Luxury Retail Still Taking A Pass On AI

Earlier this month, Saks Fifth Avenue President Marc Metrick told CNBC that the luxury retailer didn’t need fancy artificial intelligence (AI) to help it succeed in the industry, despite the tectonic shift thrusting every other retailer into reliance on such technologies.

“When you think about the online versus the offline experience, we don’t need AI in our stores. We have ‘I,’” said Metrick. “We have living, breathing, 4,500 style advisors in our stores. The focus for Saks in the luxury space is really [a] kind of convergence between tech and this living, breathing, selling associate.”

This is not to say that Saks wants to completely leave technology out of its strategy, but it sure doesn’t seem to be embracing the future with open arms either. And it’s not the only luxury retailer to take a reluctant stance on the subject.

Neiman Marcus, for instance, has built its social media strategy on the backs of sales associates, who are asked to use their personal Instagram and Snapchat accounts to generate sales for the company. They share content such as fashion advice — how to dress up jeans, et cetera — as well as updates on new products in the store.

The brand seems to understand that consumers like learning about new fashion brands and styles via social media, and also that a personal touch is key to consumer/brand engagement. However, requiring employees to advertise on their own accounts seems a little — dare we say it? — cheap.

Luxury Daily predicts the high-end fashion market will be the last sector to replace humans with automation and AI, no matter how comfortable consumers become with getting automated customer service (as long as it’s quality), and no matter how much their less-luxurious counterparts may come to rely on such tech-based personalized services.

The thing is, AI technology allows retail to be more personal — and that’s exactly what luxury retailers are trying to maintain by avoiding technology. AI lets brands offer promotions based on customer context, and, of course, smart fitting rooms make it easier for shoppers to find the right outfit, channeling them into the checkout line rather than sending them away disappointed.

Some luxury retailers are starting to offer such experiences. Even Saks and Neiman Marcus have made their concessions. Neiman Marcus has embraced smart mirrors at its beauty counters, and Saks has welcomed augmented reality (AR) in a concept hair salon called The Salon Project to be housed in 10 U.S. Saks locations over the next two years.

However, it seems that the Salon Project AR essentially does what Sephora and, probably, Neiman Marcus already do: lets customers try on makeup and other products that they can then buy instantly from the retailer. If they want to see how they’d look with a bob, pixie cut or mohawk, they’re just going to have to try it IRL.

Saks is definitely doing something right: In September, its parent company, Hudson’s Bay Co., posted a 1.2 percent gain in second-quarter sales following a long, long string of quarterly declines. The company attributed the improvements to ongoing efforts to improve the cross-channel experience.

However, selling more through online channels is not the same as embracing technology within brick-and-mortar stores. As Saks is seeing enough success to open new stores, it may do well to open its corporate mind to new tech as well.



The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers’ growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.