How technology is transforming luxury retail
By Isabel Tapp, Founder of Luxury Communications Council, GCC Chapter
No longer the domain of sci-fi films and Silicon Valley, cutting-edge tech such as Artificial intelligence (AI) has become so seamlessly integrated into our daily lives, you may not even notice when you’re using it. From crafting a WhatsApp message using predictive text to asking Siri for a song or following Waze on your way to work, technology has redefined the way we work, play, and spend.
Take the way we shop for luxury goods, for example. The luxury sector is predicted to reach 305 billion euros this year, and by 2025, 20% of luxury purchases are expected to be made online. Having a fully integrated online experience is no longer a nice-to-have; it’s a necessity. As fashion houses and heritage brands seek to capitalise on this shift in sentiment, technology – and AI in particular – is playing a fascinating role in the process.
Virtual reality fitting rooms
One of the exciting transformations we’re seeing is the creation of virtual reality fitting rooms. This form of blended reality allows shoppers to ‘try on’ clothing, shoes, and cosmetics from the comfort of their home using AI and augmented reality (AR). Early adopters Macy’s has been recently joined by luxury houses such as Moncler, Gucci and Hugo Boss, with the global virtual fitting room market now predicted to grow from USD 4.03 billion in 2022 to USD 14.87 billion by 2029. Keep an eye out for Chanel’s virtual fitting room service, which it is developing in partnership with Farfetch.
Personalising the process
Brands are also harnessing AI and the latest technology to personalise the shopping process. From serving personalised suggestions based on previous purchases to analysing spending habits and sending exclusive invitations to sales and VIP events via WhatsApp, luxury retailers are better able to cater to the diverse needs of their clientele.
Live shopping events
Live shopping events are also on the rise, with McKinsey estimating they will account for about 20% of global e-commerce sales by 2026. Early adopters include Lancôme’s immersive shopping experience, streamed live from its Champs-Élysées store in 2021, and Dior’s 2022 fashion shows, which gave viewers a behind-the-scenes look at the runway show, inviting them to chat ‘live’ with make-up artists and receive beauty tips.
Gamification of shopping
eBay was one of the first retailers to ‘gamify’ the retail space with its virtual bidding system. From those early days, the gamification of shopping has evolved into the interactive experiences and experiential retail we have today. Digital avatars from the likes of Prada and Balenciaga are designed to keep users on retail sites for longer, building brand loyalty and ultimately conversions. According to Boston Retail Partners, 87 per cent of retailers plan to implement gamification within the next five years, making it a key space to watch.
Behind the scenes
AI can even make the retail experience more sustainable. Personalisation and virtual try-ons have been shown to reduce the number of returns a shopper makes, reducing the need for extraneous transport and packaging – a win for shoppers, retailers and the environment.
Some of AI’s other roles in luxury retail are less obvious but no less impactful. From online chatbots to help with order enquiries, to a helpful prompt telling you when stock is running low on that pair of heels in your wish list, AI technology streamlines the online shopping process from the moment you start browsing until the time it lands on your doorstep.