1、WINNING WITH CUSTOMERSRETAIL REIMAGINED CREATING LUXURY CUSTOMER EXPERIENCES USING DATA-DRIVEN INSIGHTSA WORLD RETAIL CONGRESS PUBLICATIONKnowledge Partner2|Retail Reimagined Knowledge PartnerINTRODUCTIONIn luxury retail,customer experience has always been paramount.But its likely no longer enough t

2、o serve your clients a flute of champagne as they search for this seasons pice de rsistance.The bar has been raised.In the past year,digitalization has surged within the luxury retail sector,propelling brands toward new horizons beyond what weve seen before.Were entering an era defined by immersive

3、digital experiences.From personalized virtual styling to AI-augmented chatbots and beyond,the possibilities that generative AI(GenAI)poses are futuristic.However,many luxury retailersand consumershave yet to embrace this transformative shift.There are ethical,social,and data security considerations

4、at play,demanding the attention of leading maisons.So,is GenAI here to stay,or is it just a passing trend?How can retailers embrace this technology while managing the associated risk?How are leading fashion houses leveraging GenAI to deliver winning customer experiences?How can data analytics and Ge

5、nAI converge to help retailers deliver these experiences successfully and responsibly?Read on to learn more.3|Retail Reimagined Knowledge PartnerThis years World Retail Congress is focused on how retailers can steer a path through the multiple challenges,existential pressures and structural changes

6、to become a High Performance Retailer.To succeed against this background requires new strategies and leadership approaches.But what remains consistently true for all retailers,is that success or failure comes down to how they serve their customers.It is the customer that is absolutely critical which

7、 is why one of our key pillars under the theme of High Performance Retail is Winning the Customer.We are delighted to be working again with Deloitte as one of our Knowledge Partners and they have equally recognised the importance of winning the customer with this special report.Because what is also

8、true is that whilst the customer remains the constant focus for retailers yesterday,today and tomorrow,the fact is that we have all changed the way we live our lives and want to interact with retailers and brands.Consumers have more choice than ever before and an increasing number of ways of researc

9、hing,purchasing and exchanging feedback on brands.Digital technologies and social media in particular are rapidly changing the dynamics of shopping and retailing overall.As a result,the consumer is now completely in charge and retailers have to accept this new reality and find ways of embracing tech

10、nologies and channels to build new experiences and relationships with consumers.Deloittes report Retail Reimagined:Creating luxury customer experiences using data-driven insights looks at this critical intersection of the consumer and new technologies,particularly Generative AI and the luxury sector

11、.Luxury has for some time been at the leading edge in adopting new technologies to create new experiences and broaden the appeal to the next generation of loyal customers.As the report shows,technology may not seem the obvious way to deliver great,luxury experiences,but with GenAI this is now increa

12、singly possible.And the lessons are clear for all retail sectors.Which is why we hope you find this report useful in highlighting how AI can create real,human experiences that will allow brands to serve and win customers.Letter from the chairmanIAN.MCGARRIGLEWORLDRETAILCONGRESS.COMIAN MCGARRIGLE CHA

13、IRMAN WORLD RETAIL CONGRESS4|Retail Reimagined Knowledge PartnerKey trends:The time to differentiate is now 05Retailers are testing the GenAI waters 08Majid Al Futtaim:Redefining luxury in Dubai and beyond 11GenAI and marketing:Delivering more tailored,consistent messaging 14What is Generative AI an

14、d can it replace humans?07Batas forward-thinking approach to data analytics and AI 09AI-driven hyper-personalisation:The new luxury experience 13Building trust:Overcoming scepticism of AI 15Driving individual engagement at scale with trustworthy AI 16Fueling GenAI with clean,structured data 17Stayin

15、g out of the deep end:Managing the potential risks of GenAI 18Conclusion 20Connect with us 21Endnotes 225|Retail Reimagined Knowledge PartnerKey trends:The time to differentiate is nowIn luxury retail,a few key forces are converging to make this a critical moment for delivering differentiated experi

16、ences:Firstly,aspirational luxury customers are clawing back their spending while high-net-worth spenders remain loyal and seek preferential treatment through exclusive products,events,and private shopping experiences1.At its core,luxury retail is evolving into an experiential and community hub rath

17、er than merely a place to purchase items.Secondly,luxury retail faces a period of subdued growth and increased challenges,signaling a departure from the soaring growth rates of previous years.2 Changing consumer preferences also play a role.Todays luxury customers seek more than just exclusive items

18、;they crave meaningful experiences.They expect brands to understand their individual preferences and provide tailored interactions across all touches.These discerning shoppers seek seamless shopping experiences that imbue a sense of exclusivity and importance across physical and digital realms.Consu

