By Alice Schaffer, Strategy Partner, Leagas Delaney
Luxury brands have been at the forefront of innovation since long before computers existed. In the 1800s, a man named Louis Vuitton recognised that the world’s growing number of travellers needed sturdier and more customised trunks for their belongings. So, the brand was born, going on to revolutionise luggage locks, expand into luxury handbags, and continually blend traditional luxury with contemporary culture.
Keeping ahead of the times and answering our desires in ways we haven’t yet thought of is a core part of any luxury strategy. It’s natural, therefore, that the industry is getting very excited about the possibilities of AI.
In fact, McKinsey believes AI could boost the fashion and luxury sector’s operating profits by up to $275bn within the next three to five years, by helping brands bring clothes and accessories to market faster, sell them more efficiently, and improve the customer experience.
But it’s still early days. As we get to grips with the power of this new technology, luxury brands would do well to remember how they have approached innovation in the past: by always keeping their customers and their brand story front of mind.
What are you trying to deliver for the customer, and will AI help or hinder that? Will AI enhance or undermine the heritage, prestige and values encapsulated in your brand? And with those questions in mind, where are the opportunities for you to use AI successfully, and where are the pitfalls?
AI’s use cases
There are two ways luxury brands can use AI: behind the scenes to deliver a superior service, and in the foreground as an attention play.
When using AI behind the scenes, the most important thing is to keep it out of the customer’s sight as much as possible. So much of AI’s opportunity is in driving efficiencies and optimising work, which is great for businesses. But customers don’t want to feel like a number – the whole point of luxury is to feel special.
Italian fashion house Zegna has, for example, introduced an AI-powered luxury clienteling platform, Zegna X, which uses customer data to create smarter product recommendations and outfit ideas for individual clients. However, those recommendations are delivered to customers by Zegna’s store associates, using text, email, and WhatsApp. This is a great example of a luxury brand using AI to deliver a superior service, without compromising its personal customer relationship.
From a communications standpoint, AI undoubtedly has great power to grab attention and elevate perceptions of a brand’s innovation credentials. Plenty of luxury brands have already tapped into this – Prada has launched an AI-derived range of foundation shades. Johnnie Walker has launched a generative AI-powered experience allowing consumers to co-design a personalised bottle of its most prestigious (and expensive) whisky. Valentino shot its entire 2023 Essentials menswear campaign using text-to-image technology.
But if these attention-grabbing activations aren’t executed well, the risk is they come across as a gimmick. Gimmicks feel cheap. They devalue the prestige, judgement, and enduring quality of a brand. In luxury especially, this is a serious watch out.
AI is only a tool
Luxury brands need to remember that AI is simply a tool – a very powerful technology, yes, but not an end in itself. And while innovation is a requirement of luxury to remain relevant, it must always be in service of beauty, quality, and timelessness. It should never be in service of convenience or efficiency.
Brands must also remember that human relationships, craftsmanship and creativity are the lifeblood of luxury. It’s for exactly this reason that a much higher proportion of luxury sales go through physical retail today than in other sectors. Customers want that in-person experience; to immerse themselves in the physical experience of the brand and the product.
Pick your opportunities wisely
Most luxury brands have decades, if not centuries, of heritage. That means they have likely had to navigate times of change before. But in the industrial revolution, brands didn’t fire all their staff and start mass producing their products on the factory floor. They put their customers first, understanding that what people come to luxury brands for is scarcity, quality, and a premium experience.
With the rise of AI, luxury brands likewise need to pick and choose carefully which benefits of the tech they adopt. They need to embrace opportunities to elevate their brand story and evolve their service, but perhaps more importantly, they need to avoid anything that might undermine their worth.
