While the use of technology in luxury is still in its infancy, brands are increasingly looking to experiment as they seek to boost consumer engagement, operational efficiency and improve their carbon footprint. A new Bain & Company study for Comité Colbert reveals that some 50% of luxury maisons are planning to dip their toes into NFTs and the metaverse by 2025.
In the context of its recent study on luxury and technology, Bain & Company surveyed members* of French luxury association Comité Colbert to find out which technologies they are currently using, and which they aim to test in the years to come. The report covered 16 technologies – from RFID and blockchain to haptic gloves and virtual reality. Among these, luxury houses have adopted 2.3 different technologies on average, but no single one has been embraced by the majority. When it comes to barriers to adopting new technologies, a perception of "limited relevance" is cited in almost half of cases (49%), followed by a lack of in-house skills (32%).
Yet, progress is being made, with the beauty, watches and jewelry sectors leading the way. Luxury players are testing – or planning to test in the next three years – an average of 3.2 additional technologies. Efforts thus far have mainly focused on customer engagement, with the goals of seamless service, experience and hyper-personalization meaning virtual and augmented reality and 3D printing are already part of many luxury brands’ arsenal. Some 50% plan to test NFTs and the metaverse by 2025, according to the study, as they look to reach a younger demographic, create universes closer to real life and multiply consumer touchpoints. Digital products are expected to account for 5-10% of the luxury market by 2030, the study highlights.
There is a growing interest around technologies for operational excellence. RFID is the most widely adopted, while 39% of luxury companies are testing blockchain for end-to-end product traceability, and 29% are exploring artificial intelligence to optimize stock allocation and supply chain fluidity.
While reducing carbon footprint comes just eighth in the list of factors motivating companies to adopt technologies, luxury players are experimenting at various stages along the value chain: using biotechnologies to create news materials, for example, or more eco-friendly production process as an alternative to animal-based materials. Adopting technologies for operational excellence can also positively impact environmental fotprint by avoiding overproduction and waste.
To accelerate the adoption of technologies by luxury brands, an internal cultural revolution (workforce, digital platforms, organisation), pooling of resources and opening up to the technological advances of other sectors will be necessary, the report concludes.
*Bain & Company surveyed 75 luxury maisons – members of Comité Colbert – generating a 52% response rate.