19、merSignals data from Deloitte LLP shows3 that a large swath of respondents from a wide range of ages expect to be able to use their smartphones to enhance the retail shopping experience,particularly Baby Boomers and Gen Xers.A smaller yet still sizable portion of respondents expect to be able to use

20、 their smartphones to get real-time GenAI assistance.1Lauren Indvik,“What 2024 Has in Store for Luxury”,The Financial Times,28 December 20232Adrienne Klasa,“3,000 bracelets vs 400 sneakers:the diverging fortunes of the luxury market”,The Financial Times,24 January 20243Deloitte,ConsumerSignals globa

21、l data,collected in December 2023%respondents selecting in top 3Interest in future digital experiencesGen ZMillennialsGeneration XBaby BoomersGen ZMillennialsGeneration XBaby BoomersUltra-fast StreamingInstantly stream(or download)ultra-high-definition video for seamless entertainment.Multiplayer ga

22、ming with ultra-high graphics and no lag,ensuring smooth and immersive experiencesExperience stores in new ways(instant location of items/product information/availability/deals/mobile check-out)Always-on digital health monitoring/metrics,enabling health providers to monitor my health metrics and pro

23、vide personalized insightsExperience smarter urban environment with tech that makes it easier to park,navigate public transportation,find information about locations/establishmentsDigital AI assistants provide instant help with a wide variety of tasks for enhanced convenience and productivity.Achiev

24、e always-on control of all my connected devices,including smart-home devices and vehiclesDigitally engage with sports teams,performers,and fans in connected stadiums or venuesInteract with others in highly immersive 3D spaces,using virtual reality or augmented reality headsetsMultiplayer GamingEnhan

25、ced Retail ShoppingHealth CareExperiencing Smarter CitiesReal-time Gen AI AssistanceRemote ControlEnhanced Live EventsInteracting in 3D Spaces(Metaverse)69%67%62%50%37%42%46%52%29%28%30%34%42%27%29%27%27%27%24%16%15%12%9%27%28%31%33%26%26%31%42%57%40%30%18%8%6|Retail Reimagined Knowledge PartnerKey

26、trends:The time to differentiate is nowWith more consumers seeking hyperpersonalized,omnichannel shopping experiences,luxury retailers should enhance their digital presence and deliver seamless service across all channels,moving away from pen-and-paper methods to service the top 1%of their client ba

27、se.The marriage of GenAI tech with the wealth of available customer and operational data is helping retailers tailor every aspect of the interaction to the individual customers preferences,behaviors,and needs.Luxury retailers may be struggling with where and how to invest in GenAI technology,but its

28、 on everyones agenda.To navigate these choppy waters,luxury retailers should focus on investing in high-end experiences.They should also cultivate loyalty among top-spenders and remain agile in response to changing consumer habits and cost pressures.As business conditions get more challenging and th

29、e top 1%of buyers demand more exclusive experiences,brands will need to level up to deliver that special magic.And some retailers are leveraging GenAI to make that magic happen.Source:ConsumerSignals N=20,000.Global data collected in December 2023.Countries include Australia,Brazil,Canada,China,Fran

30、ce,Germany,India,Italy,Japan,Mexico,Netherlands,Poland,Portugal,Republic of Korea,Saudi Arabia,South Africa,Spain,UAE,United Kingdom,and United StatesSurvey respondents prompted to imagine a future where their smartphones are always connected at extremely fast speeds,everywhere.Ignoring cost conside

31、rations,respondents selected the top three experiences or capabilities they would most prefer to have on their smartphone.7|Retail Reimagined Knowledge PartnerWhat is Generative AI and can it replace humans?GenAI is a type of artificial intelligence that creates new and original content based on var

32、ious inputs.Traditional AI operates in a deterministic manner by learning“rules”based on data to perform specific tasks,whereas GenAI can generate novel content using training data.GenAI can create new and original content by learning from existing examples,often with impressive realism and creativi

33、ty.However,it doesnt possess the same cognitive abilities or understanding as humans.While it can mimic human-like outputs,GenAI lacks intuition,consciousness and,contextual understanding.GenAI relies entirely on patterns and data it has been trained on.Therefore,it lacks true comprehension or creat

34、ivity in a human sense.In other words:our robot overlords havent taken over just yet.However,while GenAI cant fully replicate human thought processes,it can augment them.And when it comes to customer experience,thats good news.Source:Deloitte:Safeguarding Generative Artificial Intelligence(AI)with c

