Omnichannel and Artificial Intelligence will increase customer experience and company resilience: New trend in distribution channels

Lockdown first, and social distancing later, have shocked the retail system worldwide. Consumers and companies are reacting so fast, while the world after lockdown is becoming more digital, more inclusive, thus transforming content of communication, and opening the way of the fashion and luxury industry to new horizons never explorer before.

Digital is not only and increasingly important sales channel but also a “company transformer” making logistic and sales-fulfillment options easier, cheaper and faster, fuelling innovative ways of customers acquisition, and helping predict and manage inventories and then increase company performance.

Digital world also allows to better customize goods across physical and digital channels – omnichannel customization: that is really a new frontier, not only as a new channel of distribution but as a really new marketing opportunity especially in the COVID era.

Digital Transformation and Artificial Intelligence (AI) are reshaping the economy, eclipsing traditional boundaries across industries, and driving new sources of competitive advantage. Companies can connect to a variety of economic networks, drive new value from network effects, and experience important gains from data and learning effects.

The future of this fascinating topic is Artificial Intelligence applied to retailers through a special software platform that analyzes big existing data inside companies for predicting customers’ behaviors and lifestyle.

Given this environment, Invest Foresight discussed specifics of the luxury industry with Giuseppe Gullo, lecturer at the Russian Academy of National Economy and Public Administration and luxury expert at RANEPA International Summer Campus in Kazan. Mr Gullo ( is founder of GG Luxury Consulting Group, a boutique Luxury Strategy Consulting firm based in Milan, with partners in Moscow and Hong Kong.

What will happen to retailers after pandemic?

Basically, luxury is a relationship business between brands and customers. The regular location of the luxury relationship was mainly in monobrand shops, the temple of the brand, the theater in which brands celebrated their show. Whatever is affecting this relationship, has some impact on the luxury, as lockdown and present-day social distancing have had.

But what about shops once the pandemic caused lockdown is over?

Since 2008, the overall number of shops started to decrease worldwide. Pandemic has accelerated this phenomenon, and we are seeing deep reshaping of channel brands distribution. Zara has announced that it will close more than a thousand shops worldwide. Armani has just announced a new omnichannel project, “NEXT ERA”, with the online retailer Yoox Net-a-Porter and the entrance of Federico Marchetti, President and CEO of YNAP (the authentic GURU of e-commerce, founder of Yoox) to the Armani Board of Directors. The aim of the project is to integrate the physical shop with e-commerce to overcome siloed inventories system between different shops and e-commerce to offer to the customers the entire collection available and better manage inventories. The target is to reach 30% ecommerce revenues before 2025 from the actual 12% only. In a recent Chinese Gen Z survey on digital and physical shopping experience, finding out of stock pieces, including the latest collection pieces, was the first reason for Gen Z customers to prefer online sale, in which the offer is much wider, than in a monobrand boutique.

So what?

And also today Thun (, a third generation artistic laboratory of angels in ceramic for luxury gifts (today an international group by €124 mio revenues, 140 monobrand shops, 250 in franchising, and 500 multibrand shops) has announced the acquisition of Connecthub, a digital company that helps companies with shops logistics and digitalization. Mr Simon Thun, Vice Chairman, said that the acquisition of the tech company was made for extracting more synergies between Group companies and the strategic omnichannel platform of the Group that is based on the strategic values of the Thun creativity and technology innovation.

Is digitalization causing more distancing between big groups like Armani and Thun, and small groups that have limited resources?

Digital world is more democratic than the physical world. Just think of opening an e-commerce shop rather than a shop in Via Montenapoleone in Milan, or in rue Saint-Honoré in Paris, or in the Fifth Avenue in NYC. The cost is incomparable, even though efficient e-commerce is expensive too. Also, during pandemic lockdown the physical shops are closed, the e-commerce is open 24/7. But investing in digital e-commerce and social media brand presence today creates a digital asset that increases the brand equity value for new brands too, offering today opportunities never available in the past.

What are these opportunities?

The opportunity, for new brands also, is entering the global market at lowest cost in the history, overcoming boundaries and COVID tourist travel limitations. Take for an example Shopify, a Canadian e-commerce platform that allows brands to pay $79 a month for an e-commerce “basic” Shopify plan, with a free 14-day trial. The company, with 1 mio online business in 175 countries and $1.5 bln turnover, is really powering online brand stores with other services like email marketing, inventory management and order fulfillment service.

That’s why many brands have stuck with Shopify which evolves along with its clients’ needs. The tech company has also begun offering wholesale management, currency conversion, layers of security, storefront customization and native social selling. They are modernizing the architecture of the company over time. That’s why Shopify also has market cap of about $118 bln and in the first quarter of 2020 had an increase in sales by 47% compared to 2019.

Who is investing directly in tech omnichannel distribution?

