The hidden risk in luxury’s AI race

The conversation about AI in luxury has accelerated dramatically over the past few months. Boards expect managers to deliver progress. Investors push for operational efficiency. Teams explore tools that promise everything from instant personalization to automated styling to predictive demand. The energy around AI is real, and the possibilities are extraordinary when done right. At the same time, I observe a growing disconnect in many organizations. The rush to integrate AI often happens without a clear understanding of what creates luxury value in the first place. This is where fundamental principles matter. In my academic work on luxury value creation, I describe luxury as extreme value. It is a value that goes far beyond functionality, convenience, or efficiency. Luxury value is psychological. It is cultural. It is emotional. It is created through what I define as Added Luxury Value (ALV). This is the hidden layer of perception that transforms a good product into a symbol of identity, aspiration, and meaning. ALV explains why clients pay premiums that cannot be justified through rational attributes alone. AI can amplify ALV. It can also erode it quickly if it is used without intent. Many brands underestimate this risk. They introduce AI tools because competitors are doing the same or because the technology seems exciting. They use AI to speed up processes, reduce workload and workforce, or create shortcuts. In doing so, they forget that the most powerful value in luxury is not created by speed or automation. It is created by emotion, human connection, and making clients feel truly valued. AI in luxury: Personal or generic? This is the paradox that luxury faces today. AI can make experiences more relevant, personal, and immersive. But if implemented without a clear brand lens, it can also make them feel generic. In a world where many brands are stuck in the “sea of sameness,” AI can further erode brand equity. When every brand relies on similar tools, the risk of sameness increases. Hence, many brands achieve the opposite of their intent. When interactions are scripted by models that are not anchored in the brand story, ALV becomes weaker. When technology becomes the hero instead of the client, luxury loses its meaning. In my advisory work with global luxury brands, I see two approaches. One group treats AI tactically and sometimes even as a shortcut. The goal is efficiency, speed, and automation. This often creates internal excitement but rarely results in stronger client relationships. The other group treats AI as an extension of its value creation model. They start with three key questions: What emotional outcome do we want for our clients? How can AI strengthen this? How can it help our teams deliver the brand promise more consistently and in a differentiated and value-creating way? These brands create real value because they anchor technology in strategy and client-centricity rather than novelty. Risks and rewards of AI To understand why this distinction matters, we return to the concept of ALV. Every interaction in luxury shapes perception. Every detail influences how clients feel about a brand. When a sales advisor remembers a detail about a client’s lifestyle, ALV grows. When a brand creates a moment that feels personal, ALV grows. When a store experience reflects the brand’s cultural and emotional identity, ALV grows. AI can enhance each of these moments if used with precision. However, it can also reduce them if the experience feels automated, impersonal, or disconnected from the brand. The risk becomes even more pronounced with younger luxury clients. Gen Z expects hyper-personalization. They expect brands to know them, understand them, and anticipate what matters to them. They also expect authenticity, transparency, and emotional depth. If AI is used predominantly to push offers, script conversations, or accelerate transactions, these clients will feel the gap instantly. ALV will collapse because the experience will feel manufactured. Luxury cannot become transactional. The more technology enters the industry, the more important the emotional dimension becomes. Keys to effective implementation This is why AI strategy in luxury must start with the extreme value creation of each individual brand. The question is not which tool to implement but which emotional effect the brand wants to create. This requires leadership teams to define the brand’s psychological value and ensure that AI strengthens it. It requires training programs that teach client-facing teams how to use AI to elevate service rather than replace personal connection. It requires experience audits that assess whether AI enhances meaning or introduces friction. It requires creative teams to use AI as a storytelling amplifier, not a shortcut for content. Luxury brands that take AI seriously should evaluate every tool through the lens of ALV. Does it strengthen identity? Does it create emotional resonance? Does it make clients feel more valued? Does it reinforce what makes the brand distinct and desirable? These questions matter more than the technical capability of the tool. As AI increasingly becomes part of luxury touchpoints, it brings both opportunity and risk. To stand out, brands must focus on elevating value creation, not just chasing efficiency or following the crowd. True differentiation comes from a clear understanding of what clients perceive as valuable, memorable, and emotionally meaningful. The opportunity for luxury managers is significant. AI can deepen connections, enrich storytelling, and create extraordinary service when it is guided by a strong strategic foundation. When brands anchor AI in ALV, they protect the essence of luxury while moving confidently into the future. 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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The hidden risk in luxury’s AI race