35、ybersecurity measuresLarge LanguageModels(LLMs)GANs,transformers,and VAEs DifusionnetworksNoveltechniques TextEssays,speech,creating questions asking PhotosNew enhancements,such as photo edits VideoNew videos,such as reelsAudioMusic,clips,audio,etc.CodeSelf-learning models,prompt engineering,etc.8|R

36、etail Reimagined Knowledge PartnerRetailers are testing the GenAI watersWith the omnichannel revolution,digital IDs,and the metaverse incursion,luxury has been at the forefront of industries embracing technology and digitization in recent years.While the gleam of the metaverse has slowly lost its lu

37、stre,GenAI remains a shiny prospect.Nvidia research shows that 98%of respondents plan to invest in GenAI infrastructure in the next 18 months4.However,theyre exercising caution,with 77%indicating an investment of less than$5 million.This cautious approach is consistent among retailers with annual re

38、venues of over$500 million78%reported a similar investment range.How do retailers plan to use GenAI,exactly?Deloitte research shows that a large portion of respondents plan to use GenAI for content creation,brand campaigns and marketing,and to augment the creative process.Despite the potential of AI

39、,investments in GenAI have been cautious across the board.Why?The uncertainty surrounding the long-term effect and ROI of GenAI initiatives could be driving this cautious approach.Nonetheless,some organizations are forging ahead.Amongst these organizations are Bata,global luxury footwear and fashion

40、 accessory manufacturer and retailer,and Majid Al Futtaim Lifestyle,the retail partner of choice for some of the most iconic brands.4Nvidia,“State of AI in Retail and CPG:2024 Trends”,accessed 29 February 20245Generative AI Software Market Forecast to Expand Near 10 Times by 2028 to$36 Billion,S&P G

41、lobal Market Intelligence Says,S&P Global,June 2023Projections indicate that revenue around the globe from GenAI technology will soar to US$36 billion by 2028,reflecting a compound annual growth rate(CAGR)of 58%from 2023 to 2028.5I am planning to use Generative Al in the next 12 months for.Multiple

42、selections possible.52%Content creation for publications/reportsBrand campaigns/marketingAssistance in my/our creative processVideo/3DSource:Deloitte research25%20%9%9|Retail Reimagined Knowledge PartnerBatas forward-thinking approach to data analytics and AISince its inception in 1894,Bata has had

43、a long tradition of innovation.Founder Thomas Bata was a visionary for his time.With a focus on mass production,his innovative manufacturing methods made footwear more accessible to the public.This forward-thinking approach extended beyond business;Thomas prioritised social welfare by implementing e

44、mployee benefits and community development programs,setting a precedent for corporate social responsibility.Today,Batas history of innovation continues,with Luca Demarchi,Group CIO,leading the charge.From stock optimization to AI-augmented chatbots and beyond,GenAI and data analytics are driving thi

45、s innovation.How Bata is leveraging big data,AI and GenAI to improve CXUse CaseDescription Merchandising-replenishment initiativeBata utilizes AI,particularly Blue Yonders GenAI capabilities,to forecast product demand for individual stores based on historical trends and real-time customer data,minim

46、izing transportation waste and improving the customer experience.AI-augmented chatbotBata has implemented an AI chatbot to assist customers with product inquiries,sizing questions,and order tracking,enhancing the overall customer experience.“Voice of the store”Bata rolled out a solution that convert

47、s messages from store managers into aggregated data dashboards,providing executives with greater visibility into store operations and eliminating the need for direct contact with area or district managers.Customer relationship management(CRM)platform utilisationBata leverages GenAI within its CRM pl

48、atform to segment customers and deliver tailored marketing messages based on customer preferences and behavior,resulting in a significant uptick in conversion rates and incremental growth.Back-office task managementBata is also exploring GenAI for back-office task management and process automation,w

49、ith plans for future in-store applications.10|Retail Reimagined Knowledge PartnerBatas forward-thinking approach to data analytics and AIFor instance,Bata is utilizing AI to restructure its merchandising-replenishment processes to forecast the appropriate products for customers preferred stores.By a

50、ligning inventory placement with real-time customer trends,Bata minimises transportation waste and improves the customer experience.This initiative involves leveraging Blue Yonder,an AI-driven supply chain platform with GenAI capabilities,to predict the placement of products based on historical tren

51、ds and other factors such as weather.Additionally,Bata is deploying an AI-augmented chatbot to aid customers with product inquiries,sizing questions,and order tracking,further enhancing the customer experience.Bata is also implementing a solution called“voice of the store,”which transforms messages

52、from store managers into aggregated data dashboards.Store personnel simply record their messages,which are then sent to the platform.This eliminates the need to contact area or district managers directly and provides executives with greater visibility into store operations.Additionally,Bata leverage

