François-Xavier Marquaire is managing consultant at MC Crescendo
By François-Xavier Marquaire Automation is the leitmotiv of our times. Advances in robotics and artificial intelligence mean machines are no longer confined to industry assembly lines. Robot chefs and lawyer AIs are coming, and this Fourth Industrial Revolution is on course to replace anywhere from 20 percent to 50 percent of existing jobs in developed countries by 2050. In this maelstrom of change, traditional crafts – including luxury handmade products – may appear to be safe from automation. Demand is still growing healthily, after all. Just last month, Hermès opened two new production facilities in France for its successful small leather goods division, creating more than 200 new skilled jobs. Yet craftsmanship is not immune to the effects of automation, which will affect both supply and demand – and not necessarily in a good way. World of artisans? As industrial and office jobs inevitably decline, it is tempting to think that skilled manual labour will continue to thrive. There are early signs, with MBA-educated 30-somethings suddenly deciding to ditch a corporate life mired in processes and become bakers, tailors or shoemakers. The search for “meaningful” jobs is a hot topic and, as more jobs get replaced by machines, it is likely more than a few of us will choose to don a leather apron and chiselling tools over reporting to an AI manager. There is also the belief that artisan jobs cannot be automated, largely because machines cannot be creative or achieve the level of “perfect imperfection” that we expect from the finest luxury products. That may be true now, but will it be so in the future? Vodka-maker Absolut has already found a way to mass-customize some limited-edition bottles, each with a unique design, opening the way for automated imperfection. And music algorithms are able to crunch through terabytes of listening data to create specific melodies that will be able to appeal to specific groups. Consumers who think they will be able to always tell the difference between hand and machine-made have probably already been proven wrong without them even realizing it. Finally, will future luxury buyers always choose handmade products over their machine-made counterparts? Rolex watches are inarguably a staple of the luxury world, yet production, assembly and quality control are mostly done by machines. When performance and quality are needed, few, if any, craftsmen can compete with machines. And as machines get smarter, fields such as bespoke tailoring or shoemaking may soon face automation. For the few If we look at things from the demand side, the outlook is ambivalent as well. According to Bain & Company, the market for personal luxury goods is expected to reach $338 billion by 2020. And by 2021, millionaires will control more than $115 trillion, or 51 percent of global wealth. Merry tidings for the luxury industry, but the question remains: how long can this last? While millionaires are on the rise, middle-class jobs are being replaced by machines and people are forced to look for new, lower-paying jobs, from pensioner care to Uber driver. The middle class, the main consumer for entry-level luxury goods, is faced with an uncertain future. This may push luxury brands to automate the production process for these products even further to lower prices, cutting jobs and widening the gap between true luxury and “masstige.” IN THIS CONTEXT, faced with increasing supply and shrinking demand at the lower end of the spectrum, how will brands, craftsmen, and consumers react? Will new, handmade luxury products flood the market at lower prices? Will craftsmanship become the prerogative of the new millionaire class? Or will new digital production and sales tools help small craftsmen not only survive, but thrive as well? One thing is for sure: change is coming, and it is now that industry stakeholders must choose where these changes take us. François-Xavier Marquaire is managing consultant at MC Crescendo, Milan, Italy. Reach him at fxmarquaire@mccrescendo.it.