With AI playing the roles of CD and MD, Dali Hotel reaches KRW 100 million in weekly sales with zero marketing expense
Dali Hotel, an office wear brand acquired by generative-AI company Designovel co-representatives Woo-Sang Song, Ki-Young Shin successfully achieved a rebound in its earnings after most of its fashion staff resigned.
Dali Hotel was launched in 2018 in an attempt to introduce romantic style to office wear. It recorded daily sales of 10 million won for some time but was hit hard when people began working from home during the COVID-19 pandemic. It was acquired by Designovel, with which it was on a partner relationship for AI solutions, and this ultimately led to the brand’s revival.
One of the reasons may be the increased number of people who started to look for office wear as the pandemic eased down, but the main reason for Dali Hotel’s recovery is the change of direction in the brand’s operation using generative AI – Designovel’s key technology – following the resignation of most of its staff who specialized in fashion after the acquisition.
The fashion staff that worked at Dali Hotel in the past spent over half of its sales revenue on marketing, but they failed to attain 100 million won in monthly sales. After they left the company, Designovel turned its business direction to data-based operation of the brand.
For the sales plan, they deployed products that were on the upswing based on the analysis of recent trends of three to four years. Using “Vector Search” developed by Designovel, the company developed key products that will drive the sales by checking the variation in consumer demand. Products were created based on the trends and designs predicted and suggested by generative AI, and this way, they were able to produce and sell goods that catered to people’s tastes ahead of others. It was AI playing the roles of CD (creative director) and MD (merchandiser) that are at the core of fashion business.
Popular brands usually spend 10 to 20 percent of sales revenue as marketing expense, but Designovel spends only 2.5 percent of Dali Hotel’s monthly sales on marketing, which means that it has a lot of products selling well without much advertisement.
Data does not only reveal trends, but also helps determine when, to whom, and at what price to sell. One of the AI’s roles is to find out the price range to which consumers respond and set the optimal price. The key differentiating element is making decisions based on data, contrary to decision making based on human intuition in the past. New functions applying deep learning, including Vector Search that allows rapid search of such data, are offered to accommodate the expectations from the market.
CEO Ki-Young Shin of Designovel commented, “We need to wait a little longer until generative AI model can make money. We could see that by using AI, we could make money faster and more efficiently. We also confirmed that our AI model worked accurately in the market and that it had marketability.”
Designovel is a startup that began studying generative model – which has been drawing attention in the AI industry — early and is attempting its commercialization. It launched fashion products manufactured based on a generative model in collaboration with a major Korean fashion company in 2018, which was slightly ahead of Amazon’s announcement on product design based on generative model in the U.S., and thus, created great repercussions in domestic and foreign markets. It gained excellent results in the Fashion IQ Challenge at ICCV in 2019 and is progressing with commercialization of generative model based on its advanced deep learning technology. Dali Hotel’s outstanding growth can be witnessed on its official webpage (dalihotel.co.kr) and Instagram account (instagram.com/dalihotel_official/). The fashion brand’s successful recovery through Designovel’s fashion market analysis services on the retail market, etc. and generative AI raises our anticipation for more news on business development based on generative AI.