53、s GenAI within their CRM platform to better segment its customers and deliver more tailored marketing messages based on customer preferences and behavior.Bata observed a 50%uptick in conversion rates following the implementation of this new segmentation approach,indicating substantial incremental gr

54、owth.Bata is also exploring the benefits of GenAI for back-office task management and process automation,with plans for future store applications.While he recognizes that there has been a lot of hype surrounding AI implementation,Demarchi believes the real benefits will come incrementally.He anticip

55、ates a shift towards using GenAI to solve problems rather than solely relying on human delegation.However,he acknowledges the need for change management to effectively integrate AI into daily workflows.Tom Baa,our visionary founder,was ahead of his time.He advocated not just for business expansion b

56、ut also for societal change.Weve inherited his forward-thinking perspective.Today,Batas mission transcends mere profitability;its about enhancing lives.This ethos helps us connect more deeply with our customers and go to market faster.To maintain our visionary status,embracing new technologies is cr

57、ucial.Luca Demarchi,Group CIO,Bata11|Retail Reimagined Knowledge PartnerMajid Al Futtaim:Redefining luxury in Dubai and beyondDubai is world renowned for its extravagance,and Majid Al Futtaims Lifestyle business is a true embodiment of this luxury.But the companys footprint extends far beyond the Un

58、ited Arab Emirates alone.As the retail partner of choice for some of the most iconic brands,Majid Al Futtaim holds exclusive licensing rights for global brands lululemon,LEGO,Abercrombie&Fitch,Hollister,AllSaints,Psycho Bunny,Eleventy,Shiseido,Crate&Barrel,CB2,Poltrona Frau,Ceccotti,Alessi,and THAT,

59、a Majid Al Futtaim multi-brand concept store and app.Both in-store and online,Majid Al Futtaim utilizes data analytics,machine learning,and GenAI to elevate its customer experience and drive greater revenue and loyalty across its brands.Advanced analytics and product forecastingTo ensure that custom

60、ers consistently find the products they need in-store and online,Majid Al Futtaim leverages machine learning for improved product forecasting.If an item is discontinued,the company can identify and procure the best alternative option.This algorithm is tailored to each stores specifications,enabling

61、a deeper understanding of customer preferences.For instance,if customers at a lululemon store in Dubai prefer neutral tones,the data will pick this up as a trend and the companys buyers will adjust their purchases accordingly.This initiative has helped Majid Al Futtaim reduce inventory by 25%and boo

62、st revenue by 12%.Targeted content and personalized product recommendationsMajid Al Futtaim continuously analyzes consumer preferences,purchasing behaviors,and trends to refine its offerings.The company also uses GenAI to create targeted content,including messaging and imagery,for personalized commu

63、nications that tap into customers unique preferences.Additionally,data and machine learning capabilities allow the company to offer personalized online product recommendations based on factors such as product adjacency,browsing behavior,and past purchases.12|Retail Reimagined Knowledge PartnerMajid

64、Al Futtaim:Redefining luxury in Dubai and beyondDelivering diverse,immersive shopping experiencesFurthermore,Majid Al Futtaim taps into a vast amount of data to understand customer expectations and meet evolving needs.For instance,the decision to introduce its THAT Concept Store in Dubai,the regions

65、 first complete lifestyle concept store,stemmed from a thorough analysis of customer preferences and global trends.The THAT Concept Store features:A beauty hub,grooming station,gift-wrapping corner,tailoring,personal shopping service,and a pop-up space highlighting fashion and art collaborations Cha

66、nging rooms outfitted with special“magic mirrors”that allow customers to request size and color options with a simple touch An in-store personalization tool(launching soon)that will enable frontline staff to scan products customers are browsing and recommend complementary items,further enhancing the

67、 shopping experience and driving upsellsCatering to the top 2%of its clienteleMajid Al Futtaim has taken a targeted approach to identifying and focusing on the top 2%of its high-value customers for its THAT Concept Store,who collectively contribute to 27%of the companys total revenue.Through its adv

68、anced customer dashboard,the company devises personalized gifting strategies and targeted marketing campaigns based on the purchasing patterns and behavior of its top spenders.Enhancing customer experience with augmented realityMoreover,the companys Shiseido,Crate and Barrel,and CB2 ecommerce platfo

69、rms use augmented reality(AR)tools to enhance the shopping experience.For Shiseido,this includes a skin analyzer and makeup try-on tool that aids customers in selecting suitable colors and various skin treatments and lotions.Additionally,Majid Al Futtaims home stores feature AR tools that allow cust

