The impact of Artificial Intelligence in the luxury and fashion sector
From concept to production, AI is revolutionizing the creative industries.Technology creates new opportunities, but also unprecedented ethical challenges.
Chiara Piancatelli, Associate Professor at SDA Bocconi School of ManagementArticle published in issue 1/2025 Mit Sloan Management Review Italy
Artificial Intelligence (AI) is redefining the rules of the game in the creative industries, profoundly transforming the processes of ideation, production and distribution of content. The technological acceleration dictated by a highly dynamic context has led to an increasingly pervasive integration of tools based on AI and Generative Artificial Intelligence (AI Gen) in the fashion, design and lifestyle sectors. These technologies do not aim to replace human creativity, but rather act as powerful catalysts for innovation and allow us to expand the possibilities ofvalue creationalong the entire creative value chain. They are also enabling new models of collaboration between humans and algorithms, opening up scenarios in which creativity, technological innovation and business strategy come together to generate value. A significant example is represented by the growing use of assisted design platforms, such as those that allow small fashion brands to prototype entire collections through textual prompts, accelerating time to market and improving the sustainability of the production process.
The model below offers a structured vision of the impact of AI in the main business areas of the luxury and lifestyle industry, allowing for an initial systematization of how it is transforming key processes, from product ideation and development to interaction with the end customer, opening up new opportunities for innovation and growth. First and foremost, in design and prototyping, advanced AI-based tools allow brands to accelerate the creation of collections, reducing costs and development times. On the marketing front, AI Gen supports the production of personalized content, enabling highly targeted campaigns and innovative visual storytelling. When it comes to customer experience, AI-powered immersive technologies, such as intelligent virtual assistants and virtual showrooms, enable more exclusive and tailored engagement. By integrating these solutions along the customer journey, luxury, fashion and lifestyle brands can not only strengthen their competitiveness, but also redefine the paradigms of the customer experience, making it more personal, immersive and aligned with the expectations of the contemporary customer, who increasingly requires a mix between authenticity and technological innovation (Figure 1).
AI Gen between branding and customer experience
AI Gen allows brands to anticipate target audience preferences and trends thanks to the ability to extract and process data that favors personalized strategies and targeted content.
Psychographic analysis powered by AI allows us to study consumers' future habits and needs, allowing brands to adapt communication to strengthen loyalty. In influencer marketing, AI Gen identifies high-impact creators, verifies the authenticity of theengagement, prevents fraud and optimizes ROI, measuring the actual impact on sales and brand perception. Some brands are already capitalizing on these technologies: Gucci has introduced virtual stylists for real-time consultations and hyper-personalizes marketing campaigns by analyzing social interactions and local trends. Dynamic customer profiles allow you to predict preferences and purchasing behaviors, enhancing engagement.
In parallel, AI platforms are able to generate texts, images and videos for advertising campaigns, significantly reducing production times and costs. However, an increasingly crucial challenge is balancing AI-generated content with authenticity, which is essential to maintaining consumer trust. Many companies are using AI Gen for strategic brainstorming, analyzing audience reactions and optimizing content in real time, improving agility in responding to market changes and creating more effective and relevant messages. Advanced chatbots and virtual assistants are redefining customer service, offering personalized assistance in real time: from style advice to product information. Adidas has launched a 24-hour chatbot that can learn from customer interactions. This system progressively refines responses and offers personalized purchasing recommendations based on the user's history and preferences, significantly improving the digital shopping experience.
However, the real challenge for brands is to make the output, whatever it is, generated by AI applications as 'human' as possible, since efficiency alone is not enough: it is the emotional interaction that creates an authentic connection with the customer.
Figure 1.Applications of Artificial Intelligence in the fashion, luxury and lifestyle sector
AI looks sustainable
AI is revolutionizing the sustainable fashion sector, reducing waste and overproduction thanks to the optimization of resources, the traceability of materials and the use of innovative solutions. Traceability is now also guaranteed by the Blockchain, which allows you to monitor the entire life cycle of the product, from the origin of the raw materials to the final production. This allows us to verify the sustainability of the materials and ensure that they are obtained from areas where human rights are respected. Predictive analytics and machine learning are improving supply chain management, making the use of resources more efficient and anticipating changes in demand.
Generative design promotes principles of circular economy, while the certification of materials responds to a growing demand for transparency, with promising applications also in the second-hand market.
An example of avant-garde is Stella McCartney, a pioneer in the application of AI to innovate materials and recycling strategies. The brand collaborates with companies such as Mango Materials and AirCarbon to develop low-emission fabrics. Through a partnership with Protein Evolution, it has created an infinitely recyclable polyester, using AI and enzymes to transform the fibres. Advanced technologies are redefining the concept of sustainability: Blockchain, satellite images and environmental DNA trace the origin of materials, guaranteeing transparency and authenticity. The Biopure platform also converts polyester waste into new raw materials without compromising their quality, paving the way for an increasingly circular economy.
