Internet algorithms and brand allegiance

I am afraid that top fashion brands such as Guess, The Limited, and Abercrombie & Fitch might go bankrupt in the near future and therefore be obligated to close their operations because of artificial intelligence technology. Let me say this differently — These former companies may be on their way to extinction because of the way we are thinking about our underlying human assumptions of what makes us profitable and functional which is a fundamental change in how things have been done in the past. Artificial Intelligence is changing us maybe unconsciously which will have a tremendous impact on the retail industry.

This article is about artificial intelligence and how AI may financially impact top fashion brands in the coming years. I am predicting that a number of well established luxury fashion brands will close their doors by 2025 because of technology. I hope that I am wrong about this but the signs seem clear cut to me. IBM is predicting almost 90% of customer interactions to be handled on-line without a human agent. This is very bad news for luxury fashion brands because their main sales point is selling their name. Millennials and younger do not have brand allegiance to these “old school” brands. They don’t know they exist! No wonder why stores like Macy’s and Sears are in the position that they are today. Those department stores are one of the main dealers for luxury brands.  Think about it — When was the last time you saw or you personally bought a luxury brand item from a department store? How about when it wasn’t a holiday? In the new age of information, these traditional brands may be at a disadvantage because there will be app algorithms that will find customers the best, cheapest items but those items will be tailored to what they are watching or clicking on. These luxury brands can no longer ride the coattails of success because brand allegiance is based on internet views not how long a brick and mortar store has been in existence.

Let me share something with you. My wife and I used to own a small business back in Pennsylvania prior to moving to the south. We learned, through experience and the science of observation, that customers will only buy from a local business if the prices are cheap or if the item is handmade. People are only trusting in the reviews from YouTube celebrities, bloggers, and vloggers. Younger and younger generations will turn to the internet and turn away from the customer service experience, being taught by older generations that the “salesman” is trying to sucker you. So, who will the new buyers trust?

The human side of their business, which has been at the center of their business model for decades, will prove to be irrelevant in the new age of intelligent machinery. We are going to see the birth of reinforcement learning where autonomous agents will maximize rewards. The traditional luxury brands will fight this war with “horses” where emergent e-retail giants will annihilate them with intelligent algorithms from behind.    

The old fashioned way Guess used to sell expensive clothing to you and me will mean very little in 2025. Is there a solution for them? I don’t know… I don’t think so. I am very skeptical that these companies will be able to adapt to this artificial intelligence mindset. Even if they could adapt to this upcoming reality, I don’t even think that there is enough time for them to make the transition even if they wanted to. I am afraid that these luxury company’s days are counted.

This is what I believe. We are going to see more and more intelligent systems that will help us to buy products at the cheapest price and tailored just for us. The machine will only get better at learning what you like the most and dislike the least. I do think that new e-brands will emerge in this transition. I also think that the adoption of AI in e-retail will also prove to be the “Analog” companies biggest nemesis. Tomorrow, I bet, will prove to be nothing like the past. Life changes. Retail is no exception.

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Divide and conquer by being ‘technomoderate’

It is very difficult for a person to  simultaneously “technomoderate” and also build a brand on social media.

That is to say, those who profit from any social media platform are constantly using it, which makes it very difficult to demotivate them from using these tools in the first place.

The more people use Facebook, the better they tend to get at using it, and the more rewards people tend to achieve from these systems. Therefore, asking kids who dream of having their own brand to use social media less often will hurt them. What do I do? I’m stuck!

I know that building brands online requires countless hours of dedicated work, along with the offline sweat. It is ridiculous what you need to do today in order to build a name in social media.

People spend too much time engaging support groups, managing bots to help with social media engagement and creating great media content to be shared. Limiting how often you share your stuff isn’t an option anymore. It is a requirement to share, and share often, if your goal is to build any type of brand in cyberspace.

Thankfully – at least from my “moderating” perspective – having too many social media messages released each day tends to backfire. I suspect this is related to the fact that producing quality content is difficult and expensive, and to the fact that posting too much content a day acts like a divide-and-conquer type of thing. People divide their own efforts, which tends to decrease what we call social media engagement.

People tend to remember what they hear more frequently, though. Social media professionals know this and therefore keep developing their image in cyberspace on a daily basis. But again, too much creation may do you more damage than good.

Bingo!

This is where Dr. A comes and says, “Kids, let’s build our brands in social media, but remember: Trying to build your brand too quickly will backfire. You need to engage in this process with moderation.”

Listen to me: Clever will be the ones who don’t abuse the social media system, because if they do, they will end up losing what they built. People tend to get sick of being bombarded with multiple messages because we are constantly receiving messages from hundreds, if not thousands, of people every day. There is hope for some technomoderation, I’m glad to say!

Building a brand, online or offline, is tough. It is time-consuming. Attracting a loyal clientele isn’t that simple. Now add in having to engage with them online on the top of that! Dude, I know that practice makes perfect, and in the world of social media, things aren’t any different.

A person’s social media IQ is directly related – like anything else – to use, but a degree of rest is a requirement for things to work.

Playing the game with frequency pays off, but there is a price or two to be paid. There is a physical and financial price to it, I must add.

Can you imagine building content on a 3-by-4 inch canvas, hitting tiny buttons at a rate of one keystroke per millisecond constantly for a good five minutes per session, four times a day, with the hopes of being rewarded by complete strangers 24/7? This act can be pretty physical, don’t you think?

And there is a cost! In a previous column, I revealed that spending $150 in social media services alone each month is only a fraction of the cost to build an image online. Are you ready to commit the equivalent of a car payment dedicated to growing your Instagram account? There is a price to all this madness.

As a professor who teaches social media and innovation, and believes in the moderate use of technology, this reality is — at a bare minimum — disturbing to me, unless “technomoderation” is adopted. By not using the tools, people lose by not playing the game. By overusing them, there goes your health and finances. What’s in the middle? I know, you love me … technomoderation!

Please keep this a secret.

Dr. A says, “Those who use social media tools within reason enhance their knowledge of the medium, and can build a brand over time with reason. I don’t think those who decide to ignore this advice will win,  ultimately.”

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(About the writer: Dr. Luis C. Almeida is an associate professor of communication at Lee University and a TEDx speaker. He is the author of the book “Becoming a Brand: The Rise of Technomoderation,” and a devoted Christian. He can be reached via his website at  luiscalmeida.info.)

Mindset Is Key For Success