"The Transformative Power of Data and AI in the Luxury Sector."

Hello, my name is Caroline Goulard. I founded two companies in the field of data visualization, and for over ten years, I have been working to bridge the gap between humans and data. I’m delighted to be here with you for a new episode of The Bridge, Artefact’s media platform that explores artificial intelligence and its accessibility for everyone.
Today, I’m joined by Edouard de Mézerac. Edouard, welcome! Could you introduce yourself?

Hello! I’m very happy to be here today. My name is Edouard de Mézerac, and I joined Artefact in 2018. At that time, I was living in Shanghai, China, where I was already witnessing the early rise of data as a key driver of transformation.
I remember my parents questioning my decision to join a new company from scratch, asking why I was taking such a risk. I had a cover of The Economist from April 2018 that read, « AI Will Disrupt Everything. » That moment reinforced my belief that something significant was happening, and I was drawn to the idea of joining a company fully dedicated to data and AI, especially to launch its activities in China.
I spent four years growing Artefact’s business in Shanghai until 2022, then moved to Singapore for a short period. In total, I spent eight years in Asia before recently returning to Paris to take on a more global role at Artefact. Now that our teams across Asia have grown, I’m excited to be back in Paris and France.

What is your personal experience with data and AI in the luxury industry?

At Artefact, I currently lead our industry practices. Until now, our organization was primarily structured by country, but we felt the need for consistency and strong thought leadership within specific industries. As a result, we now have dedicated industry practices, including financial services, industrials, and, of course, luxury and beauty.

I have spent considerable time working in the luxury sector. Over the past eight years, we have collaborated with nearly all major luxury groups across China, the US, and Europe, giving us a holistic view of the industry.

The luxury market experiences constant fluctuations, often driven by overreactions. If we had this conversation three weeks ago, the atmosphere would have been quite gloomy. However, last week, a major luxury group published its Q4 2024 results, announcing a 10% year-on-year revenue increase. This surprised many, leading to a surge in stock prices across the luxury sector. This is a clear example of how the market tends to overreact to short-term changes.

In reality, 2024 has been a challenging year, especially in China. The Chinese luxury market declined by 20%, which is a drastic drop. However, when we analyze Chinese luxury buyers as a whole—including those purchasing abroad—the decrease is only around 7-8%. This is because a significant share of luxury purchases by Chinese consumers now occurs outside China.

For example, Japan saw a major boost in luxury sales due to currency fluctuations. The Japanese yen weakened against the Chinese renminbi, creating a price gap of around 30%. As a result, Chinese tourists flocked to Japan to buy luxury goods at significantly lower prices. This shows how complex and nuanced the luxury market in China can be.

Beyond China, the US remains a key market for luxury. The current trend is positive, with expectations of at least 5% year-on-year growth in the coming years. While China may no longer be the primary growth engine for luxury brands, the US is poised to take on a more significant role.

What is the current data and AI maturity of luxury companies based on your own observations?

Luxury brands are well-positioned to leverage data effectively. Most luxury brands operate on a direct-to-consumer model, meaning they have detailed information about their customers. Unlike industries such as consumer packaged goods, where brands rely on intermediaries and have limited consumer data, luxury brands can track and analyze customer behavior in great detail.

We recently conducted a study using public data from LinkedIn to assess the data maturity of luxury companies. We analyzed the number and types of data-related roles in these organizations. A few key takeaways emerged. All luxury brands have significantly increased their data teams, with some having hundreds or even thousands of data professionals. However, there are major differences between companies. Some have heavily invested in data, while others lag behind. For instance, LVMH leads in data talent, with a high ratio of data professionals to total employees. Other groups, such as Gucci, Chanel, and Hermès, have a significantly lower proportion of data talent.

One key challenge is the shortage of product owners—the professionals responsible for translating business needs into data-driven solutions. Many luxury brands lack these roles, which creates a disconnect between data teams and business objectives. The most mature companies have structured product owner teams by brand or category to ensure alignment between data initiatives and business goals.

Can you describe some key data and AI use cases in the luxury sector?

Data and AI are enablers for the business. Luxury brands will never be technology companies; instead, they should use data and AI to enhance customer experiences and optimize operations.

One major area is customer experience and personalization. Many luxury brands still have disconnected touchpoints—separate CRM systems, retail store data, and digital interactions that don’t communicate with each other. The first step is creating a 360-degree view of the customer by integrating these sources.

