4 ways how AI can boost the top line of fashion and luxury brands

01 September 2021 Consultancy.eu 5 min. read

A growing number of fashion and luxury brands are leveraging smart technology and the rich customer data they have at their disposal to make better strategic decisions in the commercial domain.

Experts from Simon-Kucher & Partners share four examples of how brands can boost their top-line performance through the use of artificial intelligence and machine learning. 


AI-based trend forecasting and assortment optimization. 
Changes in consumer demand create opportunities for startups to gain a competitive advantage and disrupt the way established fashion and luxury brands do business. To keep up, having the right assortment strategy in place is crucial. Brands need to ensure that their assortment strategies are continually reviewed and adapted – this is where AI plays a key role. 

4 ways how AI can boost the top line of fashion and luxury brands

AI can be used to predict future market trends. This helps designers and marketing managers take a fact-based approach and, as a result, reduce their dependency on instinct alone. Online shopping data such as search and filtering behavior can be analyzed to personalize a user’s online customer experience. This is nothing new, but the wealth of online data can also benefit other teams leading to more informed future product design choices and broader assortment strategies. 

Moreover, AI is not only proving valuable in the online marketplace, but is also gaining a foothold in physical retail. To better understand customers’ shopping preferences, retailers are using AI to monitor customer shopping behavior and customer response to in-store assortment. For example, using sales and return data, companies are able to optimize their instore product presentation and help determine what items to stock and/or promote in specific locations. 

If done well, this can be a driving force in striking a balance between supply (inventory) and demand (purchases), reducing the need for discounting and writing off unsold stock. 


Targeted marketing campaigns and customer loyalty programs. 
Marketing functions need to evolve alongside consumer expectations. Leading fashion and luxury brands are increasingly leveraging the power of customer-centric AI to deepen and personalize their customer relationships and drive wider top-line growth initiatives. 

Gaining access to relevant data is key to understanding your customers and leveraging AI to grow relationships. Leading fashion and luxury brands collect data at each point of engagement with their customers, but also offer loyalty and rewards programs that provide a wealth of insights on consumer preferences. Numerous fashion brands use data shared voluntarily through their loyalty programs to tailor recommendations online and communicate personalized suggestions to staff in stores on their handheld devices.

There are numerous ways to use AI for marketing purposes, but it is increasing customer engagement that will ultimately lead to improved customer lifetime value. Applying AI effectively can help boost revenues and profits through higher conversion, lower acquisition costs, increased retention, and more repeat purchases.


Dynamic pricing and AI-based promotions.
Pricing is one of the most important levers for topline growth. Get it right and you will thrive. Get it wrong and you will risk permanently damaging your business. To get it right, it is important to tap into new opportunities brought about by digitalization, use psychological aspects of pricing and, most importantly, align pricing to willingness to pay.

Artificial intelligence – and machine learning in particular – can be used to dynamically and continuously adjust pricing to match willingness to pay and help manage sales volumes. Amazon figured this out early on and is a prime example with prices changing every 10 minutes. Off-the-shelf or tailored solutions exist to help revenue management specialists monitor and adjust pricing in line with market demand and willingness to pay changes.

In addition to product pricing, discounts and promotional strategies can be optimized with the help of AI. By using data on shopping behavior and historical promotion performance, companies are able to tailor future promotion strategies according to preferences and willingness to pay. AI enables companies to optimize promotion mechanics, frequency and depth, improve conversion rates, and minimize stock surplus at the end of a season.


Channel optimization.
Once a solid strategy is in place, marketing strategies are aligned, and prices are optimized, the focus should be on sales. A systematic approach to channel optimization and sales force management puts fashion and luxury companies at a strategic advantage in the battle for revenue growth. AI can be used as a basis for today’s leaders to critically evaluate their sales organizations. 

It is key to implement a solid cross-channel approach that combines online and physical sales. For example, several fashion and luxury brands ask their customers to sign up for an app, unlocking additional services and benefits in the store. As such, data retrieved from digital channels like apps and online stores can be used to improve sales volumes offline. But the application of this data goes beyond just sales. 

Online sales data can also be used to optimize inventory at physical stores and insights can be fed back into manufacturing systems to influence the styles and quantities that are produced going forward. 

Moreover, the online sales channel has become even more important due to the Covid-19 crisis. Customer activation strategies, which were previously only applied in physical stores, are now being used online. For example, makeup and fashion stores are creating apps and tools so customers can try on products virtually. Innovative, online technologies help increase customer engagement and are advancing at a steady rate.

Authors of this insight are: Jos Eeland, Joep van den Nieuwenhof, Amelie Spaniol, Linda de Graaf and Roos Offerhaus. All five are members of Simon-Kucher & Partners in the Netherlands.