70、omers to visualize furniture in their homes,providing a 3D preview before making a purchase.These tools have contributed to roughly 3%of the companys online revenue.Our customer strategy is built on a commitment to relevance.Through our immersive experiences,we strive not only to meet but also to an

71、ticipate customer expectations.Our aim is to leave lasting impressions and foster meaningful engagement.Fahed Ghanim,Group CIO,Majid Al Futtaim Lifestyle13|Retail Reimagined Knowledge PartnerAI-driven hyperpersonalization:The new luxury experience Both Bata and Majid Al Futtaim Lifestyle are utilizi

72、ng GenAI and data analytics to improve customer experience,and theyre in good company.Here are a few additional examples of how other luxury brands are using GenAI to enhance online and in-store experiences and create compelling marketing messages,as outlined in Deloittes Global Powers of Luxury Goo

73、ds 2023 report6:The Prada Group:In March 2023,The Prada Group partnered with Adobe to enhance online and in-store customer experience through real-time personalization powered by data analytics.Through Adobes platforms,The Prada Group delivers relevant content to customers.With customer consent,sale

74、s assistants deliver highly personalized service by gaining insight into preferences and store visits.Moncler Genius:During London Fashion Week in February 2023,Moncler Genius7 launched its first entirely GenAI-created commercial campaign in collaboration with Maison Meta and creative agency WeSayHi

75、.This campaign featured collabs with various designers and brands,including Pharrell Williams,Adidas Originals,Palm Angels,and others.Ralph Lauren:This fashion mogul is testing AI across several business functions,from inventory optimization to forecasting and customer engagement8.GenAI will be test

76、ed for graphics,content development,and computer programming.Valentino:The launch campaign for Maison Valentino Essentials,a collection with a new take on traditional mens clothing,was also created using GenAI9.GenAI helped develop an engaging campaign that reflected the collections core message and

77、 Valentinos contemporary approach.Zegna:This Italian luxury fashion house recently launched Zegna X,a digital ecosystem and customization tool that uses Microsoft Azure services to bridge the divide between physical stores and digital channels10.This back-end data and tool uses Microsoft technology

78、and Zegnas configurators to allow clients to customize any look in the Zegna collection online using their personal device.These examples demonstrate how luxury leaders are leveraging AI,GenAI,and data analytics to deliver highly personalized customer experiences across touchpoints,from virtual advi

79、sors and personalized recommendations to interactive customization platforms and beyond.6Deloitte,“Global Powers of Luxury Goods 2023”,accessed 29 February 20247Ibid8Ibid9Ibid 10Ibid14|Retail Reimagined Knowledge PartnerGenAI and marketing:Delivering more tailored,consistent messagingWhile some reta

80、ilers are cautiously dipping their toes into the AI waters,others are plunging right in.No matter which camp you belong to,many retailers agree on one thing:GenAI has the potential for marketing and content creation.According to Deloitte research,52%of retailers plan to use GenAI in the next 12 mont

81、hs for content creation for publications and reports,while 25%plan to use it for brand campaigns and marketing.Luxury brand Gucci is already integrating AI into its global client service network,Gucci 9,through a system called Einstein.12 This AI generates concise responses in the distinctive“Guccif

82、ied”brand tone to aid advisors in assisting customers,whether they seek to refurbish a vintage bag or book a table at a Michelin-starred Gucci Osteria.Across in-store visits,phone calls,or WhatsApp conversations,Gucci ensures that each interaction is positive and enhanced by comprehensive customer i

83、nsights.Lets use exclusive events,a common strategy in luxury,to further explore how GenAI can help create a more consistent brand voice.After hitting a certain threshold of spending,a loyal luxury customer may be invited to a“first look at collection”event.At this exclusive event,they could enjoy l

84、unch in the caf,browse products,and hear live music from their favorite artist.Data analytics and GenAI may enhance the effectiveness of these exclusive events and customer interactions.Data analytics could help retailers identify their top spenders faster,while GenAI could tailor these exclusive ev

85、ents to their unique preferences.The retailer could use GenAI tools to communicate its brands tone of voice across all event communications;they could even utilize GenAIs image-generation capabilities to create resonant advertising imagery to promote the event.11Ermenegildo Zegna Group:“Zegna X Deve

86、loped on Microsoft”12Salesforce,“AI amplifies the Gucci voice across client service centers”,accessed on 15 March 2024In the luxury space,controlling the brand narrative is key,as relinquishing control to a third party could harm brand identity.By using GenAI tools that augment content development,l

