Tech Chic

When Anabel Maldonado (BA ’11) began studying psychology at York in the 2000s, she never imagined her career would meld luxury fashion and artificial intelligence. During her undergrad, she discovered a passion for the biological aspects of psychology, particularly how brain imaging revealed mood patterns. Despite a professor’s encouragement to pursue psychiatry, Maldonado’s plans changed during a gap year in London in 2008. Initially working with autistic children, she found herself captivated by the city’s vibrant fashion scene. “I ended up pivoting into luxury fashion e-commerce,” she recalls, echoing a mentor’s wisdom, “you end up where you’re meant to be.”

Today, Maldonado runs PSYKHE AI in New York, a “personalization engine” for fashion e-commerce retailers that draws on insights from her psychology background. Her innovative “psychographic” recommender system combines personality traits from 90,000 survey responses with consumer preferences. “People that score higher in neuroticism prefer black,” she explains, illustrating how her system uncovers unexpected connections. “It was really a machine learning problem to understand the relationships.”

The result is a “super personal shopper” algorithm – “teaching machines taste” is the company’s slogan – that operates behind the scenes on retailer platforms, generating highly nuanced online recommendations for luxury fashion shoppers. Maldonado has raised US$3.5 million to date, with investors including Net-a-Porter, a London-based luxury retailer and one of fashion’s e-commerce pioneers.

A complex environment where data-driven personalization must navigate carefully curated brand images

These innovations offer a glimpse into the rapid evolution of the multi-billion dollar global luxury brand industry, which seeks marketing strategies responsive to the mercurial tastes of high-end consumers. “Often in luxury,” Maldonado explains, “no one’s looking for anything specific. You get a sudden inspiration. No one wakes up saying they need a pair of green Bottega Veneta mules for $800.”

Schulich School of Business supply chain expert Isik Bicer’s research on luxury fashion illuminates the industry landscape in which Maldonado’s AI operates. Bicer has studied the paradoxical nature of this sector, where traditional economic principles often yield to marketing strategies centred on exclusivity. “In the luxury industry,” he explains, “companies often introduce products in limited editions, which means that the marketing department sets the order quantities. If the product sells out, it is celebrated as a success story.”

While Maldonado’s PSYKHE AI aims to personalize the shopping experience, Bicer’s insights reveal why such an approach is both innovative and challenging in luxury fashion. The industry’s focus on scarcity and exclusivity, sometimes taken to extremes like destroying unsold merchandise, creates a complex environment where data-driven personalization must navigate carefully curated brand images and deliberately limited product availability.

Schulich marketing Professor Eileen Fischer, co-author of a 2022 paper on the sometimes contradictory forces driving luxury fashion, explains why a market for the 0.1 per cent warrants scholarly attention. “We can learn lessons about other slices of the world by studying this particular one,” Fischer says, adding that there’s a wealth of information about the luxury sector. “It is a convenient context in which we can develop insights that are transferable to other contexts that aren’t quite so visible or well-documented.”

Fischer’s recent works explore how digital landscapes affect luxury brands. Her research also examines how haute couture trends quickly find their way into mass-market merchandising. “What is on the runway one week is being emulated and re-articulated the next week,” she explains. “It may be in fast-fashion places like H&M or Zara, but it also may be goods that Etsy artisans see and decide to emulate or copy.”

As traditional fashion media gives way to influencers, social media and livestream shopping platforms, luxury retailers are increasingly incorporating interactive technology and personalized services to enhance customers’ shopping experiences. Maldonado’s core objective with PSYKHE AI is to recreate online the exclusivity that luxury shoppers have long demanded from bricks-and-mortar retailers. “Those really good salespeople used to be on the shop floor,” she explains. “But those are all disappearing, right? We’re trying to build that intelligence into a system that can show that emotional relevance.”

AI-driven digital marketing is just one facet of innovation in the luxury space; others involve more traditional approaches to developing novel products for discerning customers. Fischer highlights the growing interest in upcycling, “which involves taking high-end fashion goods and remaking them.” This trend poses intriguing challenges for luxury brands, as they may risk losing control of their narratives and missing out on potential revenue streams.

AI-driven digital marketing is just one facet of innovation in the luxury space

While upcycling presents potential challenges, it does align with the changing preferences of consumers. Bicer observes that younger luxury shoppers are increasingly interested in sustainability – “justifying their luxury spending by finding sustainable luxury goods.” To address this demand, new provenance regulations in the EU will require luxury firms to provide detailed sustainability information about material origins through “digital product passports.” Additionally, a coalition of luxury brands has begun embedding scannable chips in their goods that link to a blockchain ledger containing this data.

As scrutiny intensifies on the environmental records of mass-market clothing industries, Fischer notes that luxury powerhouses such as LVMH have taken proactive steps. These companies are now highlighting their performance in areas such as emissions, water consumption and packaging through public filings, demonstrating a commitment to transparency and sustainability.

Despite progress in some areas, Fischer points out a significant shortcoming in the industry: diversity, equity and inclusion. “There’s so much talent out there; there are so many people of diverse genders, races and body sizes who want to work in fashion and are desperate for their chance to grab that golden ring. Why aren’t the brands doing it?”

Maldonado’s approach offers a different perspective on disrupting the luxury sector, focusing on AI’s nuanced techniques. In the vast online marketplace, Maldonado believes her firm’s psychographic technology is uniquely positioned to meet the current needs of luxury buyers. As she puts it, “It’s just so much deeper than anything else.” ■