Luxury’s miscalculation? That AI is free

During a break at a recent luxury conference, a CFO approached me. He leaned forward with a smile. “If we implement these AI agents for clienteling,” he said, “we can reduce our retail payroll by 15%.” I had to be the one to break the bad news. “If you implement these agents,” I replied, “you will likely need to increase your payroll by 20%.” His smile faded. The assumption in almost every corporate headquarters is that artificial intelligence is a mechanism for efficiency. We assume that because technology gets cheaper, the cost of delivering a service should drop. This logic holds true for selling commodities. It is fatal for selling luxury. The zero-marginal-cost trap As AI models become ubiquitous, the cost of raw intelligence is racing toward zero. Any brand, from a mass-market startup to a heritage maison, now has access to the same level of data processing, the same predictive text, and the same automated personalization. When intelligence is free, it ceases to be a competitive advantage. This creates a new economic reality. If the smart part of the job is automated, value shifts entirely to the one thing machines cannot provide: emotional connection. I call this the “human premium.” In a world where 90% of interactions can be handled by a bot, the remaining 10% become disproportionately valuable. These are the human interactions. The moments that make or break the dream. If a client is speaking to a human, it is likely because they have a complex emotional need. They might have a grievance or simply want to be seduced by the brand story. Putting a low-paid, script-following employee in that role is no longer a saving. It is a liability. From order takers to emotional athletes We are seeing a bifurcation in the workforce. The middle is disappearing. The roles that simply facilitate a transaction, like checking stock or processing payments, are being swept away by automation. What remains are two categories: the invisible tech stack and the highly visible “emotional athletes.” These are not traditional sales associates. They are brand ambassadors who require a completely different skill set. They need high emotional intelligence (EQ) to read the unspoken mood of a client. They need cultural fluency to navigate complex social codes across different regions. And they need improvisational storytelling skills to weave the brand myth into a personal conversation. No large language model (LLM) can authentically replicate this. You cannot hire this level of talent for minimum wage, nor can you train them with a PDF manual. This reality has triggered a shift in the industry. I have never experienced such intense demand to train top sales teams as I do right now. Brands are realizing that standard service training is obsolete. Transformational training, which turns staff into emotional architects deeply knowledgeable in the psychology of luxury, is the only way to bridge the gap. Recent data supports this shift. Reports indicate that jobs requiring AI skills and the complementary human skills to leverage them are already commanding significant wage premiums. The market is realizing that a human equipped with AI is not a cheaper worker. They are a super-worker who can create exponentially more value. The uncanny valley of service There is a risk to ignoring this. We are already seeing the first wave of backlash in luxury, where VIP clients realize their dedicated concierge is actually a finely tuned bot. The feeling of betrayal is instant because trust and authenticity are the currencies of luxury. If a brand uses AI to fake a relationship, they are breaking the fundamental contract of the category. The winning strategy is counterintuitive. Use AI to ruthlessly automate the boring, repetitive, and administrative tasks that currently eat up 40% of your staff’s time. But do not bank the savings. Reinvest them. Use that capital to pay higher salaries to better-qualified humans. Give them the time and mental space to actually care about the client. I have written many times that the surest way to lose a high-net-worth individual is to treat them as a walking wallet. The boardroom choice Leaders face a stark choice today. They can view AI as a way to cut costs, a move that will ultimately commoditize service and erode pricing power. Or they can view AI as a way to upgrade talent. That means paying more for humans who can do what no machine can, which is create memories. The future of luxury is not robotics but radical humanity. And unfortunately for CFOs, that will not come cheap. Are you ready? This is an opinion piece by Daniel Langer, CEO of Équité, recognized as one of the “Global Top Five Luxury Key Opinion Leaders,” and advisor to some of the most iconic luxury brands in the world. He serves as an executive professor of luxury strategy and pricing at Pepperdine University in Malibu and as a professor of luxury at NYU, New York. Daniel has authored best-selling books on luxury management in English and Chinese, and is a respected global keynote speaker. Daniel conducts in-person masterclasses on various luxury topics across the world. As a luxury expert featured on Bloomberg TV, Forbes, The Economist, and others, Daniel holds an MBA and a Ph.D. in luxury management and has received education from Harvard Business School. Sign up for his online luxury masterclasses at the Jing Academy.

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Luxury’s miscalculation? That AI is free