Many companies are making direct investments, like Moschino, Baldinini and, also Elena Miro’ from Miroglio Fashion Group which started a digital experience with GO INSTORE that allows customers to activate a personalized online session with store managers from the boutiques of Milano and other cities, that live show and advise customers on new collection pieces. After that, with Shopping Smart Box, the boutique manager selects some pieces and sends it to customer’s home – with a surprise effect too. First results of this service show that 15% only of the pieces are returned.

And in Russia?

TSUM, number one luxury retailer in Eastern Europe, is continuing to invest in a new omnichannel approach to customer service. In its online store and TSUM mobile App all the products available are presented and the pickup can be arranged in the iconic department store buildings (or in other locations), where qualified assistants advise for fitting and tailoring if needed. If in the department store some items are not available, the staff assist customers to place order online for home delivery. TSUM online sales are approximately 25-30% in top luxury brands that reach 50% in same trendy and iconic pieces (like shoes, T-shirts, hoodies); some accessible luxury brands also reach 50% of sale through online channel.

What would be your advice to companies that have to start their digital transformation today since tomorrow could be too late, given the COVID-19 consequences?

What really makes the difference today is the Artificial Intelligence.

That’s why we as GG Luxury Consulting Group are offering AI services jointly with CALIGOO (, our software partner for fashion companies, which has developed a proximity marketing platform that utilizes EVENT–DRIVEN technology reacting in real time to customer events; for example, when a customer has opted to be identified through an app or any other digital system (e.g. facial recognition), the decisioning engine can automatically push specific offers or message when customer enters in a store or other physical location such as competitors stores. Weather conditions, time of the day, trending purchase in a specific location or complementary basket items (customers that purchased these items also purchased accompanying ones) are “automated via engine”.

In my 25 years of experience, I always advise my customers to orient their vision into a strategy that creates assets, (today “digital assets”) for a long-term period. My partner Michael Leung and myself offer to our customers “accelerators” of their strategy implementation.

And today?

Today is very important to think how reinvent the architecture of company around data, analytics, and AI. All the activities of fashion and luxury companies has to be thought for digital platform first, from collections designs, to product development and from event organization to marketing and PR. This requires investment from companies and years of implementation.   

How does Artificial Intelligence work in luxury and fashion retailer companies?

In recent years the velocity, volume, and variety of data available for analysis has exploded in fashion and luxury industries due to the advent of social media and digital world. For example, think of data of Instagram followers that have expressed like to your picture or your story and have reposted it!

But companies still have information fragmentated in distant corners of their organizations, in different IT systems such as shops customer list, wholesale customer relationship management, Instagram, Facebook, in-shops Wi-Fi, emails marketing, etc. – and most of it is not utilized or not interconnected and amalgamated. Losing this data value is like losing the blood of the company. This information on the customers today is crucial for survival.

As has always been in the past too!

Today, much more than in the past, because “integrated” data and information are needed for anticipating the customer behavior, preferences, and lifestyle, then engaging him in your exiting brand experience. As Steve Jobs said, stay close to your potential customer to know his needs before himself!

In the Industrial Revolution the automation was made on scalable and repeatable manufacturing at lowest cost of quality goods, today the “Industrialization” in the AI era has to be accomplished in the data gathering, analytics, machine learnings and decision making to reinvent the core of the modern firm, called the AI Company.  

What about customers in the Artificial Intelligence era?

In the Digital Era, also the customers knowledge has changed; (s)he arrives to interact with a certain brand when they already know everything about the product/service they are looking for, especially Z generation (the first global generation) and Y generation. That obliges companies to know in advance their needs and competitors’ products to serve customers at 360 degrees in an effective customer journey.

What is a customer journey like today?

It has to be like a ‘concierge service’ to customers, not merely selling goods. A customer today has a lot of goods at home and to choose and (s)he is looking for a service, for a storytelling of a brand, for an identity to give him/her the power to communicate him/herself immediately. The customer journey today is always “phygital” starting from digital mainly and finish with physical experience combined. But today the challenge is to provide a digital identity consistent in each different social media and touch point of the brand (Instagram, Facebook, YouTube, Weibo, flagship store, etc.) to create and communicate a clear digital brand personality.

Can you exemplify this?

If you buy a car today, you first go to the Internet and social media to find the right one according your needs; actually the trend for cars is with low environmental impact, better if electric, with all connection available for mobile apps and with automatic emergency brake when pedestrians appear. Do you really need a car dealer to get to know about all these options? Tesla, actually the biggest automaker company in the planet (with $210 bln market cap, ahead of Toyota), has no car dealers in USA, so you can order a test drive or buy your car directly online because the customer journey of Tesla is supported from targeted digital advertisement campaign, and Tesla is decreasing cars cost by this.

How can Artificial Intelligence utilize this information?

When a company decides to have an AI system to anticipate customers’ behavior, all the physical” and “digital brand touch points (physical shops, website, Instagram, Facebook, Weibo, Live, Twitter, YouTube, LinkdIn, etc.) has to be organized to extract data systematically that will be cleaned, organized by clusters and categories after analyzed and then utilized to serve customers, respecting first his privacy rules, that in Europe are extremely strict.

