Big Tech Lessons and Surprises for Fashion

The year 2024 has been a transformative period for the tech and fashion industries, marked by significant advancements, strategic shifts, and innovative applications of technology. This digest will delve into the key takeaways from various sectors, highlighting the impact of AI, wearable technology, digital goods, and cryptocurrency on the luxury and retail markets.

Retail and Fashion Tech: Consolidation, Personalization, and AI

Consolidation and Closures

The retail landscape saw substantial changes in 2024, with major consolidations and closures making headlines. Notably, HBC acquired Neiman Marcus Group’s Neiman Marcus and Bergdorf Goodman to form Saks Global, backed by investments from Amazon and Salesforce. This move is aimed at leveraging technology to enhance customer personalization, as emphasized by Saks Global CEO Marc Metrick.

Personalization and AI

Personalization remains a crucial strategy for retailers. Mytheresa's acquisition of Yoox Net-a-Porter to create a global digital luxury platform is a testament to this trend. AI is at the forefront of this personalization drive, with Google and Amazon integrating AI-created product summaries and personal recommendations into their shopping experiences. However, some brands like Kering and LVMH are cautious about customer-facing AI applications, instead focusing on internal tools to streamline tasks.

• Kering: Paused its experimental recommendation chatbot ‘Madeline’.
• LVMH: Developed an internal model akin to ChatGPT for employees to use, avoiding obvious customer-facing uses of AI.
• Estée Lauder Companies: Forged relationships with OpenAI and Microsoft to build internal tools.

Brand Innovations

Several luxury brands have made significant strides in AI innovation:

• Brunello Cucinelli: Launched a new website powered by generative AI, featuring immersive drawings and interactions with a bespoke AI service called Solomei AI. This platform saw over 10,000 daily visitors in its first week.
• Balenciaga: Used AI-generated images on LED screens during Paris Fashion Week, creating a visually stunning and tech-forward experience.
• Gucci: Adopted Apple’s AI-enabled Vision Pro headset and integrated AI into its fashion campaigns.
• Lanvin: Utilized generative AI to animate archival sportswear sketches, blending heritage with modern technology.
• Christian Dior Couture: Developed the Astra platform, which uses generative AI to analyze consumer preferences from various channels.

Wearable Technology and Smart Glasses

Meta's Ray-Ban Smart Glasses

Meta's collaboration with Ray-Ban has resulted in significant advancements in wearable technology. The latest update to the Ray-Ban Meta smart glasses introduces several groundbreaking features:

• Live AI: Enables real-time video analysis, allowing users to interact continuously with Meta’s AI assistant without the need for a wake word.
• Live Translation: Offers real-time speech translation between English and Spanish, French, or Italian.
• Music Recognition: Integrates Shazam for music recognition.

These features are currently available through Meta's Early Access Program in the U.S. and Canada and are expected to set new industry benchmarks in wearable technology.

Market Impact and Accessibility

The updates to the Ray-Ban Meta smart glasses position Meta as a leader in the smart eyewear market, potentially attracting new interest and investment in wearable technology. These glasses have also been praised for their accessibility features, particularly for individuals who are blind or have low vision, offering a life-changing level of interaction with the world.

Metaverse and Digital Avatars

Meta Motivo AI Model

Meta has unveiled a new artificial intelligence model called Meta Motivo, designed to enhance the Metaverse experience by making virtual environments more immersive and lifelike. Key features of Meta Motivo include:

• Realistic Digital Avatars: Improves the realism of digital avatars or Non-Player Characters (NPCs) by enabling natural and realistic body movements through a novel algorithm trained on unlabeled datasets.
• Whole-Body Control: Allows avatars to perform a wide range of tasks, such as motion tracking, reward optimization, and goal pose reaching, without the need for supervised training.
• Open-Source Approach: Available for free use by developers, fostering innovation and security through community scrutiny and contribution.

The introduction of Meta Motivo is expected to revolutionize interactions within virtual worlds, making them more personal and engaging. This breakthrough could also enhance communication tools for virtual meetings and provide suggestions tied to user actions and decisions.

NFTs, Digital Twins, and Blockchain

Practical Applications of NFTs

The NFT market has transitioned from hype to practical applications. Several brands are leveraging NFTs and blockchain technology in innovative ways:

• Hugo Boss: Linked its loyalty rewards club to the blockchain.
• Syky: Collaborated with brands to implement a made-to-order model using NFTs, bridging the gap between digital design and traditional fashion.
• Balenciaga: Created accessories for collectors through a Ledger collaboration, and Louis Vuitton made exclusive products available to its Via members, many of whom are first-time NFT holders.

Cryptocurrency Payments in Luxury Retail

Growing Acceptance

The recent surge in Bitcoin's value has renewed interest among luxury brands in adopting cryptocurrency payments. Key players include:

• Gucci: Has accepted payments in up to 10 different cryptocurrencies since 2022.
• Balenciaga: Offers crypto payment options and has released a leather card holder designed to hold crypto wallets.
• Printemps: Became the first European department store to accept cryptocurrencies, including Bitcoin and Ethereum, through a partnership with Binance and Lyzi.
• S.T. Dupont: Plans to accept cryptocurrency payments in two of its Paris stores.

Strategic Implications

The adoption of crypto payments by luxury brands represents a strategic shift towards modernizing retail operations:

• Appealing to Younger Clients: Embracing cryptocurrency signals a commitment to innovation and digital transformation, attracting younger, digitally native consumers.
• Market Interest: This move has generated significant interest from other retailers and brands, indicating a broader trend towards cryptocurrency adoption in the luxury market.

World Models and Their Significance

Understanding World Models

World models are AI constructs that mimic the mental models humans develop to understand the world. These models are trained on a range of data, including photos, audio, videos, and text, to create internal representations of how the world works and to reason about the consequences of actions.

Key Features and Challenges

• Realistic Simulations: World models like Sora can simulate actions such as a painter leaving brush strokes on a canvas and can effectively simulate video games. However, they also hallucinate and internalize biases from their training data, which can lead to inaccuracies.
• Potential Applications: If the major hurdles are overcome, world models could bridge AI with the real world more robustly, enabling more capable robots and enhancing various sectors such as healthcare and logistics.