New digital players have re-defined the customer experience offering a new level of personalization. With the festive shopping season upon us, it’s an opportune time to look at how luxury brands are using data to win the hearts and minds of customers.

The global success of European luxury brands is more than a badge of honor. It’s an integral part of the region’s economy. In fact, the European Commission estimates the value of European high-end luxury exports to be €260 billion, which equates to 10% of all European Union exports.

While the success of companies in this segment is often rooted in the rich heritage of their brands – which can go back more than 100 years – they now operate in an age of disruption. New digital players have re-defined the customer experience offering a new level of personalization. As a result, expectations among all consumers are going up. With the festive shopping season upon us, it’s an opportune time to look at how luxury brands are using data to win the hearts and minds of customers.

Technologies such as cloud computing and artificial intelligence (AI), enable all companies – including those with a long tradition – to create a much more bespoke customer experience by using data. Thus helping them to exceed the expectations of even their most discerning customers. According to Bain & Co., 50 percent of luxury purchases will be digitally enabled by new technologies by 2025.

 

Authenticity, transparency and provenance

Today, customers who pay a premium expect the highest quality and a guarantee that a product is 100% authentic. Collaborating with a range of fashion brands around the world, EON creates Digital Identity tags that can embed products with intelligence and allow for end-to-end connectivity throughout the value chain. EON introduced one of the first washable integrated digital identification (RFID) tags in the form of a thread that’s put directly into a garment during production. This gives each product a unique ID and connection to the intelligent edge.

“Building greater transparency directly into a garment opens up incredible opportunities for supply-chain tracking, consumer engagement, product authentication, and even smart check-out,” says EON founder and CEO, Natasha Franck. “Understanding the component materials allows for recycling or upcycling garments; it streamlines shipping and receiving methods across the supply chain; and it’s a boon to luxury brands looking to thwart the flow of counterfeits hitting the market.”

 

Unforgettable experiences

Customers don’t just demand authentic products. They also want personalized and memorable experiences. With customers being spoiled for choice, David Sadigh, Founder and CEO of the Digital Luxury Group, nicely summarized the challenge for today’s brands: “Delighting customers is both an art and a science; it’s bringing emotion together with data and analytics.”

A great example of this is the world’s leading online luxury fashion retailer YOOX NET-A-PORTER GROUP. The company is developing an Al-powered virtual personal stylist tool that can recommend items to customers based on image recognition, personal preferences and other data like location and weather forecast.

 

“The immediacy and convenience that technology creates has massively increased our expectations. And in luxury, where incredible service and a personal touch are paramount, the challenge is to offer this at an even higher level. We’re focused on creating new user journeys that seamlessly unite the human touch with technology to offer everyone a truly luxurious experience.” – Gabriele Tazzari, Director of Research & Development, YOOX NET-A-PORTER GROUP

 

YOOX NET-A-PORTER GROUP is also building an AI tool that can suggest different outfit options to help consumers complete a particular look, taking professionally styled shots from its online stores to create outfits.

 

Keeping a step ahead of customer needs  

Consumer behavior has never been so fast-changing. In fact, Stephane Lannuzel, the Operations Chief Digital Officer at L’Oréal, said that consumer behavior has changed more in the last three years than in the last thirty years.

To keep ahead of customer demands, the company is using data-driven insights for more accurate forecasts. Going beyond simply analyzing sales, L’Oréal crunches data ranging from social media insights to fluctuations in global exchange rates. The ability to pull insights from these massive data sets allows the company to more accurately factor in the variables that influence consumer behaviors.

Embracing data to make each customer feel like a VIP

Shoppers today expect the brands in their lives will know them and anticipate their needs – whether they are shopping in-store or on their mobile device. Luxury menswear brand Ermenegildo Zegna puts the customer at the center of its business to deliver personalized services based on each customer’s preferences. In moving to the cloud, Ermenegildo Zegna is able to integrate data from different channels – including in-store and online – allowing the company to provide a highly personized service to each shopper.

 

“In today’s market, companies need to accept that the consumer will dictate the way forward, with their digital behaviors” –Edoardo Zegna, Head of Content and Innovation, Ermenegildo Zegna

 

Balancing long-held brand identity with innovation

Like companies in all sectors, brands in the luxury segment are transforming to compete in a data-driven age. What is interesting is how companies that have been successful for more than 150 years embrace innovation while at the same time preserving the identities that have kept their brands so sought-after. For me, the key takeaway is that every innovation a business implements needs to map back to benefiting the end customer.

Certainly, this the North Star that guides us, as Microsoft, as we go through our own transformation.

 

With that, I wish you a happy and healthy holiday season!


About the author

Michel Van der Bel

President, Microsoft Europe, Middle-East and Africa , Microsoft

As President for Europe, Middle-East and Africa, Michel van der Bel leads Microsoft’s business across the region, which includes 20,000 employees in 29 subsidiaries.
Michel is responsible for sales, marketing and operations across the Microsoft product and services portfolio. His single focus is on helping customers transform to compete in a cloud-first world where innovation is at the heart of every successful business.