Human beings still maintain distinctive skills
AI Gen and the Metaverse are transforming the world of fashion through photoshoots and virtual influencers. The growing use of AI-generated models raises questions about authenticity and the risk of replacing human creativity. Generation Z, who values transparency and authentic connections with brands, may feel alienated by artificial images devoid of emotion and story.
Although AI produces content with extraordinary speed and precision, it lacks human sensitivity and intuition. Creativity is not just aesthetics, but also emotion, storytelling and the ability to create meaningful connections with the public, central elements for building an authentic brand identity. The absence of real models risks compromising this relationship, transmitting less than genuine values and reinforcing unrealistic beauty standards, undermining consumer trust. An emblematic example is the Adidas case: the brand launched an advert entirely generated by AI, impressive for its futuristic aesthetics and technical perfection, but which raised doubts about its ability to arouse authentic emotions and create a deep connection with the public. The risk is not only technological, but cultural: if AI dominates creative processes without a balance with human ingenuity, contents risk becoming cold, standardized and devoid of depth. Despite its extraordinary potential, AI remains a tool, powerful indeed, but complementary. Narration and involvement remain distinctive skills of human creativity, irreplaceable in marketing and communication.
From Generative Design to Dynamic Pricing
Generative design represents an innovative approach to product development and manufacturing, allowing designers to explore numerous creative solutions and shorten the design life cycle. Advanced software such as Repsketch and Artiphoria exploit advanced algorithms and computational power to transform sketches, fabrics and color palettes into design proposals optimized for weight, resistance and use of materials. In interior design, AI generates personalized solutions based on customer preferences and the characteristics of the available space, accelerating the creative process. Thanks to predictive analysis algorithms, design becomes increasingly reactive to emerging trends, processing data from social media and purchases in real time, going beyond traditional trend reports.
AI can even exploit facial recognition andbody scanningto create tailor-made garments, satisfying the growing demand for customization, reducing costsstockand allowing thetestingof infinite variations at no additional cost. A significant example is Stitch Fix, which uses AI Gen to improve both the customer experience and internal processes. Models developed by OpenAI analyze qualitative customer feedback to refine the style recommendations generated by the so-called Outfit creation model.
AI Gen also accelerates the creation of product descriptions and advertising content. Tommy Hilfiger uses AI Gen software to develop look proposals based on the combined analysis of historical data, current trends, consumer behaviors and social media interactions. In the technological field, intelligent materials with integrated sensors are leading to the creation of interactive and high-performance garments. These garments offer advanced experiences such as health monitoring, energy consumption optimization and injury prevention. An emblematic example is the collaboration between Google and Levi's, which led to the creation of a jacketsmartable to control the smartphone and receive notifications through simple gestures. Likewise, Athos develops clothing with integrated electromyographic (EMG) sensors, capable of monitoring athletes' muscular activity, providing useful data on performance and detecting signs of fatigue to prevent injuries.
In parallel, AI Gen is revolutionizing thedynamic pricing, allowing brands to adapt prices based on demand, seasonality and consumer behaviour, optimizing sales and margins. In the luxury hospitality sector, for example, AI Gen analyzes indicators such as occupancy rate, average daily rate and available revenue per room, dynamically calculating the optimal price to maximize revenue in real time.
A balance between brand protection and regulation
Thanks to image recognition and advanced pattern analysis, AI is able to detect anomalies and distinguish between authentic and counterfeit items. This technology helps protect brands, strengthening consumer trust and preventing fake products from entering the market. Furthermore, it allows for more accurate monitoring of supply and distribution chains, ensuring high quality standards.
However, the adoption of AI also raises significant legal challenges, especially in privacy and data protection. Biometrics-based retail strategies, such as virtual try-on systems, must comply with the GDPR and the recent EU AI Act, which introduces stringent requirements for transparency, security and accountability. AI solution providers must also meet rigorous standards to ensure the ethical and safe use of technologies.
Another crucial issue concerns intellectual property. The dispute between Hermès and Mason Rothschild over the Non-fungible token (NFT) MetaBirkin, which ended with Hermès winning for trademark infringement, highlighted the complexity of protecting digital assets created with AI. This case represents a significant precedent for the protection of brand rights in the digital context. Deepfakes are also an emerging threat, with the ability to falsify advertising campaigns, create misleading endorsements and manipulate body image, causing potential reputational damage for brands. To address these risks, advanced verification tools, more stringent regulations and greater transparency in the use of AI are essential. Only in this way will it be possible to guarantee a balance between innovation and protection of corporate values, promoting an ethical and sustainable business ecosystem.
