November 2023
By Leila Bianco
AI-Generated Art by DALL-E 3 for RELUX
Artificial intelligence (AI) has emerged as a transformative force in the luxury industry, reshaping the way businesses create, market, and deliver high-end products and experiences. Per McKinsey, generative AI, a type of artificial intelligence provided by OpenAI, for example, and one that we’re very familiar with, has the potential of reaching $275 billion in operating profits over the next three to five years in the apparel, fashion, and luxury sector, particularly if applied in merchandising, supply chains and logistics, marketing, customer service, retail operations and more. Hence, from enhancing personalised customer interactions to streamlining manufacturing processes, AI is revolutionising the luxury sector in profound ways. In this article, RELUSO will present just that by showcasing examples of how the luxury sector is actively leveraging AI to curate bespoke customer experiences, optimise supply chains, and create innovative designs that push the boundaries of craftsmanship and innovation.
What is AI?
It is important to understand what we refer to when relating to AI. Stanford University defines artificial intelligence as “the science and engineering of making intelligent machines.” It refers to a machine's capacity to execute cognitive tasks that we typically associate with human minds. There are three stages through which AI can evolve: Narrow AI (all currently available AI technologies fall under this stage), Strong AI and Super AI. We can then classify artificial intelligence in the current narrow AI stage into four types. The first two types are reactive machines (any recommender systems that note your behaviour and suggest what you might like to buy next) and limited memory AI (used to forecast future trends and present in chatbots such as OpenAI’s ChatGPT or text-to-image DALL-E). The second two types are theory of mind AI (still undergoing development) and self-awareness AI (a prediction for the future). Amidst AI’s global rising popularity, the EU has proposed an AI act that will go into effect in 2024; according to them, the world’s first formal set of rules on AI.
Lastly, it is essential to mention the significance XR (extended reality) technologies that are already prevalent in the luxury industry have for AI, alongside distinguishing between them. AI and XR are often used interchangeably. They instead differ in their focus and applications. XR encompasses virtual reality (VR), augmented reality (AR), and mixed reality (MR) technologies. Artificial intelligence is reshaping how these technologies are utilised and confronted. For example, enhanced user interactions stand out as a pivotal avenue through which AI is revolutionising XR applications, consequently resulting in rapid evolution in the luxury retailing service. Some of these instances will be explored in our article.
1. Generative AI: From Design Campaigns by Moncler and Valentino to AI Tools by Tapestry Inc.
February 2023 AI-Generated Visuals Provided By Moncler Genius
McKinsey & Company explains that generative AI is an “AI model that generates content in response to a prompt.” It is a type of artificial intelligence technology that can produce various types of content in a matter of seconds, including text, imagery, audio and synthetic data. Generative AI can be used for creativity in the luxury sector by facilitating co-design and accelerating content creation across a wide range of unstructured data types, including text, images, and videos. It can generate diverse media formats, such as complete scripts and lifelike 3-D models for video campaigns. The innovative world-leading generative AI studio and lab, Maison Meta, which is also the founding partner of the first-ever AI Fashion Week, has collaborated with creative agency WeSayHi to create an AI campaign for Moncler Genius back in February 2023. It was Moncler’s first AI campaign, leading to their newest AI-generated campaign, “The Art of Explorers”, featuring an Adidas Originals collaboration. They launched a new immersive platform on moncler.com to showcase the designs.
Immersive Platform Provided by Moncler
Valentino has also created an AI-generated campaign earlier in 2023 shot entirely by AI for its Valentino Essentials collection.
Valentino's creative director Pierpaolo Piccioli worked with art director Tommaso Garner and the AI Designer Vittorio Maria Dal Maso to create the line.
AI-Generated Campaign Images Provided by Valentino
On the other hand, luxury fashion holding Tapestry Inc., which is to acquire fellow luxury fashion group Capri Holdings for $8.5 billion, is focusing on data dashboards for internal use; these dashboards could add a generative AI assistant to make accessing insights even more intuitive. A core group within Tapestry has developed an easily navigable and user-friendly platform driven by generative AI. It is inspired by the easy-to-use format of ChatGPT, enabling users to enter complex queries in order to get digestible results based on internet-available knowledge and information. Their platform caters to the needs of its brands such as Coach, Versace, and Michael Kors, enabling them to make informed decisions regarding product design, communications, and overall customer experiences.
2. AI- Enhanced Upcycling: Temera and Mermec Engineering
A Video Provided by Temera and Mermec Engineering
The Temera software company is renowned for its pioneering work in IoT solutions aimed at enhancing traceability and digitalisation within the fashion and luxury sectors, with clients such as Versace, Prada, Yves Saint Laurent, Valentino, Vivienne Westwood, Loro Piana, Bvlgari and many more. It is part of the global label IoT solutions conglomerate Beontag. Temera and Mermec Engineering have partnered to launch "t!Upcycling," a project aimed at enhancing circular economy efforts in the luxury fashion sector. This creative initiative combines AI, machine vision, and NFC tags to automate the recognition of products for upcycling, offering a sustainable solution to recycling and repurposing luxury items. The technology allows for efficient identification and processing, benefiting brands and the environment.
