How AI and machine learning are being used in the luxury industry

The future, we’re told, is already upon us. From healthcare and finance to retail and customer service, artificial intelligence (AI) has infiltrated almost every aspect of our lives. Sometimes it’s invisible to end users, like when AI systems are used to detect unusual financial transactions or fraudulent activity in real-time. At other times, it’s patently obvious, in the case of chatbot assistants or this article’s own text-to-speech tool.
In the luxury space, many, if not all luxury brands, are leveraging some form of AI to deliver personalised shopping experiences and product recommendations. Behind the scenes, AI is helping luxury brands in their ongoing quest for sustainability by optimising supply chains and reducing waste, while also helping to combat counterfeit products more effectively than ever before.
While that’s great for shopaholics and and the earth, I’m not convinced that we’re living in the Jetsons age just yet. If you pay a visit to any luxury brand boutique in Orchard Road for example, you won’t find any instances of AI being used – no AI sales assistants greeting you at the door, nor touchscreens for you to tinker around with for product recommendations. 
And then there is the example of chatbots. They’ve been around for ages, yet the user experience still leaves much to be desired. I recently interacted with a Louis Vuitton’s rather unwieldy Virtual Advisor while shopping for a travel bag (more on this later). Suffice it to say that I would much rather interact with a human sales assistant at a bricks-and-mortar store.
Perhaps that is the point after all: To drive traffic to the physical retail location so that consumers can immerse themselves in the full brand experience. Because surely a powerhouse like Louis Vuitton would have the wherewithal to iron out the kinks in its AI-powered chatbots? Deep pockets aside, LVMH is also one of the most forward-minded luxury groups, having twice hosted the LVMH Data AI Summit in Paris, thereby positioning itself front and centre in the AI race.
But as luxury industry observer Daniel Langer, CEO of Equite, notes in Jing Daily, luxury is about extreme value creation. “Too many brands and organisations just embrace a new technology because everyone is doing it instead of asking themselves how they can create extreme value for their clients in a way that is unique to the brand.”
One need only look to luxury’s dalliance with Web3 in recent years to see how easily the industry can be seduced by emerging technologies, only to fall by the wayside once the hype dies down. Think of all the luxury brands that jumped on the metaverse and/or NFT bandwagon: Gucci and its Gucci Town on Roblox, Dolce & Gabbana with its Collezione Genesi NFT collection, Metaverse Fashion Week, Panerai and its Radiomir Eilean Experience, to name a few.AI’S GAINS, FROM SUSTAINABILITY TO COUNTERFEIT TRACKING
Could AI suffer the same fate as Web3? Probably not. Beyond the hype, AI has a longer runway and has already proven itself to be relatively effective on the operational front, such as in supply chain optimisation and counterfeit tracking.
AI-driven analytics can also predict consumer demand more accurately, which can then also help brands streamline their inventory, ensuring an adequate supply of popular products in-store and online. This is likely to be more prevalent and impactful in the beauty and skincare sectors, where product availability is a key priority.
In contrast, sectors such as leather goods, watches and jewellery are more likely to benefit from a scenario where demand exceeds supply. The more unattainable something is, the more desirable it becomes.
And the more desirable something is, the higher the chances of fakes and dupes. Here again, AI can be used to distinguish the knock-offs from the real deal, using advanced image recognition technology to analyse fine details such as stitching, logos and materials. When it comes to market monitoring, AI can scan online marketplaces and conduct social listening to track listings and discussions related to fake products. It can also analyse buyer and seller behaviours, flagging patterns that are typical of counterfeiters and their customers.
THE PROBLEM WITH CHATBOTS
Where AI development is lacking is the client-facing domain, such as chatbot functions. Drawing on my own experience, I found Louis Vuitton’s live chat to be clunky, whether by design or accident. My first attempt at engaging with the chatbot took far too long, possibly due to connectivity issues.
In my second attempt, it took “Calvin” about 30 seconds to respond to my query. But Calvin wasn’t very responsive, and the chat timed out after 10 minutes of inactivity. I don’t really blame Calvin, but there wasn’t so much as a “goodbye”.
My third and final attempt was slightly more successful, with “Erma” responding within 12 seconds. Towards the end of our chat, which consisted of a Q&A to determine my geographic location, gender and stylistic preferences, “she” requested my name and contact number so that a – presumably human – sales assistant could follow up with some recommendations via WhatsApp.
Checks with other digital innovation pioneers, such as Gucci and Burberry, revealed a pattern. At Gucci, the live chat function was disabled but there was the WhatsApp Chat option. On Burberry’s site, there was no AI chatbot, only a WhatsApp Chat function. It seemed that all roads led to WhatsApp.
PERSONALISED MESSAGES WILL BE A THING
In the future, however, things could be very different. Luxury brands will engage with consumers through personalised marketing messages, crafting storytelling narratives that weave the brands’ legacies with the aspirations – maybe even personal stories – of their customers.
Industry forerunner Prada is using Adobe Sensei, Adobe’s AI and machine learning solution to gain deeper customer insights. In a press statement from May 2019, Lorenzo Bertelli, Prada Group’s head of marketing and communication, said: “It’s undeniable that the volume of data collected each year is growing exponentially, which generates a very high level of complexity… thanks to Adobe Sensei… we will reach the goal to improve relations with our consumers and offer solutions that are increasingly personalised and in line with their needs.”
In 2024, with generative AI (GenAI) in the picture, the industry could well be taking a giant leap forward. OpenAI’s generative video tool, Sora, is already making strides in the advertising world, with toy retailer Toys”R”Us releasing a widely-panned AI-generated video commercial in June. In a debate on AI that same month, Hollywood actor Ashton Kutcher touted Sora as the future of filmmaking, predicting that personalised movies were not far on the horizon.
With Moncler Genius already debuting its first GenAI commercial campaign (of still images) during London Fashion Week in Feb 2023, it’s not inconceivable to think that luxury brands will be launching GenAI video commercials and personalised content for consumers in the near future. In fact, a study by Deloitte Global, Retail Reimagined: Creating luxury customer experiences using data-driven insights, revealed that more than half (52 per cent) of retailers intend to use GenAI within the next year for content creation in publications and reports, while 25 percent plan to use GenAI for brand campaigns and marketing. As for whether AI will eventually replace humans in the luxury space, the answer is no. The very essence of luxury is dependent on the human condition: Creativity, desire, interpersonal contact, emotional content and so on.
In a statement, LVMH’s chief data officer Anca Marola explained: “It’s important to embrace and take advantage of these groundbreaking technologies, but do it in the right way that is virtuous for our future as companies, people and society. At LVMH we have been promoting human creativity and craftsmanship for decades.”
On her own LinkedIn page, reflecting on the LVMH Data AI Summit held in September 2023, Marola added: “AI is the assistant that we will all welcome in our teams, it’s just the new way of working. It no longer has only a left brain, but also a right brain. However, the intuition, personal inspiration and craftsmanship of individuals is what makes the difference in the recipe of success to create dreams and desirability in luxury, so AI is there to enhance people, not replace them.”