Any examples?

For example, if you have a physical boutique or a digital new opening of a website, you can geo-localize Instragram or Facebook followers among the shop neighbors and send to their mobiles a special invitation to a live event or a promise of a discount with a coupon; the coupon (QR, or Bar Code, or alphanumeric) has to be downloaded in the mobile wallet that today 99% of mobiles have. This allows to automaticallyand in real time receive a push message when you approach the new shop’s location or to be invited inside when you pass close by some other boutique of the brand. This is because in fashion and luxury industry the percentage of App downloaders is very low.

Yet if you do have an application?

With an App installed, you have more interconnection with the customer experience playing a special role in customer engagement ensuring a continued interaction. It’s like a window of your brand in a customer’s mobile, that for Z generation is the first touchpoint. But most important, strategic Marketing Department has to create, first a “Digital Identity” that shows the brand’s “digital personality”; this allows brands to be perceived properly from the social audience, in particular from digital native, the today and tomorrow customers.

And what is possible with Wi-Fi mobile connections?

If customer mobile is connected to the Wi-Fi of a brand locations, most common in the food industry, with all the privacy authorization made in advance, you can discover where your customer navigated when (s)he was connected to your Wi-Fi. Analyzing thousands of this info with predictive algorithm, you can really know what customers’ behaviors are. But not only, for example if customers land to airport and (s)he is looking for a “free Wi-Fi” connection which you could offer from your airport shop, (with customer privacy authorizations) you will get his mobile number, or email address, and then automatically send him a coupon with discount to spend at the return in airport, or in a city center shop, that will be real time reminded when he is walking close to them. Also scanning, outside the shop, with camera mobile a video screen behind shop windows, you can enter in the brand world too.

Therefore, data analytics plays a very important role in that environment.

Yes, definitely. The more data is quantitatively and qualitatively analyzed, the more your company will be transformed in an AI company with ability to create ‘behaviors list’(nor only customer list) that allows you to anticipate the customers’ trends, lifestyle; the data “virtuous prediction cycle” is “more data” creating “better algorithms”, that create “better service”, that create “more usage”; the cycle continually repeats and auto aliments itself with learning effect from old and new data; that allows brands to offer Concierge Customer Journey: a service offer to a customer solving his daily problems. In the above example on car buyers, you may discover with data utilized in AI system, what electric car customers tend to be looking for, such as a SUV, better in matt white or pastel grey colors, for a long rent at not more than €550 monthly, but not for buying. Knowing this in advance is a competitive advantage for the company (and service to the customer) to “pre-pack” your offer with also financial and insurance services.

Ultimately, what is AIs function in fashion companies?

Today, the more data you have collected, the more your “customer lifestyle and behavior list” is efficient in prediction through predictive algorithm that elaborates, for example, the color and fitting trend of such jacket or bag. If this information is automatically delivered to the purchase director to do a cheaper and tailored fabric or leather supply order (for quantities, color and price), and the same information is utilized by the marketing directors to create targeted and localized advertising campaign, and by a designer team for designing a flash collection for reassortment of “real time trendy items” for Z generation, this is really a strategic advantage.

What are the benefits for fashion companies?

This allows companies to have automation in many “core” aspects of the organization with faster output, less mistakes, no human bottleneck, increasing a company capacity to have more people devoted to strategic roles, like designers, customer engagement expert, inclusivity manager, customer loyalty manager. A company has to break all the internal tanks of information and data to mix and complement themselves. The “datafication “strategy of the company will be easier, and data is essential inputs of the AI Company.

How do you see the future of AI?

The future is already written, when siloed information systems overcome single company borders, (with blockchain that certifies who is the owner of the info), and internal information will be integrated with other different economic networks and public information, the most data centric companies of the fashion system will take advantage of a huge volume of integrated data available. Companies will automatically scan the market with a high precision, offering the right expectations to their audience both increasing a market share of each company and generating better performance for all the industry.

Any examples?

Ant Financial, in the financial services and NETFLIX, that has transformed all the TV entertainment world, producing, for its 300 million users (in more than 190 countries that consume 15% of global Internet bandwidth), movies and TV series according preferences from the audience and personalized offers by genres, actors preferences, (also among same family members) with basket of suggested similar movies or TV series.

Sharing this data, not only internally, but with other movie studios and producer, Netflix has negotiated (monetization of data) better financial terms in its partnership with Warner Home Video and Columbia TriStar creating values for all the ecosystem. Also, actors, art directors, cameramen, stuntman, special effect creators, makeup artist, fashion studios etc. are happy with this since the access to the market and opportunities are much bigger than in pre-Netflix era.

Algorithms will become the beating hearts of luxury and fashion companies increasing creativity with AI technology.

Artificial Intelligence is really the future of fashion and luxury industry because, ultimately, it increases relationship between humans and brands that is the essence of luxury industry, as we said at the beginning of this interview.

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