3 Real Challenges Artificial Intelligence Will Raise for Luxury Brands

Like it or not, artificial intelligence (AI) is going to take over the luxury industry, and some brands are already using AI in some of their new digital marketing campaigns. Brands need to anticipate this revolution and adapt their strategies as soon as possible, because the industry will crown winners and losers as quickly as the technology grows. But AI is not simply a yellow brick road to financial success. There will be some key challenges for companies wanting to use AI, specifically ones that threaten the way they’ve been doing business for decades. CHALLENGE #1 - Artificial intelligence could be an “emotion killer” Emotions play an essential role in luxury buying. From the impeccable presentation of a Michelin-star rated restaurant to the subtly distinct aroma of a high-end perfume, luxury brands are fantastic at crafting powerful sensorial experiences that can stir emotions and linger in people’s minds for a lifetime. But, unfortunately, part of brands’ reliance on emotions could be threatened by artificial intelligence and developing robotization. For instance, car manufacturers are facing a major challenge as driverless cars begin to emerge in parts of China and Silicon Valley. For luxury auto brands like BMW, repositioning is essential to their message, as their catchphrase “the pleasure of driving” won’t exactly fit once they’re selling automated vehicles. The Japanese cosmetics company SK-II might have found an answer to this emotion problem, using AI to serve emotions and help the brand push sensorial exploration further than ever before. In its newly opened Shanghai store, the company invites visitors to create their own art piece with the help of artificial intelligence. By posing in front of a large digital wall, users can unleash their creativity and design a unique artwork starring themselves—a form of selfie art branding. This is a goal that’s also pursued by Chinese e-commerce behemoth Alibaba and its travel platform Fliggy, who this month released a new robot to serve hotel guests by performing basic tasks like food and laundry delivery. General Manager of Alibaba A.I. Labs, Lijuan Chen, introduced the robot as a way to “bridge the gap between the guests' needs and the response time they expect.” In other words, AI will help customers deal with mundane tasks to better focus on the experiences that really matter to them. CHALLENGE #2 - Protect the art of face-to-face service Salespeople are an essential part of a luxury brand marketing strategies. They are brands’ ambassadors, and for many customers, they’re the only way to engage in a genuine conversation with the brand. Nonetheless, AI-powered chatbots are beginning to handle part of the salesperson’s role in a cheaper and more efficient manner. In addition to answering questions day and night while instantly recording customer information, chatbots also have the ability to constantly improve their client knowledge and make real-time decisions powered by AI. A chatbot with an unlimited memory can, therefore, become a serious competitor to a salesperson, yet luxury is also strongly related to humanity. So what alternative roles will salespersons have in the future? Luxury brands should curate in-store talents with unique creative skills to help provide experiences at their flagship stores. Their roles would be dedicated to emotional-response functions, while the sales business will be almost entirely operated by robots. For instance, a group of artists could work for several days as a live performance on an exclusive artwork inspired by a brand’s new collection. The experience would occur right before the eyes of the flagship store’s visitors and would be broadcast live via the brand’s social media channels. CHALLENGE #3 - AI threatens the trust that customers put in luxury brands Although culturally more willing to embrace technology than their Western counterparts, Chinese consumers have become increasingly concerned about how brands collect, store, and sell their private data. We should expect China to soon start regulating how companies collect and use customer data, but when it comes to marketing, customer information is mostly collected to help brands design personalized products and services that are tailor-made to the specific needs of clients. According to a recent report from the World Economic Forum, personalization will soon become “the new mass market” standard—not an added value but a must-have for Chinese millennials. That sets up one of the most important dilemmas the luxury industry will face in the near future: Can you collect enough private data to both provide an ever-more personalized sales offer without alienating the customers by harvesting too much of their information? Right now, the personalization revolution is only at its infancy. But it’s clear that the BAT (Baidu, Alibaba, Tencent) mega-companies and their oceans of data will become even more important as partners for luxury brands that want to fully understand their customers’ profiles and buying behavior. Louis Vuitton, for example, partnered with Baidu to launch its first fragrance line in China last year. Baidu matched seven celebrities to each of Louis Vuitton’s fragrances, and then they invited users to upload a selfie that Baidu’s artificial intelligence would analyze and use to pair each user with one of the seven celebrities. Of all the luxury industry’s key assets, creative ideas like this are certainly what artificial intelligence will have the hardest time replacing—at least for now. AI can’t replicate the creative link between the brain and the hand, and the luxury industry has always featured some of the world’s most gifted creative talents. But one has to wonder how customers would welcome a collection designed entirely by artificial intelligence. Is human creativity an asset that will be valued forever? Brands will likely find out sooner than expected. Rémi Blanchard is a strategic planner who has been sharing his expertise on Chinese digital trends and consumers with some of the world’s most prestigious luxury brands.

3 Real Challenges Artificial Intelligence Will Raise for Luxury Brands

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Published October 22, 2018

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3 Real Challenges Artificial Intelligence Will Raise for Luxury Brands