Luxury fashion has often been synonymous with unparalleled quality and exclusivity. However, the sobering reality is that many high-end brands have fallen behind in the age of the digital revolution and e-commerce. This begs the question: how can luxury brands make up for lost ground and deliver the experiences needed to get ahead of the game?
The answer may not come from the fashion capitals London, Paris or Milan, but from technology capitals like Silicon Valley where the "next big thing" is Artificial Intelligence (AI), technologies capable of performing tasks normally requiring human intelligence.
Speaking to the importance of AI, Microsoft CEO Satya Nadella recently said: “We are on the cusp of a paradigm shift in computing that is like nothing we’ve seen in decades.” This paradigm shift is coming to all sectors, including retail. By 2020, IBM predicts that 85% of all customer interactions will be handled without a human agent. Players in luxury retail need to adapt to this trend if they are to thrive.
Having said that, what roles will AI play in luxury fashion? With an ever-increasing amount of data about sales and consumer preferences available, AI enables greater leverage to improve the retail experience in a way that appeals to the digitally-savvy affluent consumer. Here are three trends to watch for:
Deep Learning
Deep learning is an AI application based around the idea that we should give machines access to data and let them learn for themselves. In luxury fashion, this means that machines will get better and better at learning about what makes consumers tick - their likes, dislikes and even idiosyncrasies.
One aspect of retail that appeals to many consumers is buying at the lowest possible price. In the case of LUXSENS, a Shanghai-based company, deep learning algorithms are already being used to find the best price for luxury bags.
LUXSENS maps out the price and product attributes of bags automatically to allow consumers to find items at the lowest price and learn more about price fluctuations at different locations. The platform runs on LUXSENS’ WeChat account, making it easily accessible for Chinese customers and giving them to option to either purchase the product online or physically.
Emotion Analytics
Emotions and sentiments heavily influence brand perception and drive consumer behavior. Often, the choice to buy that diamond necklace or limited-edition timepiece comes down to how it makes you feel, more than how much it costs.
Making waves in this emerging space is emotion AI company Affectiva, whose emotion recognition technology analyses facial expressions and emotions through cameras. (Try the AffdexMe demonstration app if you're curious about how this works)
In Hong Kong and Taiwan, premium skincare brand SK-II uses Affectiva’s technology through a partnership with video ad tech company Unruly Media that analyses the emotional responses of audiences to SK-II video advertisements.
This emotional targeting capability enables SK-II to focus its content on audiences more likely to be interested in its products to create an emotional connection that is translated into greater brand favourability and sales figures.
Image Intelligence
Image recognition technology can be simply put as helping computers to “see” and “understand” images, video and other media like humans do. It helps unlock the wealth of information hidden in images that has great value to businesses and consumers alike.
The image recognition market is estimated to grow from US15.95 billion in 2016 to $38.92 billion by 2021. IBM Watson, the technology giant’s flagship AI and cognitive computing platform, is a notable example of an image recognition platform.
Not to be outdone in Asia is Chinese giant Tencent, whose AI research team Youtu Lab entered the fashion space recently by developing capabilities to analyze fashion trends among the young Chinese demographic. Youtu Lab processed billions of photos on QQ, one of Tencent’s social messaging apps, to identify popular colors, fabrics and other details like the age of users from their photos.
Although these capabilities are not unique, Tencent’s evolving image intelligence tools have immense market potential for an established luxury retail market like China. The company has mountains of user data that can be mined for insights; in 2016, Tencent’s social messaging apps QQ and WeChat had a whopping 1.7 billion monthly active users (for reference, that figure falls short of Facebook by just 300 million).
These emerging AI technologies have the potential to revolutionize luxury retail in Asia and beyond, but brands need to embrace new technologies and lead from the front or risk being left behind. AI should be seen as a powerful tool that enhances luxury retail for businesses and customers alike. The future is now, and there is no greater luxury than making the best of it.
