Luxury brands haven’t always been the first to adapt to digital. With a business model that’s built on delivering an excellent service and memorable in-store experience, these exclusive labels haven’t always managed to replicate their appeal through online channels.
But digital technology continues to move forward, forcing all industries to adapt in order to survive. The next paradigm shift that the fashion industry is facing is the advent of AI.
With artificial intelligence set to replace human interaction in many business-to-consumer encounters, how will the luxury industry adapt to new modes of service?
IBM predicts that by 2020 up to 85% of all business-to-customer interaction will be managed using AI. For brands that are dedicated to detail and to surpassing customer expectations, AI yields great potential for crafting a better customer experience.
That’s something that seems ripe with potential for the luxury industry: deep learning can be used to improve the retail experience by understanding customers better than ever before – perhaps better than they even know themselves.
Crafting exceptional brand experiences is all about managing and responding to customer emotions. In the past, humans have always been the best agents for emotive communication with customers. In the future, AI could be charged with the responsibility for gauging and managing customer emotional states.
Emotion-recognition technologies are starting to be able to recognize facial responses and identify emotional states using camera technology. There’s some work being done in Asia to link this up to advertising efforts. In the future, advertising could be crafted not to our previous buying behaviors and demographic information, but to our immediate emotional state.
The early adopter
Dior is already adapting AI to manage customer-brand interactions. The luxury label is using interactive chatbot software to interact with customers via Facebook Messenger.
The Dior Insider AI tool is aimed at brand admirers – consumers that aspire to the brand, not all of whom may ever become actual customers. Dior uses the messaging service to personalize communications and create a fun experience, incorporating emojis and GIFs into communications.
Dior’s solution crafts a personalised experience for each consumer that signs up. This experiential marketing is a good way to offer a good brand experience with tailored interactions to a mass audience.
The messaging service is also eCommerce-enabled, with shoppable slideshows and links to the eCommerce site. It’s a way to bridge the gulf between the personalized in-store experience customers get and the online experience. It also unites with social media to offer multichannel brand exposure.
But Dior’s unusual in managing to unite channels via tools such as Dior Insider. Most luxury brands – in fact, most fashion brands – aren’t managing to unite online and offline brand offerings. Only a minority of luxury brands are promoting in-store services online, so there’s a real disconnect in customer experiences depending on their first channel of choice.
Luxury brands have the potential to engage with a large and willing audience, but they are not managing to convert their intense customer experience focus into digital channels. AI offers the potential to create digital concierge service and scale-up the brand’s offer to huge online audiences.
More AI potential
Digital concierge services could also offer fashion design to customer audiences. Personal style service Stitch Fix uses AI and information provided by customers to design wardrobe ensembles for clients based on their preferences and other data such as body measurements.
What’s notable about Stitch Fix is the way humans and artificial intelligence work together. Stitch Fix’s AI function will choose a pair of jeans for you using information such as which jeans were well-received by customers with the same body type as you.
But human stylists intervene to check whether you’ve expressed any particular preferences that might conflict with the choice AI has made for you and to oversee the decisions with a human eye. The company is also experimenting with natural language processing to better understand client feedback about items they receive.
The Stitch Fix platform employs several thousand remote-working human stylists with the aim of maximising the speed at which they put together a customer’s style picks – and often with a personalized note from the stylist.
This means the service is geared to very efficient levels of human input. It would be hard for a bricks-and-mortar store to give the same level of personalized, tailored input into each customer at the same scale and at ‘high street’ rather than luxury prices.
For Stitch Fix, it seems to be working so far. Revenues are close to $1bn and they have close to 3 million customers of which 86% make repeat orders. Perhaps the biggest success factor is the amount of data they hold on customers, who provide an average of 85 answers to the style quiz on sign up.
That’s a colossal amount of data on preferences such as preferred brands, lifestyle and body type. This body of data only increases over time as the relationship with the customer continues.
Stitch Fix doesn’t claim to be a luxury fashion house. In fact, the clothing it offers is generally unremarkable in fashion terms and the average item cost is only around $55.
But the level of service it’s offering, in terms of personal input into the customer preferences, is probably matched only by high-end traditional fashion houses.
These are the services that luxury brands will be competing against in future. If the mid-market is offering this level of personalization, the luxury industry is going to have to find new ways to differentiate itself.