AI in luxury retail: 4 trends to watch in 2026

<p><b>Luxury retailers have always competed on relationship and trust. Now, they can use AI to accomplish both of these goals.</b></p>

<p>In luxury retail, prestige is no longer defined by price tags or marble floors. It’s defined by how deeply a brand understands its clients, how seamlessly it blends artistry with intelligence and how boldly it reimagines the customer experience. From AI-powered stylists to carbon-neutral couture, luxury is evolving into something more intimate, more immersive and more intentional.</p> <p>But that doesn’t mean luxury retailers have escaped issues that have hit the greater industry. Tariffs, consumers hyper-focused on value and fast-moving AI advancements have all impacted the industry.</p> <p>So what does that mean for luxury retailers? While growth in the space is expected to remain low for 2026, the influx of AI brings opportunities to those that embrace the technology. And some already have. According to a <a href="https://www.mckinsey.com/industries/retail/our-insights/state-of-fashion#/" target="_blank" rel="noopener noreferrer">McKinsey report</a>, more than 35% of global fashion and luxury brand executives say they are already using AI for customer service, consumer search, product discovery and more. However, that leaves nearly 65% of luxury retailers still primed to take advantage of the technology offered.</p> <p>Here are the four main trends we expect to see in the luxury retail space as the year unfolds.</p> <h4>The influence of AI on luxury retail</h4> <p>The connection between luxury's strategic reset and technology isn't incidental. Consumers now expect luxury brands to meet them where they are, intimately know their likes and dislikes, provide seamless on-and-offline experiences and more. AI is the common thread between each trend.</p> <ol> <li><b>AI will take personalization to the next level</b><span class="text-bold-italic"><br> </span>Using AI for personalization isn’t new. Businesses have fed AI with demographics and purchase history for some time now to provide personalized ads and recommendations. But now, AI can take it further by analyzing available information to group customers by values and interests, even suggesting store layout recommendations.<br> <br> &nbsp;<a href="https://nrf.com/blog/lvmh-balances-luxury-innovation-in-the-digital-age">Companies such as LVMH</a>&nbsp;are leading the way. In collaboration with Google Cloud, LVHM <a href="https://blog.google/innovation-and-ai/infrastructure-and-cloud/google-cloud/lvmh/" target="_blank" rel="noopener noreferrer">is using AI-powered analytics</a> to help surface each client’s personal tastes and guide advisors to products that are a good match for clients that they otherwise may not have considered. Before AI, this level of personalization was only possible for a brand's top-tier clients. Now it can scale across the entire customer base.<br> <br> </li> <li><b>Luxury retailers will use AI to embrace the resale market<br> </b>As consumers become more cost-conscious, the secondhand luxury market has boomed. However, this creates a major challenge for brands: How do you authenticate and manage pre-owned inventory while keeping control of the brand?<br> <br> With the resale market projected to reach $360 billion by 2030, according to <a href="https://www.cnbc.com/2025/10/18/secondhand-luxury-soars-authentication-becomes-a-new-gold-standard.html" target="_blank" rel="noopener noreferrer">CNBC</a>, AI provides the tools to manage these issues. Computer vision and machine learning models can authenticate products, flag counterfeits, verify conditions and even set pricing. This means that luxury brands now can run in-house resale programs.<br> <br> </li> <li><b>Digital product passports will increase purchase transparency</b><br> Consumers, especially Gen Z and millennials, are seeking transparency in their purchases. Digital product passports (DPP) are scannable IDs—via either a QR code, NFC or RFID tag—that share a product’s material composition, sourcing history, production and more.<br> <br> Operationally, this could be a substantial challenge as luxury brands have thousands of SKUs and complex supply chains. But generative AI enables brands to document these stories at scale, without adding a lot of manual overhead.<br> <br> While DDPs can be seen as a compliance checkbox (with the EU Digital Product Passport registry set to <a href="https://www.narravero.com/en/blog/eu-start-digital-product-passport" target="_blank" rel="noopener noreferrer">launch mid-2026</a>), luxury brands are taking advantage of this as a way to provide data-backed storytelling.<br> <br> </li> <li><a><b>AI will blur physical and digital to create omnichannel retail experiences</b></a><br> The debate over physical stores vs. digital retail is over, and both sides won. As boundaries between physical and digital blur, luxury brands are moving beyond thinking in channels entirely, instead designing intentional roles for every touchpoint in a unified customer journey.<br> <br> <a href="https://www.mckinsey.com/industries/retail/our-insights/the-fashion-industry-faces-a-world-in-flux" target="_blank" rel="noopener noreferrer">McKinsey</a> notes that 70% of retail sales today are digitally influenced, and that one of the most underutilized AI opportunities is in how customers experience the physical store, not just online. Inside the store, luxury brands are doubling down on emotion, heritage and human connection. Technology stays invisible, empowering associates with clientele tools and customer context rather than disrupting the sense of exclusivity clients expect. Outside the store, desire is curated through tightly controlled digital ecosystems, private invitations, virtual showrooms and cultural collaborations that extend intimacy rather than chase scale.<br> <br> <a href="https://www.swarovski.com/en-US/s-swarovski-digital-flagship-store/" target="_blank">Swarovski's digital flagship</a>&nbsp;is one of the more fully realized examples of this vision in action. Their fully interactive virtual environment lets customers explore collections, take on gamified challenges and shop while their AI-powered infrastructure delivers real-time personalization across more than 2,300 physical boutiques and digital touchpoints simultaneously.<br> <br> But the experience is only as strong as the infrastructure behind it. What ties it all together is AI-powered CX orchestration, unified customer data, composable commerce layers and journey design that ensures the brand remembers the client regardless of where engagement happens.<br> <br> The shift is fundamental: from selling products across channels to orchestrating value across moments. Luxury brands that master this will deepen relationships at every touchpoint. Those that don't risk delivering a fragmented experience in an industry where seamlessness is now the baseline expectation.</li> </ol> <h4>Why luxury retail’s AI moment is now</h4> <p>For decades, the intimacy and exclusivity that luxury brands have delivered was powered by humans. Now, with AI, luxury retailers can take these experiences to the next level and scale them.</p> <p><a href="https://www.mckinsey.com/industries/retail/our-insights/state-of-fashion" target="_blank" rel="noopener noreferrer">McKinsey's State of Fashion 2026 report</a> found that among high-net-worth individuals, higher product quality and better in-store service are the top factors that would drive them to buy more from luxury brands in the year ahead. AI now makes it possible to deliver all of that, at a scale and consistency that was previously unrealistic.<br> <br> Luxury has always competed on relationship and trust. AI amplifies both for the brands willing to invest and erodes them for the brands that don't.</p>

<p>With AI touching every part of the journey, the real risk for luxury brands isn't that AI will make them feel less human. It's that their competitors will use it first, and the gap in client experience will become too wide to close.</p> <p><i>For more information about how Cognizant’s range of solutions can help your luxury brand, visit: </i><a href="https://www.cognizant.com/us/en/industries/retail-technology-solutions/specialty-retailers" target="_blank" rel="noopener noreferrer">Specialty Retailer Technology Solutions | Cognizant</a><i></i></p>