Retail is increasingly phygital
AI algorithms are transforming the retail sector, improving operational efficiency and enriching the customer experience. By analyzing traffic and user behavior, AI optimizes the layout of products and the navigability of stores. Through real-time video monitoring, it allows you to allocate staff more effectively and detect theft attempts, improving security and operational efficiency. The integration of innovative tools such as augmented reality allows employees to quickly access detailed information on the products, while RFID technology labels personalize the purchasing path. In luxury retail, this convergence between digital and physical makes the store increasinglyphygital, offering interactive experiences ranging fromgamificationto the holographic catwalks, transforming shopping into an engaging and immersive activity.
Burberry represents a pioneering example in the adoption of these technologies. The social retail store in Shenzhen, developed in collaboration with Tencent, merges digital and physical thanks to interactive windows, immersive fitting rooms andgamificationaccessible via WeChat app. Predictive analytics and recommendation engines allow the brand to anticipate customer preferences and optimize inventory based on variables such as climate and social trends.
Gucci, always a leader in marketing innovation, integrates AI and intelligent mirrors into boutiques to ensure continuity between online and offline experiences. Through the analysis of customer data, the brand offers highly personalized recommendations both in-store and on digital platforms.
The expansion towards the Metaverse is redefining the strategies of luxury brands. Iflagship storevirtual, NFTs and immersive spaces offer brands the opportunity to engage new generations of consumers, in particular Millennials and Generation Z. Events such as the Metaverse fashion week on Decentraland represent digital showcases to strengthen brand awareness and experiment with new engagement models.
AI also plays a crucial role in design: by analyzing thousands of models, it generates innovative creations, such as the first Nft sneakers designed through machine learning algorithms. Dolce&Gabbana has already experimented with this convergence between physical and digital fashion, selling exclusive NFTs worth millions of dollars. This evolution, powered by AI, marks the beginning of a new era for luxury retail, where technology and creativity come together to redefine the concept of the shopping experience.
AI at the service of customer experience
AI Gen is revolutionizing the ways in which brands and consumers interact, enhancing theengagementintouchpointsphysical and digital. By analyzing data from heterogeneous sources, AI creates persuasive and personalized content that increases conversion rates. Augmented reality tools allow customers to virtually view products being worn, reducing returns and increasing satisfaction. The integration of virtual tours in boutiques and advanced chatbots, available in multiple languages, guarantees immediate and personalized responses, improving customer service. Experiential immersion also extends to ecommerce, where technologies such as Augment Reality (AR) filters, interactive apps and virtual try-ons capture customers' attention, increasing the time spent on the page and the conversion rate. An emblematic example is the collaboration between Ferrari and IBM, which led to the launch of an app with exclusive 'behind the scenes' content, made possible by the use of AI Gen and Data analysis.
In the luxury sector, AI enhances theclienteling, providing tailored communications based on individual preferences to drive long-term loyalty. Real-time analysis of customer feedback allows brands to refine their offering, identify new trends and generate product images that respond to market desires.
A significant example is represented by Dior which, in collaboration with Perfect Corp. and Teads, launched a Virtual try-on campaign for the Rose des Vents earrings collection. Consumers could try them virtually via smartphone, without leaving the publisher's site. This approach increased engagement, strengthened the premium perception of the brand and stimulated purchase intention. The brand is exploring further applications of AI in the cosmetics segment, with the ambitious goal of digitizing the sensorial experience of luxury, including evoking the perception of a fragrance online. This combination of AI and sensorial innovation marks a new frontier for digital luxury.
AI rewrites the supply chain
AI is transforming supply chain management with applications ranging from supplier selection to demand forecasting, improving operational efficiency and product quality. Thanks to advanced data analysis, it helps to select reliable suppliers, monitor their performance and predict supply chain risks. Predictive models optimize inventory management, reducing both surpluses and shortages, while robotic automation improves logistics and distribution.
In quality control, automated vision systems are able to detect defects with extremely high precision, ensuring that high quality standards are maintained. This aspect is particularly relevant in luxury watchmaking, where artificial vision allows us to identify microscopic defects in watch movements, verify the perfect alignment of the hands and guarantee the authenticity of the materials used. AI also supports product design and demand forecasting, reducing the production of unsold items, with a positive impact on both financial statements and sustainability. The integration between Blockchain and AI allows you to trace the path of the product and its materials along the entire production chain, ensuring greater transparency and optimizing returns management.
Louis Vuitton uses AI Gen to optimize demand, inventory and supplies, reducing waste and shortages. The Aura Blockchain ensures authenticity and transparency, while AI contributes to ethical sourcing and carbon footprint monitoring.
Moët & Chandon, on the other hand, uses artificial vision algorithms to select only the healthiest grapes, guaranteeing the highest quality of champagne and improving production efficiency.