LVMH bets on AI to navigate luxury goods slowdown

Mint

20 hours ago

LVMH said artificial intelligence and agents will be key to navigating a broad slowdown and waning consumer demand in the luxury goods segment.
Over the past four years, the conglomerate has worked with Google Cloud to build a central data platform, housing data from its 75 brands, known as maisons. It's now applying predictive AI, generative AI and agents in areas like supply chain planning, pricing, product design, marketing and personalization, all with the goal of maintaining and growing market share and improving operational efficiency.
'The market is becoming tougher for everyone," said LVMH Group IT and Technology Director Franck Le Moal.
Luxury retailers hiked prices anywhere from 20% to 30% during the pandemic in part because of inflation and in part because consumers, who didn't have much else to spend their money on, kept buying, said Carole Madjo, head of European luxury goods research at Barclays. Now a tougher macroeconomy in LVMH's two biggest markets, the U.S. and China, has weakened consumer sentiment and hurt business.
LVMH's fashion and leather goods segment, which includes brands like Celine, Fendi, Givenchy and Dior, reported a top-line decline last year, a big deal in an industry accustomed to only seeing top-line growth, Madjo said.
'You may have been seeing some consumers not being fully loyal and not coming back to buy those goods at those brands," Madjo said.
LVMH said that's not the case and its brands remain attractive to consumers. The company said it is experiencing a normalization in the luxury sector after a post-Covid boom.
Tech won't fully solve all these problems, but it can definitely help, said Carrie Tharp, vice president of Global Solutions and Industries at Google Cloud. 'We see AI and agentic AI as the difference-maker for consumer businesses to weather the storm," she said.
LVMH said AI agents could help it maintain and grow its customer base. For example, at Tiffany, most sales advisers now have access to agents that can summarize every previous interaction customers and use the information to generate a personalized message to them.
The goal is not to drown customers in digital experiences, but to use tech behind the scenes to make human sales advisers more effective at engaging customers, Le Moal said.
In e-commerce, LVMH is starting to use Google's Search for Commerce product to enable better semantic understanding of what customers are searching for on their websites. 'When you have the right search capability, the conversion rate is significantly higher," he said.
LVMH also is aiming AI at its internal operations, an area where 'every decision can be supported by tech," Le Moal said. That includes using AI to adjust prices on its items based on factors like currency fluctuations, he added.
Managing the luxury goods supply chain can also be tougher than other segments because the product assortment is so small and the raw materials are so expensive, Le Moal said. But he added that LVMH is able to use the data platform to identify signals earlier and react faster than in the past—especially critical, he said, given the unpredictability around tariffs.
AI is also affecting the creative side of the business. Design teams are now using generative AI to construct so-called mood boards for inspiration. And marketing departments are using the technology to generate more personalized copy for e-commerce sites—something Le Moal said has become so baseline that every brand needs to do it in order to stay competitive.LVMH also has a companywide generative AI agent known as MaIA, which uses models like Google's Gemini and image-generation model Imagen and OpenAI's GPT. It receives more than 2 million requests a month by about 40,000 employees.
'We are spending a significant amount in technology," Le Moal said. 'Tech is, for me, mandatory to become super-efficient and at the same time keep the spirit and the essence of luxury and offer the best possible luxury experience."
Write to Isabelle Bousquette at [e-mail]