From AI to Zara: Luxury Retail’s Challenges and Opportunities
It was a star-studded evening for the Baker Retailing Center recently, as students were treated to the thought leadership of some of retail and journalism’s leading lights. Joining the Baker Executive Speaker Series panel were alice + olivia founder, CEO and creative director Stacey Bendet; Saks CEO Marc Metrick; and Glamour Editor-in-Chief Samantha Barry.
The conversation ranged far and wide: from AI, online personalization, and social influencers, to fast-changing trends, supply chain challenges, and the physical store experience. What emerged were unique, firsthand insights into luxury retail today.
The Transformation of Retail
What factor has caused the biggest change in the retail world? Social media, in Bendet’s opinion. “When I first started my business, the job was [only] to make clothes and sell them to these guys,” she said, gesturing toward Saks’ Metrick. But today, “every brand is a media company,” she said, drawing parallels between her company and Conde Nast-owned Glamour.
Bendet noted that while social media gives retailers power, it also makes them dependent upon influencers. She described Alice + Olivia’s approach: “We are actually building out networks that I compare to the Tupperware parties of the 1960s, where we’re creating our own influencer/selling networks.”
Barry observed that the way people shop has changed dramatically. She said that when she started at Glamour, there was no commerce tied to the magazine. But now, “we’re one of the strongest commerce brands in all of Conde Nast, which has Vogue and GQ and Wired.” She added that the publication’s selling power extends far beyond style and beauty products to items like sex toys, cookware, and mattresses. Readers “come to us because they trust our editorial content and our voice,” she said.
Another major change she identified was that more people now shop with ethical concerns in mind, such as gender equity or sustainability. In response, Glamour last year launched a “By Women” feature highlighting women-owned and -operated businesses. “We wanted Glamour to be a place that can give you that information,” she said.
For Metrick, the biggest change has been “the speed of trend and how fast it’s evolved.” Bendet agreed that trends, mainly driven by social media, have played havoc with the traditional selling cycle. “We used to know that [an item] would be on the floor for three months… But last week we shipped this one pant into stores and sold through like 70% of the inventory in the first few days. You couldn’t predict that.”
For luxury brands like Alice + Olivia and retailers like Saks, manufacturing and obtaining products promptly enough to meet demand can be tough, the panel agreed. “If you’re Shein or fast fashion, it’s great [to sell out quickly],” said Metrick. “But if you’re upstream and you’re the one setting the trend, it’s more complicated.”
Personalization is Everything
For Metrick, the future of luxury retail is ever-increasing personalization, facilitated through AI. He has his eye on making saks.com much more responsive to the customer—more like a social media platform that dynamically customizes itself and makes recommendations as someone uses it. (Think TikTok or Instagram Reels.) “For each one of you,” he said, pointing to the audience, “we currently have about 250 prescriptive or descriptive data points… But we’re using none of that online. So we need to continue to push to personalize the experience onsite, not just offsite.”
He described other potential AI innovations and efficiencies. Saks would quickly learn how a customer arrived at its website, for example. “We know you came in through Glamour; we know how you did it. We know what your predictive LTV is, using AI, because you came in from a magazine ad online into McQueen Ready-to-Wear. And you’re a very different customer than one coming in for denim on sale.” Saks could then respond to the consumer in a way that better suits what they’re looking for.
Barry said of Glamour’s inroads into this area, “I think media companies are still behind what social media companies have done in terms of personalization. There’s always this catch-up.” She added, laughing, “I’m so jealous of the TikTok algorithm that knows I love cheese and sends me cheese videos! It certainly didn’t take long for it to learn who I am.”
Will AI Take Over Luxury Retail?
Will AI replace fashion designers? Will AI-enabled online shopping become so simple and enjoyable that we won’t need physical stores? The panel tackled these eye-opening questions.
“Clothing is still an art form,” according to Bendet. A shirt might be AI-designed and a company like Zara might produce hundreds of thousands, she said. “But then there’s those special pieces that you walk in our store and you’re like, wow, I’m not going to find that everywhere and I’m going to keep it forever. There’s this elegance and longevity to it.”
Metrick stated that despite the huge role of e-commerce, at the end of the day “luxury is theater… People don’t want to stream Hamilton—they want to go to the theater and see it.” Then the online part comes in: they download the soundtrack. Similarly, when it comes to Saks Fifth Avenue physical stores and saks.com, Metrick said retailers must “deliver the right experience and match it up the right way.” He added, “Our highest LTV consumer on saks.com is the store customer. And that’s why bricks and mortar is always going to be important.”
MORE BAKER EVENTS