87、uxury retailers can standardize tone of voice across all communications,although brand teams may need to relinquish some control.”Gillian Simpson,Retail Partner,Deloitte Digital,London15|Retail Reimagined Knowledge PartnerBuilding trust:Overcoming scepticism of AIBased on what we are hearing and see

88、ing,now is the time for luxury retailers to deliver hyper-personalized,immersive experiences.However,first,we need to address the elephant in the room:trust.And trust and AI arent exactly synonymous.In fact,eight in 10 consumers from the 2023 Deloitte Holiday Survey had little to no trust in retaile

89、rs ability to use artificial intelligence responsibly in their operations,and retailers also see this as a challenge13.Consumers harbor mistrust towards companies utilizing AI,presumably due to concerns regarding data privacy,transparency,and the potential for algorithmic bias.Some consumers fear th

90、at their personal information may be exploited or misused without their consent.Additionally,the opaque nature of AI decision-making processes can erode trust,leaving consumers uncertain about how their data is being used to shape their interactions with the company.According to Deloitte TrustID Res

91、earch,trust in a brand drops 144%for customers who know a brand is using AI.14 This seems like a rather bleak statistic.But theres more to the story:keeping trust at the centre of AI design can create greater adoption from employees and customers and quadruple market value.15 Trust drives greater lo

92、yalty,yet consumers mistrust AI.Given this dilemma,how can luxury retailers leverage data and GenAI to create immersive customer experiences that put trust at the centre?By following a few key principles.13Deloitte Insights,“2023 Deloitte Holiday Survey”,accessed 29 February 202414Deloitte,“TrustID

93、Research,”accessed 29 February 2024.Deloitte has developed TrustID,an open-source data-driven tool that helps companies not only measure the four critical factors that drive trusthumanity,transparency,capability and reliabilitybut accurately predict how human emotions will impact behaviors.15Ibid16I

94、bidTrusted companies financially outperform their peers by up to four times,and customers who trust a brand are 88%more likely to buy again.1616|Retail Reimagined Knowledge PartnerDriving individual engagement at scale with trustworthy AISo,how can luxury leaders put trust at the cornerstone of thei

95、r profitability playbook?Driving individual engagement at scale with trustworthy AI is key.To cultivate trust,luxury retailers should base the design,deployment,and communication of AI tools on four fundamental pillars,as outlined in Deloittes 2024 Retail Industry Outlook report:1.Human connection:R

96、etailers should prioritize creating genuine human-like interactions when developing AI tools for customer engagement.This involves equipping AI with a comprehensive set of guidelines to adapt to various customer contexts.For instance,if a customer mentions a personal loss,AI responses should express

97、 sympathy and condolences.2.Transparency:Effective communication about AI to both customers and employees requires clear,tangible explanations of its purpose and functionality.Retailers should reveal the specific use cases of AI tools,such as chatbots,and articulate why they are implemented.3.Capabi

98、lity:To foster adoption and confidence in AI tools among employees,retailers should showcase their benefits and functionalities transparently.This could involve providing opportunities for hands-on experience through a“sandbox”environment,emphasizing the positive impact of the tools on individual em

99、ployees and reassuring them that AI complements rather than undermines their work.4.Reliability:When integrating AI tools into customer interactions,retailers should set clear expectations and acknowledge any limitations.For instance,if AI bots cannot address certain queries,retailers should redirec

100、t customers to alternative support channels.Consistently meeting these expectations will enhance perceptions of reliability and bolster trust in AI-driven experiences.Trust is hard won and easily lost.To strengthen trust with clientele,its crucial to consistently fulfil promises.Additionally,be tran

101、sparent,and ethical in how data and AI are leveraged to shape customers experiences with the brand.17Deloitte,“2024 retail industry outlook”,accessed 29 February 202417|Retail Reimagined Knowledge PartnerFueling GenAI with clean,structured dataFrom luxury retail and beyond,the allure of GenAI is gro

102、wing.However,its effectiveness hinges upon the quality of the data that feeds it.Yet,across many organizations,unstructured data looms large.This poses a few challenges:Firstly,unstructured data is notoriously difficult to access and pull insights from.It often contains sensitive personally identifi

103、able information(PII),which raises concerns surrounding consumer trust and data security.Compounded by its ever-increasing volumes,unstructured data necessitates costly storage solutions and complicated disposal processes.To fulfill GenAIs promises,luxury leaders should separate the proverbial wheat

104、 from the chaff,discerning valuable data from the redundant,obsolete,and trivial.Lets consider a relatable example:Imagine a high-end fashion brand that specializes in luxury handbags.Every day,thousands of users post pictures and stories featuring their products on Instagram.These posts contain a w

