In 2017, the luxury business was marked by technology-driven disruption, a recovering global economy, and the narratives of the consumer “experience” and “transformation” economies. What can we expect in 2018?
Automation has impacted numerous areas of the economy and society such as finance and transportation. The luxury business is no exception. With automated commerce, more advanced algorithms in retail business and smarter devices will mean outsourcing some of the fashion experience for the affluent consumer for whom time is the ultimate luxury, or the forward-thinking shopper who wants to be the trendsetter.
There are always aspects of the fashion experience one would not mind forgoing in order to savor the truly enjoyable parts. A-commerce is set to take care of the nitty-gritty of the fashion experience like searching, purchasing, organizing, and styling.
Finery is a virtual wardrobe planning platform that stands out from other wardrobe organizing services. Harnessing machine learning and AI to organize, style, and manage a user’s existing wardrobe, it automates the experience by transforming data from past purchases into a visual catalog of items that can be organized into looks.
A recommendation engine is in development that will machine-learn from other user habits and image databases to suggest outfit combinations and help plan new purchases. Luxury brands will need to adapt to selling to algorithm-driven systems as well as humans with implications for pricing strategy, marketing approach and more.
As the digital realm increasingly fuses itself into our daily lives, virtual entities will make the leap from assistants to companions. Millions of consumers are already deeply immersed in behaviors that make virtual companions the natural next step in 2018.
Gartner predicts that by 2020, the average person will have more conversations with bots than with their spouse. Thanks to AI, machine learning and emotion analytics that make it possible to realistically model human conversation, relationships with virtual companions are set to extend beyond the merely functional.
This trend could stem from AI chatbots like Replika, which is programmed to become a digital version of a user by picking up a user’s moods, mannerisms, preferences and speech patterns such that it can even mirror an individual’s idiosyncrasies.
Beyond these, a virtual companion capable of internalizing a user’s values and aspirations holds great potential in being able to deeply connect with an individual. Imagine the possibilities of coupling such a virtual companion with an a-commerce platform — you get the ultimate luxury companion who knows who you are, what you want and even why you want it, perhaps even better than you.
Blockchain, the underlying digital ledger technology of cryptocurrencies has entered the mainstream this year and looks poised to grow in 2018. Blockchain offers game-changing possibilities to the luxury business. We are in the age of the holistic luxury experience where luxury is not just trading products anymore, but the trading of entire product lifecycles.
The creation of an item like art or fine wine, its sale, re-sale and the end of our ownership of it are all part of one lifecycle. Blockchain, which is essentially a shared database of transactions that are continuously updated, will give owners of luxury items everything they need to know about the provenance of an item — the story of its creation and ownership.
Green is the new black. Rising concerns about climate change and environmental sustainability will impact affluent consumers, particularly millennials. Green luxury is catching on fast in China , where consumers are embracing the benefits of living green, not simply for egalitarian purposes, but for their own happiness.
According to market research firm Mintel, Chinese consumers are more likely to purchase ethical brands at a premium price. Fifty-eight percent of surveyed consumers indicated that they are willing to pay more for ethical brands.
International luxury group Kering, which owns brand such as Gucci and Yves Saint Laurent, is leading the green movement in China. It recently launched a WeChat mini-program named “My EP&L” (Environmental Profit & Loss), an environmental impact measurement tool that informs consumers of the environmental cost of their purchases, and allows them to make ethical choices based on the calculated cost. The lower the cost, the greener the luxury.
Luxury consumers already used to great expectations, fueled in part by digital offerings, will want constant service upgrades and seamless personalization to stay loyal. Seventy-eight percent of consumers say they retract loyalty faster today than they did just three years ago.
While a-commerce, virtual companions and blockchain may well help, they will also expect products and services to reward their loyalty by forgiving them when they change their minds about past purchases. Luxury brands need to grant greater flexibility to individual needs.
Canadian athleisure brand RYU, for instance, offered discounts on fitness apparel to customers who either lost weight or gained mass over the previous year through its “Up-Down” program. And, returned items went to charity. Service which embraces a customer’s lifestyle and aspirations.