Personalization with Artificial Intelligence in Luxury Retail

Is there a potential role for artificial intelligence (AI) in the realm of luxury retail? Luxury retail is distinguished by its high-end, premium products from reputable and esteemed brands. However, it encompasses more than just the products themselves. The in-store experience in luxury retail is characterized by exceptional customer service and personalized interactions, in addition to the expensive merchandise. Over the years, customer service and operations teams in luxury outlets have collaborated to provide superior service to shoppers. Similar to other sectors in the brick-and-mortar space, these teams are increasingly embracing technology, including AI, to enhance the overall experience for their customers.

A Personal Touch

High-end goods, due to their inherent quality, come with a higher price tag compared to items found in the mass market. These items are known for utilizing premium materials and exquisite designs, often incorporating superior manufacturing techniques. When a consumer visits a boutique in search of an Hermes handbag or a pair of Louboutin’s signature red-soled shoes, they anticipate receiving the utmost quality with a corresponding cost. Consequently, they anticipate a luxury shopping experience.

Luxury retailers have long been known for providing personalized experiences that are not heavily reliant on technology. These experiences are facilitated by knowledgeable and skilled staff members who possess the ability to anticipate and fulfill customer needs with exceptional efficiency and precision. In contrast, technology is often perceived as a means to enhance productivity and increase sales, requiring customers to actively engage with it rather than the other way around, where the retailer proactively seeks to understand and cater to individual customer preferences and requirements.

Contrary to common belief, adopting a one-size-fits-all approach is not the most effective way to enhance customer experiences. Instead, personalization plays a crucial role in ensuring customer satisfaction and fostering loyalty. Personalization entails understanding and fulfilling customers’ desires and needs, sometimes even before they express them. The focus is on creating tailored and distinctive interactions with brands, which ultimately leads to repeat business. In today’s digital era, it is essential to leverage available technologies to provide products to customers in a seamless manner, whether it be through online platforms or physical stores. As the millennial generation becomes a significant segment of luxury retail consumers, it is imperative to integrate online and in-store experiences seamlessly. Merely excelling in one aspect is insufficient. With the widespread use of smartphones, smart speakers, and online shopping, both online and offline channels must work harmoniously to meet customer expectations. The utilization of artificial intelligence in luxury retail is increasingly becoming a means to achieve this objective.

AI and the Human Element

The integration of machine learning and artificial intelligence in the luxury retail industry is poised to bring about a significant transformation. In the present day, retailers are actively collecting data on customer trends, purchasing behaviors, and inventory patterns, and there are numerous innovative ways in which this data can be utilized to enhance customer service. Farfetch, in collaboration with Gucci, has introduced new AI features that enable shoppers to receive personalized product recommendations from staff through their smartphones, leveraging the data gathered. Similarly, mainstream retailers like Sephora not only offer tailored suggestions driven by machine learning but also develop entire product lines to capitalize on this synergy. Moreover, outside the physical store, marketing materials can be meticulously crafted and targeted toward specific customers, further enhancing the overall retail experience.

In the same vein, mirrors that incorporate augmented reality displays offer further avenues for customization. By leveraging analytics and data obtained from smartphone apps specifically developed to enhance the shopping journey, these displays can make informed predictions. Such design features have the potential to elevate the store’s appeal, differentiating a technologically advanced and fashionable luxury retailer from a more ordinary or budget-friendly one. Ultimately, why opt for a plain mirror when a smart mirror can recommend an even more exquisite addition to your collection?

Nevertheless, a significant portion of these advancements in customer service are not flashy or easily noticeable by consumers. In the realm of luxury retail, numerous technologies play a crucial role behind the scenes, remaining inconspicuous to the average shopper. One such technology is machine learning and artificial intelligence, which assists retailers in maintaining optimal inventory levels. By leveraging these technologies, luxury retailers can ensure that the desired products are readily available to customers when they visit the store. Machine learning and artificial intelligence can aid store associates and operations teams in determining which items should be prominently displayed and prioritized in sales efforts. This enables retailers to offer the right products at the right price points to their target customers. In essence, the true essence of luxury often lies in its subtle and imperceptible nature.

Alpha Cogs’ involvement in Luxury and Fashion

An intersection point between Alpha Cogs and Fashion is the pride in creating something unique and personalized for our clients and customers.

In the constant research to use technology to augment human capability, and not to replace people skills, we are constantly investigating ways of putting our knowledge at people service, and maybe is for this very reason that we are one of the few digital development agencies that creates products of their own in various sectors.

Using the experience we have in the Fashion industry thanks to the fact that we are Kering service providers and working with important luxury brands such as Alexander McQueen, we are researching and implementing a Personalized Fashion Style Assistant that learns from customer choices and indications offering assistance based on a Knowledge-based created from the Brand experience and style. The challenge we want to resolve is bringing the luxury experience of having a personalized style assistant at home that knows your taste and style exactly like the one in the shops that has served us for many years. The solution does NOT want to be a replacement for this experience but an augmentation and extension of the latter. We strongly believe that Artificial cannot replace the Natural, especially in an environment where too many complex human feelings are involved.

Personal taste not only follows clear rules in fashion but often is created by personal experiences, how we perceive ourselves in the mirror or the image we want to give of ourselves to others or, even more difficult to reproduce artificially, from subconscious memories of our past, for example, mimicking the style and behavior of a person that has been emotionally important for us such as the parents.

For this reason, our research is aimed not to replace or completely automate the process but to involve the human experience in the process giving the possibility to open a line of conversation with the “human expert” requesting an opinion or suggestion or simply to validate and suggest during the creation process. Technology becomes a tool that in the knowledgeable hands allows for extended services beyond the natural possible reach of the physical counterpart, keeping always in mind that it is not possible to replace the original with the fake, a concept even more true in the Fashion and Luxury Sector.

What do you think about the use of AI in the Luxury and Fashion sector?

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