LVMH Understands The Human Element Is Luxury’s AI Challenge

LVMH

“While these technologies offer remarkable creative potential, making it possible to generate bespoke designs and personalized experiences, they also raise questions about authenticity, as well as responsibility,” LVMH stated.

Luxury brands are widely using basic AI for data analysis to forecast demand, in supply chain management and to support other operational uses, but the emergence of generative AI (GenAI) takes AI to a whole new level, both maximizing the opportunities and the challenges.

Basic AI is programmed to analyze data, identify patterns and make predictions. Its scope is limited and its range narrow. GenAI has no such limits. It is programmatically trained to analyze data inputs from multiple sources and create new content and information in a variety of formats, including text, photos, video and audio.

GenAI mimics human creativity, though it lacks human cognitive abilities and contextual understanding. It holds the promise to expand human limits and accomplishments, but it has no moral compass or as retail industry analyst Robin Lewis observes, “What it doesn’t deliver is wisdom, insight, and context. It is soulless.”

For example, Senator Richard Blumenthal opened a Congressional hearing on the dangers of AI by playing a recorded message of what sounded like his voice saying words he didn’t write. His voice and speech were created by GenAI, but it could have just as easily been a video given GenAI’s power.

Luxury brands design products reflecting the highest levels of human creative achievement. The brands prosper in the marketplace on authenticity and person-to-person connections that build trust. Rather than enhancing those qualities, the irresponsible use of GenAI can threaten them.

As the luxury market leader, LVMH has the most to gain from AI if used effectively and the most to lose if AI is deployed improperly. And given its scale, LVMH has unmatched resources to discover AI’s potential. That’s why it’s getting the best minds behind it to explore the uncharted waters of artificial intelligence.

It recently hosted a three-day LVMH Data AI Summit in Paris, bringing together students and practitioners to explore innovative AI applications. And it has aligned with Stanford University’s Institute for Human-Centered Artificial Intelligence Institute (Stanford HAI), which is on the forefront of research in the retail sector for AI safety, human-centered design, human-computer interactions and other areas.

“Recent generative AI breakthroughs show new opportunities for major innovation and efficiency but also challenges and risks. LVMH will accelerate the efforts to learn and experience how it can help the business,” the company said in a statement.

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Should luxury marketers dig their heels in with their current advertising and marketing strategy as the market normalizes?

May 23 Luxury Roundtable Webinar: Industry Insiders' View on the State Of Luxury

What do luxury industry insiders say about the state of the luxury business? How do they view the normalization currently underway? How to set strategies, including advertising and marketing, for the period ahead as some luxury groups such as Hermès and flagship brands within LVMH blow past others?

In its seventh year, the State of Luxury: An Industry Insiders’ View report is one of the most reliable barometers of corporate-side attitudes to customer demand for luxury goods and services. The study pulls together first-hand responses from hundreds of executives worldwide across diverse luxury sectors to portray a picture of advertising and marketing strategies that work and do not work, making the report indispensable for luxury marketers.

In this hourlong webinar Thursday, May 23 at 11 a.m. to noon EDT (New York time), Luxury Roundtable and Unity Marketing will present the results of the extensive proprietary study conducted in association with Affluent Consumer Research Company and The Home Trust.

The webinar will focus on:

State of the luxury goods sector
How luxury services and experiences are evolving with customer expectations
Advertising and marketing strategies that resonate with the market
Business outlook for the luxury market
How to make this research actionable

Join me and Mickey Alam Khan for this Luxury Roundtable webinar. Register now to hold your spot.

“For affluent consumers, luxury is a privilege, not a right, and as they look at the challenges they and the world at large face this coming year, they are signaling a willingness to trade off excess spending on luxury. Many plan to batten down the hatches and ride out any potential economic storm, as they did in the Great Recession of 2008 and 2009,” said Chandler Mount, Affluent Consumer Research Co.

Luxury Brands Must Prepare For A Reset:

Here's The How And Why

Over the last three years, the luxury market has experienced a whirlwind of change. After rising 7 percent in 2019 before the pandemic, it suffered a steep decline in 2020, only to bounce back with spectacular growth through 2021 and 2022.

Bain-Altagamma expects the good times to keep rolling in 2023. “The personal luxury market is projected to see further growth of at least 3-8 percent next year, even given a downturn in global economic conditions,” they predict.

However, since the past is often the best predictor of the future, a different outlook is suggested based on results from the Great Recession of 2008 and 2009. Global personal goods luxury sales dropped 9 percent from 2007 to 2009, disproving the conventional wisdom that the luxury market is immune to economic downturns.

Whether the economy takes a slight tumble or a big fall in 2023, more economists are warning about an economic downfall that will impact the luxury market too. Analysts are warning of a potential "Richcession."

To prepare the Washington, DC-based Affluent Research Company has just published a new study among 2,000+ affluent consumers, called Research The Affluent Luxury Tracker. It provides a forward look at how the affluent will adapt their spending and purchase behavior if the economy falters, which they fully expect it will.

“Affluent luxury consumers are the most highly-educated and well-informed consumers, and some 69 percent see a recession coming within the next six months, if it isn’t already here,” said Chandler Mount, the study’s lead researcher.

“Anticipating the worst, the affluents aren’t waiting for the other shoe to drop. Nearly half (48 percent) surveyed said, ‘Now is a good time to limit my purchasing,’” he continued, noting that the survey sample was skewed heavily toward high-net-worth-individuals (HNWI) with $1+ million net worth (excluding their primary residence), a notoriously difficult consumer segment to survey.

Not unexpectedly, the HENRYs, with less than $1 million net worth, were more inclined to cut back (52 percent). But even 46 percent of the HNWI are lining up to reduce their purchasing. This will pose significant challenges to luxury brands that depend upon the HNWI’s greater spending power if they do pull back.

GET THE REPORT

“A groundbreaking and truly exceptional instruction manual offering a wealth of marketing insights and information, Meet the HENRYs is impressively well written, organized and presented, making it highly recommended.” writes Midwest Book Review.

Meet the HENRYs: The Millennials that Matter Most for Luxury Brands

Meet the HENRYs breaks new ground by uncovering a new target consumer--Millennials with money.

It's a segment of the largest generation of Americans with more discretionary income than the rest of the cohort today and poised to acquire more money in the future.

These are the millennials that matter most to brands today and tomorrow

For the foreseeable future, millennial HENRYs (High Earners Not Rich Yet) will be the consumers that every brand manager, marketer and retail executive will need to know well.

This subset of the largest generation of Americans, earns between $100K and $250K–the income cohort that accounts for 40 percent of all household spending. Most important, however, these are the consumers who are on track to become the ultra-affluent ($250K +) of the future.

This forward-looking book examines trends and profiles emerging disruptive brands that millennial HENRYs are drawn to, and explains how many of these innovative brands are setting themselves apart from the traditional top-tier luxury brands.

It takes you on a deep-dive into the steps the smartest of the traditional luxury brands and retailers are taking to keep up with a new generation of consumers who are anything but traditional in their approach to luxury spending.

GET YOUR COPY

Unity Marketing | 717-336-1600 or pam@unitymarketingonline.com

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