We are at a pivotal moment, and for many luxury brands it is the perfect storm: Growth rates are slowing down and getting more in line with historic numbers, the transition to Gen Z is a headache for many brands, the significant price increases many brands implemented over the last 24 months are causing client backlash, and the rate of change is increasing dramatically and it will be further accelerated through the emergence of artificial intelligence .
Technologies such as generative AI promise innovation, but often deliver little more than a superficial enhancement of existing tools. Importantly, they are large language models, and depending on what they are trained for, they can be of little use when used outside of the trained context. This scenario mirrors the enthusiasm and subsequent disillusionment with metaverse initiatives in 2021 and 2022, where organizations poured millions into virtual ventures that, for the most part, failed to deliver tangible value.
In the era of"more of the same," it's worth asking: What is the return on investment of these AI activities? Are luxury brands truly innovating by deploying AI-powered solutions, or are they caught in a cycle of incremental improvements that offer diminishing returns? Another example is to make sense of the social sentiment to measure the brand story that the public perceives in real time. The AI-powered technologies to do so have existed for more than five years, but few brands utilize them strategically and even fewer to monitor the brand performance in real-time.
Or, consider AI-driven supply chains that not only optimize efficiency, but also adapt in real time to shifts in consumer demand or global disruptions, ensuring a level of agility and resilience that becomes a competitive advantage.