British luxury retail giant Burberry is one of the pioneers of machine learning in retail industry and the executives are trying to position the brand as an “end-to-end digital business”. I believe machine learning is particularly important for luxury retail brands due to three reasons: to provide personalized and superior customer service, to avoid counterfeiting of brand’s products, and to offer products that are in line with the current trends. First, personalized and superior service has a high importance in luxury goods industry since customers are willing to pay high prices not only for high quality of the products but also for the spoiling experience that luxury brands offer. With the help of machine learning, brands could predict their customers’ preferences by leveraging all the data they can access, improve their online and in-store experiences by offering tailored recommendations, and use social media accounts of customers to communicate with them. Second, many luxury brands are counterfeited very frequently, and this situation could significantly harm the brands by decreasing the customer demand for original products. Machine learning algorithms help brands identify counterfeited product by only uploading photos of the suspected products into applications. Third, creating trendy and on-demand products are at the heart of luxury goods industry and it is very hard to turn the luxury brands around if they fail offering the right products at the right time. Machine learning allows brands to discover which products are trending and design their products accordingly.
Executives of Burberry are working on several important initiatives to transform Burberry into an end-to-end digital enterprise. Burberry is now collecting customer data via loyalty programs, and using both in-store and online data to tailor its offerings to the customers. To fight with counterfeits, Burberry is using image recognition technology provided by Entrupy which enables the company to identify if a product is genuine only by looking at a small piece of suspected product’s picture. Moreover, Burberry salespeople display customer-specific recommendations on their tablets to provide real time recommendations. Burberry also offers a series of cutting-edge experiences to its customers. For example, Burberry is one of the first brands that leveraged Facebook chatbots to let customers know about their new products, to provide customer service, to let them search nearby stores and to purchase new products – as well as to book an Uber ride to the nearest store.Last but not least, Burberry also offers customers to create their own personalized copy of their ads, allowing customers see themselves next to the celebrities. In the medium run, Burberry is planning to leverage machine learning to better their support processes. As David Harris, SVP of IT, mentioned:
“Areas we are looking at include: chat bots in service functions, proactive IT operations, insight from pattern recognition, automated and scenario modelling for planning & logistics, and security & fraud prevention.”
Image: Facebook chatbot of Burberry 
In the short run, I recommend Burberry to actively track the behavior of its customers in other platforms: online retailers such as Amazon and Rent the Runway to understand their current shopping behavior, as well as Spotify to get a sense of what they are listening and Yelp to grasp where they have their dinners. I believe that luxury shopping is a comprehensive experience, and customers better respond to the brands that are in line with their lifestyle. By using other data sources, I believe Burberry could better know their customers, develop in-depth understanding of what they really do, and offer the most suitable products to their customers. For example, for the customers who eat at more cozy places and listen to country music, Burberry could offer sneakers and sweatshirts. On the other hand, for the customers who eat at fancy places and love listening to popular party songs, it could be more appropriate to recommend high heels and fancy trench coats. In the medium run, I recommend Burberry to use the customer data in product development. I believe that having a trendsetter position is particularly important for luxury brands, given that one of the main reasons why people choose to buy from a luxury brand is the desire to be associated with a trendy and cool brand.
Two questions: 1) Is using machine learning to streamline support functions in a luxury retailer priority, given that cost is not the most important element of the business? 2) Does customer preference drive luxury products, or do luxury products drive customer preference? If the latter is true, is it possible to predict customer preferences from the historical data? (751 words)
Bernard Marr, “Burberry: How Big Data and AI is driving success in the fashion world,” https://www.bernardmarr.com/default.asp?contentID=1282, accessed November 2018.
Forbes, “The Amazing Ways Burberry Is Using Artificial Intelligence And Big Data To Drive Success,” https://www.forbes.com/sites/bernardmarr/2017/09/25/the-amazing-ways-burberry-is-using-artificial-intelligence-and-big-data-to-drive-success/#540f075b4f63, , accessed November 2018.
AI Business, “Where are Burberry with AI? Exclusive Interview with David Harris, SVP of IT,” https://aibusiness.com/where-are-burberry-with-ai-exclusive-interview-with-david-harris-svp-of-it/, , accessed November 2018.
Topbots, “Burberry,” https://www.topbots.com/project/burberry-facebook-messenger-chatbot-guide/, , accessed November 2018.