3. AI-driven 2023 Innovation Award Winners: LVMH
The luxury conglomerate LVMH presented its award winners at the 2023 VivaTech event, which is an annual technology conference dedicated to innovation and startups. LVMH being one of the founding partners of VivaTech, alongside founder of the recently held LVMH Data AI Summit. The categories of the LVMH Innovation Award 2023 are presented below, alongside the respective winners.
The Grand Prize Winner: Save Your Wardrobe
A fashion technology platform that
assists both brands and consumers in embracing sustainable fashion practices through a virtual closet, all while granting users entry to a network of aftercare services. It employs cutting-edge AI technology, incorporating machine learning, computer vision, and a recommendation system to deliver an enjoyable user experience when maximising the utility of the user’s existing wardrobe
Employee Experience & D&I: Neobrain
Neobrain is a digital platform based on artificial intelligence designed for HR teams to facilitate strategic talent planning with a focus on internal mobility. It enables companies to match the appropriate skills with the right positions at precisely the needed moments. Neobrain places a central emphasis on competencies and motivations, addressing three critical organisational requirements: nurturing employee engagement and tenure, enhancing internal workforce mobility, and harmonising employee skills with the company's strategic objectives.
Image & Media for Brand Desirability: VidMob
Vidmob, used by brands such as L’Oreal, Michael Kors, luxury hospitality leader Marriott International alongside Bloomberg Media and many more, is a prominent platform for creative effectiveness among enterprise marketers that leverages advanced video analytics to provide practical suggestions for improving ad performance. Through the application of AI, they assess digital advertisements and provide actionable guidance to enhance the effectiveness of creative content. It is currently in partnership discussions with a few of the Maisons from the LVMH portfolio.
Immersive Digital Experiences: Absolute Labs
Absolute Labs, used by LVMH, introduces a pioneering Web3 CRM platform that analyses blockchain for NFT pricing and facilitates Web3 marketing and wallet messaging. Their platform combines blockchain analytics to guide NFT pricing strategies for brands. It automates marketing campaigns based on market trends and customer segments, delivering a tailored marketing channel for a Web3 audience.
Data & AI Special Prize: ChatLabs
ChatLabs, with current clients such as Cartier, Delvaux, Chopard, Montblanc and many more, uses AI's capabilities to empower brands in narrating their tales and conveying their principles with a high level of personalisation, thereby shaping a distinctive customer journey for each person. This enables brands to redirect their social media audience to a refined and contextually enriched consumer experience, engaging them in a more imaginative and significant way and leading them on a customised journey toward their chosen brand objectives.
4. Immersive Customer Experiences: Dior
Dior, one of the luxury industry’s first brands to use AI software, the AI chatbot Dior Insider, communicating with customers via WhatsApp and Facebook Messenger, continues advancing its immersive customer experiences. Using augmented reality technology, Parfums Christian Dior introduced a live online makeup consultation service so that customers can try on Dior full-face makeup looks virtually, allowing them to experiment with new styles without needing to visit the store. This online service combines Perfect Corp.’s AR makeup virtual try-on technology with Bambuser’s live shopping technology. The house has also released a Dior Makeup virtual try-on mobile application. Luxury brand Chanel offers a similar make-up AR service on their website, though only for lip colour, eyeshadow, and eyeliner, with an additional AR nail colour service.
Dior Couture presented its newest innovation at the world-renowned 2023 VivaTech event. It offered an up-close view of the tools employed by the luxury house to enhance the customer relationship through its sales advisors. The house has introduced a distinctive client engagement application for its sales team, known as Dior Star, blending digital innovation with human expertise. This pioneering creative solution is a component of an integrated ecosystem within a unified app. It provides comprehensive support to Dior's sales advisors throughout the entire sales process. They can utilise Dior Star to prepare for one-on-one customer meetings – including understanding the customer's background and creating wishlists – schedule appointments, efficiently complete purchases with tap-to-pay, and even facilitate duty-free tax refunds as they wander the store.
5. Advanced Data Analytics for Fashion Trends: GeoStyle
Cornell University researchers have developed an AI tool, GeoStyle, that is able to identify fashion trends around the world, so far 37 cities, by scanning millions of publicly available photos. It has great potential for the luxury fashion industry, as using advanced convolutional neural networks, data analytics and machine learning sales forecasting can lead to better sales predictions and anticipation of potential implications for the fashion industry. It can also lead to better clothing trend predictions, hence reducing the number of unsold clothes each season. As the images convey not just the people's attire but also information about the climate, activities, and cultural context, the researchers’ framework can make long-term trend forecasts identifying socially meaningful events that impact fashion across the globe. It has the potential to assist the luxury sectors in making informed forecasts regarding locally specific styles.
