What: Luxury brands must embrace AI to enhance and scale their white-glove service, as 56% of clients report dissatisfaction with their luxury shopping experience despite high expectations shaped by other sectors.

Why it is important: As luxury retail faces slowing growth and increased competition, AI's ability to enhance client advisor capabilities and improve online self-discovery presents a critical opportunity to reignite growth through scaled personalisation.

The luxury retail sector stands at a critical juncture where artificial intelligence can transform how brands deliver exceptional service at scale. While AI may seem contrary to luxury's emotional and personal nature, changing client expectations and increasing fragmentation make it essential for future growth. BCG's 2025 Luxury CX and AI Global Survey reveals that 56% of clients are dissatisfied with their luxury shopping experience, while 38% report shopping more online than they did three to five years ago. AI and GenAI can enhance the human connection through thoughtful, behind-the-scenes support, enabling "superhuman" client advisors and improved online self-discovery experiences. These technologies allow advisors to engage with more clients while maintaining personalised service, providing real-time access to client insights and enabling "wow moments" at scale. The implementation challenge lies in balancing technology with brand experience, as 62% of survey participants express concerns about losing the human touch. However, the commercial risks of not deploying AI far outweigh these concerns.

IADS Notes: Recent market evidence demonstrates luxury retail's accelerating AI transformation. In July 2024, LVMH's AI Factory began developing modular algorithms for e-commerce recommendations and client advisor enhancements, while maintaining ethical AI practices. By September, Saks implemented AI-powered solutions for enhanced personalisation, demonstrating how traditional luxury retailers can bridge digital and physical experiences. Selfridges' innovative approach, launched in February, shows how AI can support deeper personalisation for high-net-worth individuals while maintaining the human touch. The urgency for transformation is clear: March data reveals that 71% of consumers expect personalised interactions, while only 10% of retailers have successfully scaled their AI applications. These developments highlight how luxury brands can leverage technology to enhance rather than replace the essential human element of luxury service.

Why the luxury experience needs an AI moment