenge to many traditional retailers in recent years. Yet within this competitive environment, emerging innovative business models have thrived and successfully disrupted the industry. We analyze the nature of disruptive business-model innovations and the ways they disrupt the fashion retail industry. To that end, we examine three disruptors in the industry: born-digital brands, AI-enabled demand forecasting and product design, and collaborative consumption. After introducing the concept of disruptive business-model innovation, we discuss the three disruptors’ effects on the fashion industry. We find that all of these models keenly answer fundamental needs unmet by current business models, such as offering quality products at a competitive price, curated services, and sustainable consumption. At the same time, all three disruptors suggest effective operation models for handling demand uncertainty, inventory management, and timely responses to the market, all of which are inherent issues for current push supply chains and forecast-based, inventory-driven systems. Based on this analysis, we discuss important implications for both academics and industry practitioners.