Luxury: Technology Drives Strategy but Remains Peripheral in Executive Committees

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Bridging the Gap: Technology’s Role in the Luxury Sector

Published: September 24, 2025

In the luxury sector, a significant disconnect exists between perception and reality regarding technology’s strategic importance. A recent study by Bain & Co, in collaboration with the Comité Colbert, reveals that while 85% of chief executives view technology as a strategic asset, only 35% of Chief Information Officers (CIOs) hold positions on executive committees. This disparity highlights a critical challenge facing luxury brands as they navigate an increasingly digital landscape.

The Growing Importance of Technology

The Bain & Co study, which surveyed executives from various luxury groups, underscores the rising significance of technology investments in the industry. Currently, the European luxury sector allocates an average of 3.1% of its revenue to technology, with variations ranging from 1.9% to 5.5%. Interestingly, this percentage is consistent across both large groups and small to medium enterprises (SMEs). More than a third of respondents believe they possess the technological capabilities necessary to execute their strategies effectively.

A Shift in Investment Strategy

The report indicates a potential for CIO budgets to increase tenfold over the next two to three years. This anticipated growth comes at a time when the luxury market is experiencing a slowdown, prompting leaders to optimize resource allocation across all functions, including technology. The rise of artificial intelligence (AI) tools presents opportunities for substantial productivity gains, further supporting the need for a more disciplined approach to growth.

The Current State of Technology Budgets

Despite the optimism surrounding technology investments, the luxury sector still lags behind other industries in terms of modernization. On average, companies allocate 63% of their technology budgets to maintaining existing systems, referred to as "run," while only 37% is dedicated to "change" initiatives. In contrast, other sectors often allocate nearly 50% of their budgets to modernization projects. This reliance on legacy systems and external service providers can hinder the sector’s ability to innovate and adapt.

The Need for Transformation

To remain competitive, luxury brands must invest in transformation initiatives that reduce operational costs and enhance efficiency. The study reveals that 60% of surveyed companies expect their technology expenditure to rise by more than 5% in the coming years, with 28% anticipating increases exceeding 10%. However, the strategic choices made regarding these investments will be crucial for long-term success.

Prioritizing Visible Impact

Top management in luxury brands tends to favor investments that yield immediate, visible impacts on the business. During the COVID-19 pandemic, many brands accelerated their technology initiatives to enhance customer relationship solutions, which accounted for 40% of their "change" budgets. In comparison, spending on data and AI—critical components for long-term transformation—remains modest, comprising only 21% of the budget.

Challenges in Talent Acquisition

The luxury sector faces significant challenges in attracting and retaining technology talent. Many companies still rely heavily on external service providers for strategic technology matters, often due to a lack of in-house expertise. The competition for skilled professionals is fierce, making it imperative for luxury brands to cultivate a culture that embraces technology and innovation.

The Role of Leadership

A key finding of the study is the importance of collaboration between CEOs and CIOs. Effective partnerships can help luxury groups build competitive advantages as they enter a new phase of technological maturity. The integration of technology specialists into executive committees remains limited, with only 35% of CIOs holding such positions compared to 83% in the retail sector. This gap reflects a broader apprehension within luxury groups regarding the integration of technology into their core strategies.

The Path Forward

To address these challenges, luxury brands must foster a new generation of leaders who are well-versed in digital development, infrastructure, and the strategic use of AI and data. While honoring the industry’s rich cultural legacy and commitment to craftsmanship, these leaders will be essential in driving the sector’s technological transformation.

In conclusion, the luxury sector stands at a crossroads. While there is a growing recognition of technology’s strategic importance, significant gaps remain in its execution and integration within executive leadership. By embracing transformation and fostering a culture of innovation, luxury brands can not only enhance their operational efficiency but also secure their position in an increasingly competitive market.

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