For example, in a recent project, we reconciled digital and retail data to understand consumer purchasing behavior. We found that half of the customers who made in-store purchases had previously researched the product online. However, many luxury brands fail to leverage this insight, missing opportunities to guide potential customers from digital engagement to in-store conversion.

Another key focus is driving second purchases and cross-category exploration. Many luxury consumers enter through a single product category, such as accessories or beauty, but don’t explore the brand’s full range. Data can help brands identify these customers and personalize recommendations to introduce them to other categories, increasing customer lifetime value.

The next big challenge is personalization. Luxury brands promise a one-to-one relationship with customers, but in reality, their digital experiences are still one-to-many. If you and I log into a luxury brand’s app at the same time, we will see exactly the same content, even though our preferences are completely different. Meanwhile, most of the digital platforms we use daily, such as Instagram and YouTube, provide highly personalized experiences. This gap is something luxury brands need to address to remain relevant in the digital space.

How can luxury brands foster high-value customers?

There’s also significant potential in using data to enhance VIP client services. Luxury brands rely heavily on a small group of high-value customers who contribute disproportionately to revenue. Using data to anticipate their needs, personalize interactions, and ensure seamless service can be a game-changer. This isn’t about replacing human relationships with AI but using data to empower client advisors with deeper insights into their customers.

The luxury sector is at a turning point. While some brands have fully embraced data and AI, others are still in the early stages. The key to success is aligning data initiatives with business priorities, investing in the right talent, and moving beyond short-term experiments to build scalable, impactful solutions. The brands that master this will be the ones that create deeper, more meaningful connections with their customers while optimizing operations for the future.

In what other areas specific to the luxury business are data and AI making improvements?

The first area of focus is the use of data and AI in enhancing customer experience. The second major battle is in product management. Luxury brands sell physical items, and manufacturing and distribution are critical areas where data and AI can make a significant impact. Ensuring the right product is available in the right store, in the right quantity, and at the right time requires a strong data and technology backbone. Predicting demand for specific products, colors, and locations is a key use case. Understanding how many units are needed in a given country or a specific store can help optimize inventory and reduce inefficiencies.

Another important aspect is assortment management—determining which items should be present in which stores. Many luxury groups have decentralized decision-making, where store managers decide what and how much to order based on their experience. The goal is not to replace their expertise but to provide them with smarter insights so that their decisions are more informed.

Can data and AI be used to address sustainability concerns?

On the product side, sustainability is an area that remains largely untapped. Consumer preferences are evolving, and sustainability is becoming a more important factor in how customers choose luxury brands. Traceability and sustainability are particularly relevant in categories like jewelry and watches, where end-to-end traceability of materials, such as diamonds, is becoming crucial. Today, if a customer asks about the carbon footprint of a luxury product, the answer is often unclear. There is little transparency in the supply chain, and air transport is frequently used without hesitation, increasing the carbon footprint.

The first step in addressing sustainability is gaining visibility into the supply chain and its impact. The second step is optimization—reducing unnecessary transportation, minimizing reliance on air freight, and ensuring that products are moved more efficiently. AI can help predict demand more accurately, reducing unnecessary shipments between stores and minimizing environmental impact.

How does AI improve luxury product traceability or fight against brand counterfeiting?

In categories like diamonds and jewelry, data and technology can also enable end-to-end traceability. A piece of jewelry can involve dozens of suppliers and components, making it complex to track. AI can help reconcile this information across the supply chain, providing greater visibility. Some AI applications can even verify the authenticity of a luxury item. A customer can bring a purchased product back to the store, where a simple photograph can confirm whether it is genuine by cross-referencing it with the brand’s catalog. This kind of technology can also help identify quality issues and detect potential counterfeiting.

Quality control is another key area where AI can play a role. Luxury is built on the promise of high-quality products. Following products after they reach the consumer and maintaining records for quality assurance are essential. In the watch industry, for example, consumers are willing to pay high prices for premium craftsmanship. Some watches come with long warranties, and AI can help brands anticipate potential quality issues. If a specific batch of watches has a known defect due to a component failure, brands can proactively reach out to customers, offering repairs or replacements before an issue arises. This changes the entire conversation around customer service and enhances the luxury experience.

How can data and AI help sales advisors offer hyper-personalized customer experiences in luxury stores?

The final area of focus is retail and sales channels, particularly how to enhance the role of sales advisors. Many luxury brands recognize the importance of well-trained sales advisors who have access to customer insights. However, they often introduce multiple apps for training, product catalogs, client management, and inventory tracking. As a result, sales advisors may be required to use several different apps to perform their tasks. In reality, most of us only use a handful of apps on our phones regularly, so expecting sales staff to manage multiple tools is inefficient.

