Luxury fashion retailers have traditionally been associated with new fashion rather than new technology. However, emerging digital technologies are making an outsized impact in the retail industry during the pandemic. High-end fashion retailers are discovering that technology is chic when it comes to connecting with customers and boosting their bottom line. At the same time, digital technologies are making it easier for luxury fashion brands to learn about their customers, implement sophisticated inventory management strategies, and optimize omnichannel efforts. Here are the top digital trends in luxury fashion to keep your eyes on in 2023 and beyond.
Artificial Intelligence
Data analytics, hyper-personalization, micro-targeting, inventory management, and customer service all require AI to effectively scale and deliver at the level expected of luxury retailers. AI-powered technology solutions are proliferating, providing opportunities for fashion brands to track customer journeys and match customers with the right products, monitor inventory, forecast trends through data, and predict customer behaviors and preferences.
Keeping it Real
In a world where authenticity and brand cachet are everything, new digital tech advances are game-changers. Tech that records and preserves digital identity has a myriad of applications as a transparent, traceable and efficient tool in the retail supply chain. This provides the possibility to follow products and supply chains by creating a physical-digital link that records every stage of production, leading to improved sustainability and increased brand sentiment. Consequently, organizations can prevent counterfeit goods, identify the last party to gain custody of the product, track new merchandise shipments, and advertise exclusivity to consumers by capitalizing on a transparently finite supply.
Know Your Audience
The rule in retail is 80% of your revenue comes from 20% of your customers. That ratio is more disproportionate in luxury fashion, making it notably critical to maintain strong connections with customers—and have a nuanced understanding of their priorities and preferences. Social media and mobile applications play an important role, driving a diverse range of new apps to connect with consumers in new ways. This can allow for micro-targeting and hyper-personalization for limited releases and exclusive offers, identify when customers are in specific stores, and deliver targeted offers based on history and preferences. Some cutting-edge platforms can glean customer info through facial scanning and sentiment analysis (metrics on service calls are already becoming more common).
Intelligent Automation And Omnichannel Optimization
Gartner predicts, “By 2024, Tier 1 retailers in North America and Europe will reduce inventory carrying costs by 30%.” They’ll do it by investing in technology like intelligent automation (also known as cognitive or hyperautomation). Intelligent automation uses bots with decision-making capabilities to increase scheduling productivity and accuracy, evaluate the connectedness of task management, and automate end-to-end processes.
Luxury retailers who adopt intelligent automation equip sales associates to serve customers more effectively by informing them about the location and availability of products (both in-store and online) and when limited supply items or exclusive releases are expected. With details about individual customer preferences, sales associates can provide elevated and personalized service—a defining characteristic of high-end service in the luxury space. Practically, sophisticated and transparent merchandising and inventory management are more critical than ever, especially when the global supply chain is chaotic and unpredictable. Fashion retailers are investing heavily in the technical and logistical infrastructure required to execute speedy delivery and fast and efficient returns and exchanges.
The Data Dimension
The power of data is extraordinary, but the most sophisticated tech tools are only as good as the quality of the data collected. Because high-end items (and the accompanying shopping experience) are so important in the luxury space, the in-store experience remains a key piece of the data collection and utilization puzzle. Some of the most interesting and impactful digital and virtual innovations are related to in-store data collection and customer experience. That’s important because brick-and-mortar retail isn’t going anywhere; in some respects, it’s stronger than ever, part of a connected retail ecosystem. Brands are increasingly turning to digital/social media to track sentiment and provide incentives to third-party partners to share collected data and are also using sensors, computer vision, and RFID technology to measure foot traffic inside and outside stores. Some solutions can track conversion rates, monitor inventory and read sentiment, leading to new insights that can enhance the shopping experience and improve the overall design of the store.
A Fashionable Future
Luxury retailers are finding it increasingly important to create a seamless experience across mobile, social media, web, and in-store. Investing in a diverse technology stack that benefits customers as well as retailers builds positive brand associations but also allows you to cater to personal profiles and purchasing habits with tailored products and store experiences designed just for them.
Given the clear importance of emerging digital technologies in the luxury fashion space, retailers would be wise to prioritize education about the tech innovations available to them. Luxury retailers are very familiar with the importance of staying in touch with the latest and greatest trends—and it’s abundantly clear in this sector that impactful technology innovation is the next big thing.
For decision-makers, evaluating which tools make operational and financial sense for your brand begins with determining how well a solution enables you to:
• Learn more about your customers
• Implement sophisticated inventory management strategies
• Facilitate supply chain optimization
• Drive in-store engagement
• Create personalized customer experiences
• Support seamless omnichannel effort
If the answer isn’t clear, consider consulting with an experienced technology partner to assist you in selecting and integrating new technology in a thoughtful and strategic manner—or even create a digital retail solution designed with your business objectives in mind.
In conclusion, the world of luxury fashion is no longer just about new looks but also new tech. With artificial intelligence, keeping it real, knowing your audience, intelligent automation and omnichannel optimization, and the data dimension, luxury retailers can benefit from tremendous opportunities for growth and expansion. By investing in a diverse technology stack, retailers can build positive brand associations and create personalized customer experiences.
