why luxury brands are betting on artificial intelligence to survive market challenges
LVMH closes an agreement with Google to incorporate AI into its market strategy. It is the last but not the first of the luxury brands.
If there is an industry that could be quickly associated with everything creative and of which it could be said that ideas are important, it is that of fashion, especially when it comes to luxury and catwalk brands. You just have to think about how they are represented in popular culture to visualize this situation and this perception of things. The fashion star responsible for the brand has brilliant and groundbreaking ideas, which she has drawn from a deep creative process that collides with the status quo and that turn into something with a high cultural impact.
However, the fashion industry, even this very high level, has always been closely linked to the world of business and technological innovation. The great maisons of Belle Époque Paris were pioneers in using the latest marketing techniques. All of them benefited from advances in technology to have new patterns, new colors or new fabrics.
Now, with a century in between, things are not much different. The big luxury fashion brands are not only elements of creative genius, but also examples of how to integrate technology into business strategy and marketing. That technology is now artificial intelligence.
One of the last big announcements has been made by LVMH, the French luxury giant that owns fashion, cosmetics, perfumery and liquor brands. LVMH has just signed with Google Cloud to integrate machine learning and artificial intelligence into the company. It is not known how much money the agreement represents, but what the company hopes to get out of all this. The agreement has an initial duration of 5 years and LVMH will begin to apply it in the 15 key brands of the conglomerate before making it integrated into the culture of all.
Artificial intelligence will allow them, first, to manage their products. The company hopes to optimize inventory, but also anticipate trends and peaks in demand. Thanks to AI, you can anticipate what consumers will want and prepare for it.
They will also use it, as a second basic point, to improve the customer experience. It is not, in reality, anything that companies that are betting on artificial intelligence are not already doing, but their movement shows that AI is valid for everyone and that all sectors, even those that are more linked to ideas, have potential Applications.
A general movement in the industry
And LVMH is the last but not the first. In recent years, luxury companies have embraced digital transformation and made it a crucial piece of connecting with consumers. These brands brutally resisted making the leap to eCommerce and digital environments (they defended for a long time that their potential buyers were ‘not there’, they were wrong), but now they are quite clear that technology is essential to connect with their market niche.
McKinsey predicts that a fifth of luxury purchases in 2025 will be online and that 80% of all will be digitally influenced. Companies have incorporated different IT elements to remain relevant, from more presence in social networks (a kind of basic step) to advanced elements such as integrating technology in product design or using virtual and augmented reality in the customer experience. Of course, artificial intelligence will also come in here.
The companies that are incorporating it are noticing the results. Gucci came out of a crisis because it knew how to transform itself digitally and position itself better online. Now, it has a high weight among millennials. Burberry is already using artificial intelligence and big data to drive sales, improving relationships with consumers. Everything is customized according to each of the potential buyers.