A more effective approach is to consolidate these functionalities into a single application. In China, for example, brands have developed integrated mini-programs within WeChat that provide training, client history, product information, and task management in one place. This allows sales advisors to receive smart prompts, such as notifications during low-traffic hours about pending tasks in the store. By streamlining these tools, brands can improve efficiency and ensure that sales advisors spend more time with customers rather than handling administrative tasks.

Another key challenge is the balance of time spent engaging with customers versus managing operations. The more time that can be shifted from operational tasks to customer interactions, the better. Some brands struggle with low store traffic on certain days, which is where AI-powered clienteling comes into play. By analyzing purchase history and past interactions, AI can suggest which high-value customers should be contacted proactively. Personalized messages can be automatically generated to re-engage clients based on their preferences and past purchases.

Failing to invest in these technologies can pose risks to the business. In China, for example, studies have shown that when a beauty advisor moves from one brand to another, the customers they previously managed often follow them. Beauty advisors can have turnover rates as high as 30% per year, meaning that brands risk losing a significant portion of their client base if they do not maintain strong direct relationships with customers. Ensuring that the brand itself, rather than individual advisors, owns the customer relationship is critical for long-term stability.

Let’s come back to GenAI because it’s a very interesting subject. When it comes to luxury, we have this image of luxury, creativity, human talents… how do they match? Could generative AI solutions play a creative role in the luxury market?

There’s often a perception that luxury is deeply rooted in creativity and human talent, which raises questions about how AI fits into this world. Surprisingly, some of the most receptive groups to generative AI have been creative teams within luxury brands.

During strategic alignment sessions with executives from major luxury brands, we worked to identify areas where AI could be applied. One of the areas that emerged was creativity. Many would assume that AI in creative processes would be a non-starter, but that wasn’t the case. Creative directors and designers were already experimenting with AI tools to enhance their workflows. Mood boarding, concept visualization, and idea generation have all been accelerated by AI, helping designers iterate more quickly.

One example is in fragrance development. AI has been used to assist perfumers in identifying new scent combinations by analyzing historical ingredient pairings and suggesting new blends. This doesn’t replace the perfumer’s expertise but speeds up the creative process, allowing them to explore ideas more efficiently.

Another unexpected interest in generative AI comes from its ability to generate unexpected outputs. AI models sometimes « hallucinate » and produce results that seem strange or unconventional. Rather than seeing this as a flaw, some creative teams view it as an opportunity. The idea is that AI-generated outputs can inspire new directions that human designers might not have considered.

Are there any use cases or ways to present products or set up scenes that have never been done before? Can AI be used to present luxury products in innovative new ways?

Luxury brands are also exploring AI for content creation. Some beauty brands are currently testing generative AI tools to create marketing visuals. While human models will not be replaced, AI is being used to generate hyper-realistic images of products in different settings. These tools are evolving rapidly, and their output quality is improving month by month.

We are still in the early stages of AI adoption in luxury, but the potential is immense. From enhancing creativity to optimizing product distribution, improving sustainability, and personalizing customer interactions, AI is set to play a significant role in shaping the future of the industry.

How are luxury brands scaling up after launching their first GenAI solutions?

Right now, almost all luxury brands have tested and piloted generative AI, but no one has scaled it yet. One example is LVMH, which has awarded a contract to a Chinese company called Fancy Tech. Fancy Tech has developed a technology that can automatically generate short and long videos. They simply film the product in high resolution, and from this footage, the system can create thousands of content variations that can be used directly on platforms like Instagram. While this technology is promising, it is still in its early stages, and the cost structure remains unclear, as it is still expensive to operate at scale.

Many of these use cases could apply to other industries, but some aspects are unique to the luxury sector. One key difference is the promise that luxury brands make to their consumers regarding how data will be used. Each luxury brand should define a clear stance on data usage and consumer privacy. This requires a balance between personalization, legal frameworks, and consumer expectations. I would call this « consumer data governance »—a set of rules and commitments that define what can and cannot be done with customer data. Unlike social media platforms that collect and use data extensively, luxury brands should set their own ethical standards, deciding how far they will go in predicting consumer behavior and personalizing experiences.

Another aspect unique to luxury is its omnichannel nature. Compared to other industries, luxury brands operate across multiple touchpoints, from digital platforms to physical boutiques. This means they must be particularly skilled at integrating and reconciling consumer journeys across these different channels. When brands invest in advertising on digital platforms, they often lack visibility into customer behavior. Luxury brands should take ownership of their data, connecting the dots between digital interactions and in-store experiences to measure what works and optimize engagement.

