Luxury Fashion in the Age of Digital Transformation: Top Trends to Look Out for in 2023 and Beyond
The world of luxury fashion has always been one that is associated with new looks and trends, but recently, emerging digital technologies have started to make a significant impact in the industry. Luxury fashion retailers have come to understand that technology is a vital tool in their arsenal when it comes to connecting with customers, boosting their bottom line, and standing out in an ever-evolving retail landscape.
At Stefanini, we specialize in providing digital transformation solutions to luxury fashion brands. With my role as Vice President of Digital Business and Innovation, I work to match industry trends with solutions that help merge digital transformation with overall business objectives. In this article, we will explore some of the top digital trends in luxury fashion that we expect to see in 2023 and beyond.
You Can’t Spell Fashion Without AI
Data analytics and centralization, hyper-personalization, and micro-targeting, inventory management, and customer service all require the use of artificial intelligence or AI to effectively scale and deliver results at the required level expected of luxury retailers. The proliferation of AI-powered technology solutions has provided opportunities for fashion brands to track customer journeys, match customers with the right products, monitor inventory, forecast trends through data, and predict customer behavior and preferences.
The intelligent use of AI technology and big data analytics can enable luxury fashion retailers to improve their understanding of their customers, implement sophisticated inventory management strategies, and optimize their omnichannel efforts. This, in turn, can lead to a heightened ability to drive in-store engagement, create personalized customer experiences, and deliver a seamless omnichannel shopping journey.
Keeping It Real
In a world where authenticity and brand cachet are everything, new digital tech advances are the game-changers. Technology that records and preserves digital identity has myriad applications as a transparent, traceable, and efficient tool in the retail supply chain. This enables the possibility to follow products and supply chains by creating a physical-digital link that records every stage of production, leading to improved sustainability, environmental consciousness, and increased brand sentiment.
Consequently, organizations can prevent the distribution of 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 that 80% of revenue comes from 20% of customers. In luxury fashion, that ratio is more disproportionate, making it particularly critical to maintain strong connections with customers and have a nuanced understanding of their priorities and preferences. Social media and mobile applications are playing an increasingly important role in driving a diverse range of new apps to connect with consumers in new ways.
This can inspire 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. The retail space is also seeing cutting-edge platforms that can glean customer info through facial scanning and sentiment analysis (metrics on service calls are already becoming more common). By using social media and mobile applications, luxury fashion retailers can offer better-informed recommendations to consumers that suit their personal preferences and shopping habits.
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 will do it by investing in technology like intelligent automation (also known as cognitive or hyper-automation) that 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 that 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 the customer experience. That’s important because brick-and-mortar retail isn’t going anywhere; in some respects, it’s stronger than ever and remains 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. They are also using sensors, computer vision, and RFID technology to measure foot traffic inside and outside of 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 luxury retailers 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, it 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 efforts
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. Embracing digital transformation can be the key to unlocking competitive advantage, driving growth, and enhancing the customer experience in luxury fashion.