6. AI-Driven XR: Virtual Fitting Rooms
In 2022, the worldwide market for virtual fitting rooms was assessed at $3.78 billion, with a projected compound annual growth rate (CAGR) of 24.1% from 2023 to 2030. As per McKinsey's insights, the most significant opportunities for fashion businesses align with the preferences of younger consumers, centring around digitalisation, sustainability, and enhanced consumer engagement.
The incorporation of AI-driven 3D virtual fitting room software can be a valuable strategy for retailers to cater to all these consumer preferences, and we can already observe examples of implementation. Ralph Lauren, for instance, installed virtual mirrors in its in-store fitting rooms, whilst e-commerce fashion retailer ASOS integrated AI through the implementation of "See My Fit," a virtual fitting room feature. Hugo Boss, the 100-year-old brand that wants to convert to a “tech-driven fashion platform” for Gen Z and millennials, currently investing millions into a dedicated data campus in Portugal, has also implemented AR technologies. The brand integrated a virtual mannequin try-on feature on its websites, with the help of Reactive Reality’s AR-based solution, PICTOFiT. The customers can personalise the mannequin with their measurements, see the clothing’s transparency, test out clothing layers and even tuck in a shirt, for example.
This technology is devised to empower customers to visualise how a specific garment would appear on models of varying sizes, closely mirroring real-world body diversity. By utilising such cutting-edge functionality, customers can attain a more concrete understanding of how the clothing item might complement their own physique, thereby reducing the chances of making misguided purchases that result in returns. As Christine Marzano, CEO of fashion tech company BODS, tell British Vogue, “currently 70 per cent of [clothing] returns are due to improper fit,” clothing returns generating 750,000 tonnes of CO2 emissions in 2022 in the UK only. Hence, virtual fitting rooms could have a profound impact on diminishing waste and the additional emissions associated with return processes, promoting a more sustainable and resource-efficient shopping experience.
7. A Luxury Industry Revolution: The Aura Blockchain Consortium
Blockchain technology is considered an evolved version of an AI branch called Multi Agent Systems (MAS). It was also recognised that AI has the ability to bring a new level of intelligence to blockchain-based business networks, as it is able to rapidly and comprehensively read, understand and correlate data at incredible speed. Hence, RELUX chose to include the new Aura Blockchain Consortium in the AI innovations selection.
The Aura Blockchain Consortium is a non-profit organisation that offers blockchain diagnostic solutions exclusively to luxury brands. It was established by luxury groups LVMH, Mercedes-Benz, OTB (Subsidiaries: Diesel, Maison Margiela, Jil Sander, Viktor&Rolf. etc.), Prada Holding and Swiss Richemont Group-owned Cartier. They have united to create the technological standard for the luxury industry and enhance the customer experience. The Consortium's aim is to create unique digital identities for each luxury product with an innovative web3 approach, develop the power of NFTs and SBTs, build trust for customers and show transparency initiatives by tracking the product’s entire supply chain, from raw materials to the final product.
So far, there are 37 luxury brand members and more than 20 million products on the blockchain, the initiative offering crafted solutions for all luxury sectors, such as fashion, jewellery, watches, automotive and more.
The world-leading diamond company De Beers has also launched a blockchain-backed sourcing platform, Tracr, to provide the origin and impact of every diamond discovered and sold. Similarly to the Aura Blockchain Consortium, to track the journey of each product or diamond throughout the value chain, Tracr uses a combination of artificial intelligence, blockchain technology, and advanced privacy.
AI Speculations For The Future: What To Expect?
AI-Generated Images by DALL-E 3 for RELUX
RELUX has chosen to examine the work of scientist Dr. Sandra M.C. Loureiro, who has over 750 indexed publications alongside research papers published in 12 scholarly journals. She speculates that consumers in the luxury fashion sector, which may be applied to other luxury sectors as well, may constitute a heterogeneous market of human but also hybrid and non-human individuals. By hybrids, it means humans that have incorporated technologies to augment their capabilities; such technologies are nanotechnologies, for example. Such individuals might not only be luxury consumers but providers as well. Hence, a Couture House’s creative stylist could become a hybrid or a non-human AI agent that has significant creative and intuitive capabilities. When considering the manufacturing process of ready-to-wear fashion, a collaborative effort between human and non-human employees is conceivable in the future. Some hybrids, who possess augmented physical and cognitive capabilities, may, independently or in conjunction with AI algorithms, excel in crafting personalised clothing and innovating in developing eco-friendly fabrics and materials. In the realm of Haute Couture, the creation of tailor-made outfits and experiences could be orchestrated by highly advanced AI agents, whether they take the form of robots or other technologies. Capabilities such as handling vast amounts of data and a comprehensive understanding of the psychological and physical aspects of human beings, which would improve over time, would enable AI agents to deliver distinctive experiences either independently or in collaboration with human counterparts in the luxury work environment.