Developing a Theoretical Artificial Intelligence-Based Business Model for Fashion SMEs

Abstract

The evolution of new digital technological platforms has provided businesses with numerous opportunities to improve their business models (BM). This is especially prevalent in Artificial Intelligence (AI), which provides user-friendly transactions between businesses and consumers. Through personalisation, innovation and enhanced productivity, AI has had a dynamic impact on the clothing and textiles industry. For instance, AI use in fashion can benefit businesses using robotics and intelligent manufacturing, 3-dimensional (3D) printing and knitting, and virtual and augmented reality (AR). These are all part of the Fourth Industrial Revolution (4IR), fundamentally shaping how we live and work. AI has given businesses access to an enhanced understanding of consumer behaviour and motivations that drive their decisions. Furthermore, AI has enabled businesses to make intricate decisions at remarkable speeds, which is crucial to the fashion industry, where survival heavily depends on rapid response to trends and swift turnaround times. Although AI can significantly impact the fashion industry as a whole, this study focuses on how the technological advancements of the 4IR can foster positive, growth-oriented outcomes for small and medium enterprises (SMEs) in South Africa when strategically directed and effectively integrated into their business frameworks. Although larger businesses have easier access to AI, SMEs could leapfrog into becoming market leaders with AI's assistance. Within the realm of the 4IR, this study aims to investigate AI from three different perspectives: creating value, delivering value and capturing value, and the effect this has on consumers and SMEs. This study employed an interpretivist, qualitative, exploratory phenomenological methodology, using purposive sampling and semi-structured interviews with SME owners in the South African clothing and textile industry. Data were analysed inductively through thematic coding to generate insights into business practices and value creation. The results of this study provide SMEs with indepth insight into how to utilise AI-based BM factors that can contribute to the growth of the entrepreneurial economy in a developing country like South Africa.