The global luxury goods industry is accelerating its adoption of new technologies, looking to improve operational excellence, reduce their product’s carbon footprint and make customer relations more transparent, according to a new analysis released today by Bain & Company for the Comité Colbert, the French luxury trade association.
While the study finds that luxury houses backed by a larger group are ahead of their independent counterparts, it also reports that companies across the industry are testing technologies, or plan to do so in the next three years.
The report notes that accelerating the adoption of technology in the luxury industry will require three essential levers These include a cultural and organizational revolution within the luxury houses and businesses, a pooling of strengths, and an openness to technological advances from other sectors.
The study is based on data from 75 member companies of the Comité Colbert and interviews with senior company executives, consortia and technological partners, as well as additional research and analysis.
16 TYPES OF TECHNOLOGY
The study focused on 16 types of technology, namely biotechnologies, molecular recycling, 3D printing, artificial intelligence and machine learning for process optimization, artificial intelligence and machine learning for customer engagement, augmented reality and virtual reality, automated optical inspection, scanning, 3D imaging, holography, neural analysis, haptic gloves and screens, radio frequency identification, blockchain, metaverse and NFTs.
The level of adoption remains still low, but barriers are beginning to fall. On average, the companies surveyed for this study had adopted only 2.3 new technologies and none of these technologies in question had been adopted by the majority of the sector. And only radio frequency identification (RFID), 3D printing and 3D imaging had an adoption rate of more than 30 percent.
The perceived limited relevance of certain technologies to specific needs of luxury companies is the reason cited in almost half of the cases of non-adoption. This is followed by a lack of in-house skills to leverage the technology involved.
On average, luxury houses are currently testing, or plan to deploy in the next three years 3.2 additional technologies.
NFTs and metaverse are the technologies that are generating the most interest. Adopted by only 5 percent of companies to date, the study suggests they will be deployed massively in the years to come. 51 percent of luxury houses are already in the testing phase or planning launches before 2025.
CUSTOMER ENGAGEMENT MOST CRITICAL FACTOR
Customer engagement is by far the most important focus for luxury goods companies when it comes to new technologies.
The rise of the digital-savvy Chinese market and then the COVID crisis have accelerated the deployment of technologies that personalise and enrich distant selling experiences and foster omni-channel experiences. Most notably, these include 3D imaging, augmented and virtual reality, artificial intelligence.
Technologies serving operational excellence include RFID, which is is the most adopted. Some 39 percent of companies reported that they are testing Blockchain, which allows end-to-end product traceability, and this is followed by artificial intelligence, with 29 percent of those surveyed being in the test phase. The AI systems being tested are largely aimed at optimizing stock allocation, supply chain fluidity and collection structures.
The adoption of technologies for operational excellence also contributes to accelerating the eco-responsibility efforts of luxury, the report states. Anticipation technologies enabling demand to be forecast and stock to be better managed have an effect on the environmental footprint by avoiding overproduction, overstocking, overconsumption, and waste.
“The adoption of new technologies in the luxury industry is still in its infancy,” said Mathilde Haemmerlé, partner in charge of the Luxury Goods practice at Bain & Company in Paris. “They can play a central role in the profound transformation of the sector – at the service of customers, operational excellence and sustainable development. The fields of application to be explored are still numerous and promising. The pooling of forces across the sector will be a powerful accelerator.”