What are AI agents in the luxury sector and what are possible use cases for them?

Looking at the future, AI agents are an exciting area of development. These are intelligent systems capable of performing tasks, analyzing information, and autonomously determining the next logical steps. Some pilots are already underway, such as AI agents that help users plan travel. For example, if someone wants to visit Lisbon, an AI agent can automatically find hotels, book flights, suggest restaurants, and organize the entire trip based on personal preferences.

In luxury, there are several areas where AI agents can be valuable. One obvious application is customer service. Luxury brands employ large teams to handle customer inquiries about product availability, quality, and after-sales service. AI agents can augment this process, making it more efficient. For example, one luxury brand analyzed the most common reasons for customer service calls and found that product availability was the top issue. An AI agent could listen to conversations, access inventory data in real time, and instantly provide store-specific information based on the customer’s location, reducing wait times and improving service.

Another promising area is AI-driven marketing. Running marketing campaigns is still a largely manual process, requiring teams to design audience segments, select content, monitor performance, and adjust strategies. In the future, AI agents could automate this process, optimizing campaigns in real time to maximize return on investment. The dream scenario would be to give an AI agent a target ROI, along with creative assets and customer data, and let it autonomously run and refine the campaign. So far, no company has fully implemented this approach, but it is likely to become a reality. This would free up human teams to focus on strategy, creativity, and analysis rather than operational execution.

What challenges do you anticipate for the luxury sector and how can AI solve them?

The next challenges in luxury remain the same as they were five years ago because the industry has been slow to evolve. One of the biggest battles ahead is solving data governance. Many companies still lack a structured approach to data management, resulting in silos where information is scattered and disconnected. Breaking down these silos and creating a centralized, well-organized data infrastructure will be crucial for the industry’s future.

Another key challenge is AI governance. As AI adoption increases, luxury brands need to establish clear policies on its usage. Surprisingly, few companies have developed official AI ethics guidelines. Given the importance of trust and exclusivity in luxury, brands must define their own AI principles, ensuring that consumers, employees, and investors understand the ethical boundaries of AI applications. Customers will demand this transparency, and corporate boards will also expect brands to have a clear stance on AI ethics.

How do you envision the future of the luxury market?

In terms of industry evolution, luxury remains highly resilient. The biggest brands continue to perform well, even in challenging markets like China. The strongest brands, those with consistent strategies and long-term investments, will continue to dominate. This will likely lead to further market consolidation. Many mid-sized luxury brands, with annual revenues between €500 million and €1.5 billion, are struggling because they have underinvested in key areas like data, distribution, and international expansion. Entering markets like the US and China is extremely difficult for smaller players. These brands would benefit from being acquired by larger luxury groups that have the resources to scale them effectively.

Luxury brands that have been proactive in adopting AI and data-driven strategies will continue to widen the gap with those that lag behind. The leading companies will push further into AI-driven creativity, customer personalization, and automation. Meanwhile, brands that have been slow to embrace AI may struggle to catch up unless they make a radical shift in strategy.

China remains a fascinating market. While Chinese businesses have mastered many aspects of consumer engagement and digital transformation, they have yet to fully succeed in building global luxury brands. One of the biggest challenges for Chinese brands is maintaining long-term brand consistency. Many Chinese companies operate with a high degree of volatility, frequently changing leadership and strategies. However, building a successful luxury brand requires patience, consistency, and long-term vision—qualities that are not always aligned with the fast-paced nature of Chinese business culture.

What recommendations do you have for those who want to learn more about AI in luxury?

For those interested in exploring the intersection of luxury, AI, and business strategy, I recommend looking at both forward-looking industry insights and literature that provides deeper perspectives. One valuable resource is the latest keynote from Nvidia’s CEO, which highlights how AI will reshape industries. He mentioned that CIOs will soon become « HR managers for AI agents, » a thought-provoking statement about the future of AI integration in business.

On the literary side, I believe fiction can offer valuable foresight into technological and societal trends. A book I highly recommend is Machines Like Me by Ian McEwan, published in 2018. McEwan, best known for Atonement, explores the idea of purchasing humanoid robots as easily as buying an iPhone. The novel delves into the complexities of human-AI relationships, providing an intriguing reflection on where technology might be headed.

Thank you for listening. I hope you enjoyed this episode, and see you soon for the next edition of The Bridge!