Journal du Luxe: ""Luxury brands must strike the right balance between exceptional experience and frugal impact" Guillaume des Rotours and Raquel Navalón, KPMG".

Guillaume des Rotours and Raquel Navalón De La Rosa, KPMG: Ecological and sustainable values are playing an increasingly important role in the purchase of luxury goods, as consumers become more aware of the environmental and social impacts of their choices. They say they are prepared to pay more for eco-designed products, but this has yet to be proven at the point of purchase.

According to our latest KPMG "Future of Luxury" survey of industry experts and professionals, ESG issues are now recognized as a priority at the highest levels of corporate decision-making. For the luxury professionals surveyed, while product quality and craftsmanship remain top priorities (41%), sustainable development ranks in the top 3 priorities cited for the sector (37%), just behind product uniqueness (38%) and ahead of social responsibility (36%). To meet consumer demand, luxury brands are implementing sustainability strategies, working to eco-design their products and optimize their production to meet customer demand as closely as possible. Transparency and traceability are also crucial, as consumers want to know the provenance and manufacturing conditions of the products they buy. The "digital product passport", which will take effect in 2027 for the fashion industry, will help to meet this consumer expectation. What's more, consumers are looking for shopping experiences that are consistent with their ecological values, which means that brands have to find the right balance between exceptional experience and frugal impact. From packaging to store design, everything is being rethought in the light of the objectives set out in CSR strategies.

This commitment to sustainability will enable companies to sustain their business over the long term. It is crucial for them to secure their supplies of raw materials, build loyalty among the younger generation and comply with current and future regulations.

Guillaume des Rotours and Raquel Navalón De La Rosa, KPMG: Luxury companies have embraced AI by integrating advanced technologies to improve the customer experience, both online and in-store, and optimize their operations. AI, and in particular generative AI, is cited as a major element of customer engagement in luxury. For 41% of professionals surveyed, this is the most important impact of generative AI, a conviction that is even stronger in Asian countries.

They use AI algorithms to analyze customer data and offer personalized recommendations, enriching both interaction and customer satisfaction. For example, luxury houses such as Gucci and Burberry use chatbots and virtual assistants to respond to customer queries instantly, while gathering valuable data on preferences and purchasing behavior.

Guillaume des Rotours and Raquel Navalón De La Rosa, KPMG: Artificial intelligence (AI) brings significant added value to the luxury sector by optimizing the customer experience and improving brands' internal operations. Thanks to AI, companies in the luxury sector can offer highly personalized customer experiences, tailored to individual preferences and behaviors. For example, product recommendations based on the analysis of shopping and browsing data enable customers to discover items that precisely match their tastes. What's more, augmented and virtual reality technologies, powered by AI, enrich the in-store and online experience by enabling customers to virtually try on products, creating more immersive and engaging interactions.

On the operational front, luxury companies are embracing AI to improve supply chain management and optimize inventory. Predictive analytics help anticipate demand and adjust stock levels, reducing excesses and shortages. Brands such as Louis Vuitton and Chanel use AI-based inventory management systems to streamline their logistics operations and improve efficiency. What's more, AI can automate repetitive processes, freeing up employees to focus on higher value-added tasks. By integrating AI, luxury goods companies can thus offer high-quality customer service while improving their operational efficiency and competitiveness on the market.

Guillaume des Rotours and Raquel Navalón De La Rosa, KPMG: The future of physical retail in the luxury sector looks promising, but will have to adapt to several trends to remain relevant. Luxury boutiques will become immersive experience spaces, offering personalized services, exclusive events and high-end interactions. Digitalization will play a crucial role, with the integration of technologies such as augmented and virtual reality to enrich the in-store experience. As a result, 48% of the professionals consulted in our study believe that "creating seamless omnichannel experiences between on and offline" is the major evolution in the future of luxury boutiques.

What's more, as consumers become increasingly sensitive to sustainability issues, brands will need to integrate sustainable practices and communicate transparently about their corporate social responsibility efforts. Personalized service will remain a key element, with private consultations and tailor-made services to meet customer expectations.

In addition, hybridization of sales channels will be essential to deliver a consistent and seamless customer experience between physical stores and online platforms. Luxury stores will adopt technological innovations such as smart mirrors and interactive screens to make in-store shopping more engaging. Stores will also evolve into experiential spaces with art installations and exclusive events to create unique experiences. Finally, sustainable practices will be integrated not only into products, but also into store design and operation, by optimizing energy consumption and implementing recycling programs.

Guillaume des Rotours and Raquel Navalón De La Rosa, KPMG: The luxury sector is facing major challenges in terms of digital transition, sustainability and customer experience, while remaining true to its core values of exceptional savoir-faire, superior quality and unique experience. The digital and sustainable revolution requires luxury brands to adapt while preserving their cultural and artisanal heritage. One of the main challenges is talent management, where luxury houses need to attract and train profiles with new technological and sustainable expertise. To achieve this, investment in continuous training programs and digital platforms is essential, although this may seem a far cry from the sector's traditional methods.

At the same time, luxury companies need to create environments conducive to creativity and innovation, while respecting their DNA and evolving with the times. The combination of modernity and historical know-how is essential if they are to keep up with the times while retaining their uniqueness. Innovation must be seen as a tool for continuing to create lasting dreams, by integrating sustainable development and circular economy practices, such as rental, repair, and the use of new technologies and designs inspired by biomimicry. These adaptations will enable companies in the luxury sector to explore new territories while meeting the demands of current and future consumers.

Read more at www.journalduluxe.fr

By Anaïs Clavell

Published July 30, 2024