As growth slows and consumer expectations evolve, luxury brands must rethink the role of physical retail — blending heritage, storytelling and technology to shape the next era.
Luxury retail’s golden age is beginning to lose its lustre. This is not simply a passing cyclical dip. It’s a wake-up call for an industry that has long relied on heritage and scarcity to command loyalty.
Physical flagship stores must be reimagined. Not as a simple point of sale, but as a living embodiment of brand experience. At the heart of this reinvention lies a largely untapped opportunity: the intelligent use of augmented reality (AR) to deepen engagement, showcase craftsmanship, and create a new level of emotional connection with customers.
Luxury has always been about an exceptional experience as much as high-end products. In the next chapter, the brands that use technology not as a gimmick but as a natural extension of their brand and provenance will be the ones that stay relevant.
Turning Stores Into Destinations
The answer, or at least part of it, lies in how stores are used. Not as shops, but as cultural destinations.
Some luxury houses are getting the idea. Dior has transformed its Parisian flagship store into a whole brand world. Come for the curated art exhibitions, stay for fine dining restaurants or even book a room upstairs—flagship stores are no longer simply points of sale but full-scale brand embassies.
Louis Vuitton is at it, too. At the start of this year, it reinvigorated its partnership with the Murakami art gallery in its London, New York and Singapore flagships. These spaces are curated as cultural hubs—part retail, part conceptual art—where footfall is welcomed even without immediate purchase intent.
Physical retail remains a vital part of luxury’s identity. But in a market where experience is often valued above ownership, brands need to offer customers something compelling enough to draw them in, time and again.
Where AR Enhances Experience
AR could do a lot for luxury if done properly.
Imagine a smart mirror that doesn’t just show you how a handbag looks, but suggests what outfits it pairs with. Imagine being able to see the hundreds of individual stitches inside a Hermès scarf. Or how a £50,000 watch mechanism actually moves, bringing to life in a way even the most eloquent sales assistant may struggle to pull off.
That kind of storytelling could boost sales. It could explain to the perfunctory browser why these prized goods cost what they do—and why they’re worth it.
Done right, AR gives physical retail what online simply can’t to the same degree. It adds weight, meaning and narrative.
And crucially, it captures data about what customers really want, which right now luxury houses are mostly guessing at.
The Hidden Problem?
This sounds good in theory. But there are challenges to overcome.
Most luxury retailers are working with outdated WiFi foundations that haven’t kept pace with today’s technological demands. The reality is that sophisticated AR experiences require 5G network capabilities, which provide ultra-reliable and low-latency connectivity to support real-time data sharing.
Yet infrastructure is just one piece of the puzzle. The luxury industry’s traditional organisational structure — where brand, merchandising, and technology teams operate with distinct objectives — can inadvertently slow innovation. When digital initiatives are developed without fully engaging those who manage the customer experience, or when technology decisions aren’t aligned with visual merchandising vision, even brilliant concepts face implementation hurdles.
This represents a strategic opportunity for leadership teams. The luxury houses making the most progress aren’t simply investing in technical upgrades — they’re fostering cross-divisional collaboration that ensures all stakeholders share both vision and execution. Medium-term infrastructure decisions are being made with an eye toward three-to-five-year business goals, while longer-term digital architecture prioritises adaptability.
For luxury brands, where every detail contributes to the perceived value, seamless experiences aren’t optional— they’re essential to maintaining the aura of excellence that customers expect.
The Path Forward
Luxury retail has always been about the experience, as much as the product. Arguably more.
In a shaky economy, that truth sharpens. If customers are spending less often, every visit has to feel like an event.
Tinkering with a virtual try-on app won’t be enough. Brands need to overhaul how online and in-store experiences connect, making them feel like two chapters of the same story, not two different books.
In-store digital experiences — smart, sophisticated and unobtrusive — are no longer extravagances. They are survival strategies in a market where consumer expectations are rising even as spending tightens.
The brands that successfully weave innovation into the fabric of their heritage will create environments that people want to return to, spend time in, and spend money.
The golden age of luxury isn’t over. But in today’s retail landscape, it belongs only to those willing to reinvent what luxury can feel like.
About the Author
James Hughes is Retail CTO at Verizon Business. You’re more than a business, agency or organization leader. We’re more than the usual network that provides reliable coverage. Together, we can empower you and your people.