105、ealth of unstructured data,including images,captions,likes,comments,and tags.Now,what does the company do with all that data?Before they can use this data,they need to analyze it.By developing a strategy to source,comprehend,cleanse,classify,and structure their data,the retailer could gain insights

106、into different aspects of their products popularity.For example,they could see which styles are trending.They could also see how customers are styling their handbags and which influencers or celebrities are endorsing their brand.They could even tap into what emotions or sentiments are associated wit

107、h their products.They could use this structured data to create marketing messages that resonate with their customer base on a deeper level.To take the personalization a step further,the company could cross reference their social data with purchase data to develop AI-powered virtual styling assistant

108、s.These assistants could provide tailored fashion advice by suggesting outfits and accessories that match the customers body type,occasion,styling preferences,and favorite celebrity influencers.Additionally,while many luxury retailers are investing in sustainability,accessing comprehensive product d

109、ata is a challengeparticularly data around the true origins of their products.By utilizing unstructured supply-chain data,retailers can better communicate their commitment to sustainability and supply-chain transparency.Furthermore,AI can help retailers minimize their environmental impact through st

110、reamlined production,improved operational efficiency,and reduced overproduction.If your data lake is not clear,not clean,you cant do anything with your data.The quality of your data inputs will ultimately determine the success of your GenAI efforts,and the impact of your immersive customer experienc

111、e.Karine Szegedi,Consumer Industry Lead,Audit Partner,Swiss Fashion&Luxury Head,Deloitte Switzerland18|Retail Reimagined Knowledge PartnerStaying out of the deep end:Managing the potential risks of GenAITo prepare the enterprise for a bold and successful future with GenAI,organizations need to bette

112、r understand the nature and scale of the associated risks,as well as the governance tactics that can help mitigate them.From a cybersecurity perspective,GenAI models can compromise customer privacy by inadvertently revealing sensitive information from training data.Moreover,accepting GenAI outputs w

113、ithout proper scrutiny can expose backend systems to various security threats,such as remote code execution or data breaches.In addition,unauthorized access to proprietary GenAI models can result in economic losses and compromised competitive advantage.However,revealing sensitive information from tr

114、aining data requires that a GenAI model was actually trained on sensitive data from a given company.This risk only occurs when retailers explicitly train or finetune their own models,which is not a very likely first step.While large language models could potentially output malicious code,a more tang

115、ible risk is GenAI producing the wrong information or content that doesnt align with the companys values.Before using GenAI,luxury leaders should be aware of ethical concerns,discrimination,algorithmic bias,and threats to intellectual property.For example,GenAI can generate content that seems real b

116、ut is entirely fabricated by the AI system.These“hallucinations”can range from fictional stories to surreal images that appear to be generated by a human.Additionally,GenAIs susceptibility to bias and discrimination arises from its training data.By mirroring societal prejudices,GenAI algorithms can

117、perpetuate unfair outcomes or inaccurate representations of historically marginalized groups.Without meticulous data curation and algorithmic scrutiny,GenAI could exacerbate existing biases and reinforce discrimination.To manage the risks associated with GenAI,luxury leaders should consider conducti

118、ng a risk assessment.This assessment should help all key stakeholders understand the risks that span GenAI models,applications,infrastructure,personnel,data integrity,and training and testing methodologies.In the realm of AI-driven commerce,innovation must be guided by ethical oversight and robust r

119、egulation.From protecting intellectual property to addressing algorithmic bias,transparent governance is essential.As legislators worldwide create regulations,businesses must prioritize ethical standards to foster trust and sustainable growth.Ida Palombella,Partner,Deloitte Legal,Global Fashion&Luxu

120、ry Co-Leader19|Retail Reimagined Knowledge PartnerStaying out of the deep end:Managing the potential risks of GenAIAs outlined in Deloittes Safeguarding Generative Artificial Intelligence(AI)With Cybersecurity Measures report,a solid GenAI risk-management framework is comprised of four key layers18:

121、GenAIs ability to drive transformation depends on finding a careful balance between mitigating risks and establishing comprehensive global controls.To grow with resilience and confidence while using GenAI,luxury retailers should address cybersecurity,data security,and customer privacy risks,to name

122、a few.Additionally,effective governance of GenAI requires a multidisciplinary approach and collaboration between teams and stakeholders.It should be dynamic in nature to keep up with changing societal norms and regulations.It should also be an ongoing process that evolves with advancements in GenAI

123、technology.1.Business values layer:Evaluate potential risks and benefits from AI implementation.Align projects with strategic objectives,financial robustness,reputation management,and competitive edge.2.Governance layer:Ensure the responsible,secure,and ethical use of GenAI by managing and overseein

