As fashion and luxury look to the year ahead, big questions regarding customer confidence and appetite to spend are front of mind for industry executives — cited as the biggest risk to growth globally in 2025 by fashion executives surveyed for The Business of Fashion and McKinsey & Co.’s The State of Fashion 2025 report.
Indeed, shoppers across income levels are trading down on purchases, while dissatisfaction across the shopping journey remains high. Baymard Institute, a research and consulting firm, found that 94 percent of e-commerce sites fall short in at least one of five key areas relating to user experience.
In 2025, investing in the improvement of that experience will be a key differentiator, with the application of AI within the customer journey identified as one key area of opportunity. The State of Fashion 2025 report found that 82 percent of customers want AI to assist in reducing the time they spend researching what to buy, while an IBM report found that 86 percent of consumers who have not tried AI for shopping are interested in using it.
Outside of the improved customer experience, this level of investment also benefits the bottom line. McKinsey estimates that generative AI could add up to $275 billion of economic potential to apparel, fashion and luxury sectors’ operating profits.
The opportunity is broad, but one possible frontier is AI-augmented customer care. Since its inception in 2007, customer service platform Zendesk has been supporting businesses to make online customer experiences better. Features include messaging and live chat, AI-powered intelligent bots, enhanced self-service options and reporting and analytics.
“From our observations, there is increasing consumer expectation that, when they interact with a brand online, there should be the ability to send photos, message on a chat, send a text on my laptop, via the website,” said Zendesk’s vice president of solutions consulting, Ram Naidu, in his opening comments at an intimate breakfast co-hosted by BoF and Zendesk in New York. “If you’re not able to engage across these different mediums in one fell swoop, you will have already disappointed the consumer.”
Executives from Michael Kors, Walmart, Ralph Lauren and Tapestry joined BoF and Zendesk for an intimate roundtable held under The Chatham House rule at Hotel Chelsea in New York City, to discuss the wider opportunities, and challenges, in this technology — and the winning strategies that could drive growth.
Below BoF shares anonymised insights from the discussion.
Recognise the differentiating factors for premium shoppers
“I find that AI-augmented care works for e-commerce where customers understand and appreciate the scale of service. We are talking about the type of businesses where you cannot allocate human interaction for great service, at scale. Here, it makes sense, because the offering is going from nothing to something,” said one guest.
“However, when you start to get into luxury or into the higher pricepoints, there is an expectation of a more specialised service. Could it have the opposite effect here? When you cross a threshold with a price point, do those shoppers expect human interactions — even online?”
“As the AI chatbot language gets more and more natural, and customers begin to see their own tones reflected in this technology, I think friction will ease,” countered another guest. “In my experience, where and how this kind of technology is implemented should not be split by category, or price point or by line, but rather by channel. While offline shopping still requires a very human side of selling, all e-commerce innovation is ripe for this kind of update.”
Signpost the value exchange for consumers
“If you are willing to incentivise the data capture, then customers typically opt in. They have already chosen to come to your site, so it shouldn’t be a big leap for them to go further,” said one guest.
“I had an interesting test come back recently — we had a QR code in physical stores, with no incentive, and we saw zero scans in a year. It’s indicative that there’s a place for the tech, but the exchange of value needs to take place — and at a better point in the shopper journey,” they added.
“Do customers really think things are truly private anymore?” asked another guest. “The average consumer knows that every company is collecting information. If you’re using an iPhone, they have your biometric data. We enter a transaction with businesses where we trust that the data is not going to be exploited — that’s the explicit part of the deal. The implicit component lies in tailored experiences — the enjoyment level goes up, and consumers want to engage further and deepen their ties with your brand. It’s an ongoing balance.”
Closely Monitor and Evaluate Consumer Readiness
“I think disclosure regarding when and where you are using AI in the shopping journey is currently the key to success. Especially as, in the early stages of this implementation, we often run the risk of customers who will not know that they are engaging with the technology,” said one guest.
“Baby Boomers, for example, are a significant demographic with huge spending power — we can’t risk upsetting or offending them by assuming that whether they are engaging with AI or not won’t matter to them. With disclosure, the gains go up. I believe it’s all about education and awareness,” they added.
“It’s about finding the balance. You want to educate consumers, but you don’t want to make it seem like you’re doing something wrong,” countered another attendee. “Think about it like a photoshoot for a campaign. That’s shot in a studio with props, often designed to look like it’s somewhere else entirely. We don’t disclose to customers that it wasn’t actually shot on location. I think the same could be said for applications of AI that benefit the customer and where that awareness matters less.”
Augment workforce roles with AI for greater productivity
“Within our workforce, employees feel like AI helps to streamline their workload. Currently, we’re doing tons of AI-powered attribution which, historically, in the world of retail, was always a pain point and a real manual effort,” said one guest.
“It has to be done so often to keep up with evolving language — is it a cocktail dress, an evening dress, a going-out dress? Internally, the workforce is embracing AI to streamline as opposed to worrying about their jobs. I think in part because adoption is still incremental — it just frees up some time to tackle more things.”
“There was a time when everyone said analytics will become part of your job, as opposed to it being such a separate function. That being able to understand data at a deeper level would be a basic requirement,” said another attendee. “Now, the conversation is very different, because AI is increasingly easy to engage with.
“But even just the technology aspect means there are going to be many more hybrid roles, this innate understanding of technology, of prompting, of leveraging AI tools, is going to become a core part of jobs. I hear of roles like citizen developers, for instance. That comfort with technology tools, no matter your role, will only become more important.”
This is a sponsored feature paid for by Zendesk as part of a BoF partnership.
