The luxury goods industry, renowned for its emphasis on personal touch, is gearing up to leverage artificial intelligence (AI) significantly.
Over the past three years, this sector has invested over $360 million in AI, representing a notable 79 percent increase compared to the previous three-year period, according to GlobalData.
AI has ushered in a new wave of technological advancement, compelling businesses across various sectors to integrate AI capabilities into their products and services. As the industry navigates new AI regulations, such as the EU AI Act, investments in AI, particularly generative AI, are steadily rising.
Insights from Technology Foresights, GlobalData’s innovation intelligence platform, highlight the substantial efforts of major luxury brands like LVMH, Chanel, and Artemis Groupe, the holding company for Kering, among others. This platform showcases their tech-driven innovations, underscoring the crucial role AI plays in their strategies.
A focus on personalization is evident in the innovations being developed by leading luxury goods companies. These innovations include AI-powered cosmetics recommendation systems and body measurement tools designed to enhance the personal touch in their offerings.
Cosmetics recommendation systems consider various user features, both biological and non-biological, to suggest the best products. Meanwhile, AI-based body measurement tools determine a user’s body type in the least intrusive manner to ensure the best product fit.
A Salesforce survey of over 1,000 marketers, as part of its Generative AI Snapshot Series, said 51 percent are currently using generative AI. An additional 22 percent plan to use genAI very soon, totaling nearly three-quarters of marketers.
Burberry uses AI to identify counterfeit items.
Prada uses AI to enhance consumer understanding and boost their marketing efforts.
Gucci is using AI.
Chanel is developing a solution that recommends the best matching makeup product based on user-selected images.
Chanel said its capital expenditure for 2023 reached $1.227 billion, representing 6.2 percent of sales of $19.7 billion. Investment in AI technology is one of the focus areas for Chanel, says Leena Nair, Global Chief Executive Officer of Chanel, announcing its financial result.
Sephora, a subsidiary of LVMH, is creating a cosmetic recommendation system that scans a user’s skin to analyze features such as skin tone, color, and pigmentation, providing the best matching cosmetic products.
FancyTech has won the LVMH Innovation Award 2024. FancyTech, which also won the Immersive Digital Experiences category, uses AI-generated video scripts (Python code) to control video movements and lighting effects in video production software, based on creative briefs provided by brands.
Other companies in the luxury goods sector are also making significant strides in leveraging AI for personalization.
In 2022, Japanese luxury brand Shiseido partnered with Finnish AI-based beauty platform Revieve to launch a skin analyzer application. This app allows users to upload selfies, which are then analyzed by Revieve’s AI to recommend the most suitable Shiseido products.
Shiseido has formed a joint venture with Accenture to accelerate Shiseido’s digital transformation using AI, data analysis, automation, service design and digital marketing — to provide personalized customer experience.
Estee Lauder made a strategic move by investing in US-based Kiki World, a company utilizing Web3 technologies to co-create products with users, thereby taking personalization to the next level. Kiki World has raised $7 million in this round of VC funding.
Earlier this week, Cartier, the luxury watch brand, collaborated with Snap to use AI and AR technologies. This partnership enables users to virtually try on rings before making a purchase, enhancing the personalized shopping experience.
The AI beauty pageant held in April this year, the first of its kind, signals the future direction of the industry. Beauty product companies are beginning to explore platforms where AI-generated models are evaluated and rewarded, allowing them to showcase their products to a broader audience, according to Sourabh Nyalkalkar, Practice Head of Innovation Products at GlobalData.
This development underscores the significance of AI and other technologies in transforming the luxury industry. Additionally, the growing startup ecosystem, particularly in Asian countries, is focusing on smart and digital approaches to fashion, which the luxury goods industry is starting to embrace.
Baburajan Kizhakedath