124、g its application across people,processes,and technologies.3.Five pillars layer:Develop a comprehensive roadmap for navigating the complete GenAI lifecycle and proactively identifying and mitigating risks at each stage.This step encompasses adoption,maintenance,scaling,customization,and decommission

125、ing.4.Risk control layer:Ensure that AI technologies harmonize with data security,privacy imperatives,and regulatory compliance,extending from established principles like the CIA triad to encompass the full spectrum of privacy considerations and adherence to regulations.Deloittes Trustworthy AI Fram

126、eworkSource:Deloitte Development,“Trustworthy AI Framework”19 18Deloitte,“Safeguarding Generative Artificial Intelligence(AI)with cybersecurity measures”,accessed 29 February 202419Deloitte Development,“Trustworthy AI Framework”20|Retail Reimagined Knowledge PartnerConclusionThe landscape of luxury

127、retail is undergoing a seismic shift.GenAI is reshaping the customer experience,from virtual shopping lounges to personalized recommendations and beyond.But the path forward is not without its challenges.At the heart of this transformation lies the quest for trust,a fragile commodity.However,amidst

128、these perils lies the potential of unparalleled innovation and hyperpersonalized experiences that connect more deeply.To realize GenAIs potential,organizations should tread carefully,balancing risk with reward and caution with courage.Organizations should also improve the quality of the data that fu

129、els GenAI engines.By embracing transparency and managing risks,retailers can utilize GenAI and data analytics to deliver better customer experiences,elevating their brandand customersto new heights of sophistication.21|Retail Reimagined Knowledge PartnerConnect with usAbout Deloitte Deloitte provide

130、s industry-leading audit and assurance,tax and legal,consulting,financial advisory and risk advisory services to nearly 90%of the Fortune Global 500 and thousands of private companies.Our people deliver measurable and lasting results that help reinforce public trust in capital markets,enable clients

131、 to transform and thrive,and lead the way toward a stronger economy,a more equitable society,and a sustainable world.Building on its 175-plus-year history,Deloitte spans more than 150 countries and territories.Learn how Deloittes approximately 457,000 people worldwide make an impact that matters at

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137、.2024.For information,contact Deloitte Touche Tohmatsu LimitedEvan Sheehan Global Retail Industry Leader Deloitte Global Email: Ida Palombella Partner,Deloitte Legal,Global Fashion&Luxury Co-LeaderKarine Szegedi Consumer Industry lead,Audit Partner,Swiss Fashion&Luxury HeadGillian Simpson Retail Par

138、tner,Deloitte Digital,LondonKatie Weir Global Fashion&Luxury Co-Leader22|Retail Reimagined Knowledge Partner1.Lauren Indvik,“What 2024 Has in Store for Luxury”,The Financial Times,28 December 20232.Adrienne Klasa,“3,000 bracelets vs 400 sneakers:the diverging fortunes of the luxury market”,The Finan

139、cial Times,24 January 20243.Deloitte LLP,“ConsumerSignals Global Data”,collected December 2023.Countries include Australia,Brazil,Canada,China,France,Germany,India,Italy,Japan,Mexico,Netherlands,Poland,Portugal,Republic of Korea,Saudi Arabia,South Africa,Spain,UAE,United Kingdom,and the United State

140、s.4.Nvidia,“State of AI in Retail and CPG:2024 Trends”,accessed 29 February 20245.Generative AI Software Market Forecast to Expand Near 10 Times by 2028 to$36 Billion,S&P Global Market Intelligence Says,S&P Global,June 20236.Deloitte,“Global Powers of Luxury Goods 2023”,accessed 29 February 20247.Ib

141、id8.Ibid9.Ibid10.Ibid11.Ermenegildo Zegna Group:“Zegna X Developed on Microsoft”12.Salesforce,“AI amplifies the Gucci voice across client service centers”,accessed on 15 March 202413.Deloitte Insights,“2023 Deloitte Holiday Survey”,accessed 29 February 202414.Deloitte,“TrustID Research”,accessed 29

142、February 2024.Deloitte has developed TrustID,an open-source data-driven tool that helps companies not only measure the four critical factors that drive trusthumanity,transparency,capability,and reliabilitybut accurately predict how human emotions will impact behaviors.15.Ibid16.Ibid17.Deloitte,“2024 retail industry outlook”,accessed 29 February 202418.Deloitte,“Trustworthy AI Framework”19.Deloitte,“Safeguarding Generative Artificial Intelligence(AI)with cybersecurity measures”,accessed 29 February 2024Endnotes