The biggest mistake luxury brands can make in 2026 is assuming AI only matters to younger customers. In reality, AI is reshaping consumer behavior across all generations, though its influence varies by age group. Brands must therefore keep pace with these shifts to stay relevant.  

Since 2018, we have been exploring the impact of AI on luxury brands as part of our bi-annual “Premium and Luxury Study.” Each wave surveys a representative sample of 1,000 German consumers, from Gen Z to Baby Boomers who regularly or occasionally purchase premium and luxury products.  

Our goal is to track how generational values and attitudes influence high-end buying behavior and purchasing decisions across age groups. Here are some of our findings from this year’s study. 

How Generations Like to Search

Search habits differ sharply across generations. Google is still firmly Baby Boomer territory, regarded as very important or important for 67% of respondents in this group, compared to only 41% of Gen Z. In contrast, social media belongs to Gen Z with 54%, versus only 29% of Baby Boomers.  

Millennials (40%) are the strongest users of retail platforms, such as Mytheresa and Net-a-Porter, for purchase decisions, compared to Gen Z (34%) and Gen X (38%). 

AI-Powered Convenience

The uptake of AI is making shopping much simpler, driven by the need for speed, simplicity, and ease of use. 78% of the total survey base actively uses AI regularly or daily, up from 73% in 2024. About 52% of all generations agree that AI will positively enrich their lives in the future. 

64% of Gen X and 61% of Baby Boomers say they actively follow developments and educate themselves on AI, compared to only 51% of Gen Z. One reason behind this response may be that Gen Z uses AI more intuitively. In contrast older generations feel the need to study to keep up with the changing trends. 

Convenience is a huge factor across all generations, with rapid AI adoption rates notably among older generations, being used to simplify forms and processes. Surprisingly, Baby Boomers (49.5%) value it more than Gen Z (44.5%). 

AI-powered convenience also plays a major role across all stages of the buying cycle, from inspiration to search and decision-making, and it is catching up with traditional tools. While consumers still rely on familiar channels such as brand websites (54%), Google search (55%) and social media (45%), we found a growing adoption of AI: 44% regularly use Google AI and 45% turn to platforms like ChatGPT and Perplexity. Given that search engines have dominated for over 15 years, this narrow 10% gap highlights the remarkable pace at which AI is gaining ground. 

Building Trust With Buyers

Trust plays a major role in consumer behavior. When asked which channels were most important for inspiration, research and comparison, and purchasing decisions, Baby Boomers showed the highest trust in official brand websites, with more than 60% considering them important. In contrast, Gen Z is more skeptical of official channels, with less than 50%, and prefers decentralized information on social platforms. 

When it comes to letting an AI agent make a purchase decision, there’s a noticeable split: Gen Z (41.5%) and Millennials (42%) are ready. Baby Boomers (32%) remain more resistant.  

Likewise, 43% of respondents trust AI in decision-making, such as using AI agents. A slight increase from 41% in 2024. Whereas, younger generations show 42% approval compared to Baby Boomers (27%).  

Both points signal reluctance but a growing interest among senior audiences, which has knock-on effects for brands.  

Since 2024, trust and data privacy concerns in AI have fallen from 51% to 45% across age groups. When asked about concerns regarding AI ethics, Millennials are the least concerned  (31%), followed by Gen Z (42%), Gen X (42%) and Baby Boomers (45%). 

One important lesson: Brands must harness AI for personalized inspiration without compromising privacy. It is also important to address ethical and data concerns proactively, as trust remains a key lever in brand leadership. 

Future-Proofing Luxury

Our analysis shows the real risk isn’t overlooking AI; it’s assuming its impact is limited to select customer segments, especially younger consumers. The implication for premium brands is that they can’t afford to dismiss AI’s universal impact. Likewise, they need to mitigate generational blind spots, as viewing AI adoption through a single generation’s lens creates a constrained understanding of how others think and engage with technology. 

With the rapid rise of AI-based search, generative engine optimization (GEO) is becoming a key driver of traffic and brand visibility. This will impact how luxury brands show up on platforms, differentiate themselves and resonate with audiences across generations.  

At Prophet’s annual Talking Tacheles event, business leaders from across the country came together to explore shared opportunities and challenges around AI—and how it can elevate employee, brand, and customer experiences. 

The name Tacheles reflects the spirit of open, cross-disciplinary dialogue and pays tribute to the location of Prophet’s Berlin office, adjacent to the iconic Tacheles building, once a post-reunification hub for creativity, transformation, and new beginnings. While AI was the central theme of the evening, the conversation organically reverted to AI-focused topics.  

Layla Keramat, a partner in Prophet’s Experience & Innovation, EMEA, practice shared insights from her experience working with clients: 

AI–Opportunities and Threats: Reimagining Experience in a Rapidly Changing World 

While most discussions on AI focus on technical capabilities, cost savings, and productivity gains, it’s also important to step back and ask: What value will AI deliver to human beings?  

History offers many parallels of profound change. For example, during the smartphone revolution of 2007, touchscreens transformed not just devices, but entire industries and workflows. AI is now having a similarly deep impact, disrupting how we work, interact, and experience brands. 

We can confidently expect that by 2030, no customer, brand, or employee experience will feel the way it does today. This very narrow timeframe will require a major shift in perspective, from viewing AI as a tool, to embracing it as a catalyst for reimagining human-centered experiences. 

By 2030, no customer, brand, or employee experience will feel the way it does today.

Layla Keramat

The question is therefore: How can we weave customer, brand, and employee experiences into holistic journeys that create real value, strengthen relationships, and unlock new avenues for growth?

Here are three areas for business leaders to consider: 

1. Employee Experience: Augmenting Human Potential 

AI is already enhancing how employees work, from email assistance to robotics in physical environments. In many working environments, technology can now take over repetitive, physically demanding, or hazardous tasks, freeing humans to focus on creativity, strategy, and value creation.  

The message? AI should, however, be viewed as a partner, not a replacement for humans. Organizations must rethink how they support and upskill employees to thrive alongside intelligent systems. 

2. Brand Experience: Standing out in a sea of Sameness 

With AI tools widely available, differentiation becomes harder. Even digital-native brands are struggling to stand out. Consumers are shifting away from traditional search engines like Google and turning to platforms like Amazon, and soon, AI-powered browsers from major tech players. 

In this landscape, the brands that win will be those that embed unique value into their experiences, not just their products. The challenge is to avoid becoming indistinguishable in a world where everyone has access to the same AI toolkit. 

3. Customer Experience: Retaining Relevance

One of the most overlooked challenges in customer experience is the loss of control at critical touchpoints, especially in areas like last-mile delivery and post-purchase service.  

While AI can help optimize logistics, personalization, and support, it’s not enough on its own. Brands must invest structurally to ensure they own the entire customer journey. That means looking beyond the transaction and designing every step, from purchase to delivery to return, as a seamless, reliable, and satisfying experience. 

From FOMO to Strategy 

In our work, across industries leaders often candidly share feelings of anxiety: “I don’t know what my brand, customer, or employee experience will look like in 2030. All I have is FOMO.” 

Our advice? Don’t chase gimmicks. Instead, build a clear strategy rooted in experience design, infrastructure, and long-term value. The parallel to AI is clear. It’s not about flashy demos, it’s about embedding intelligence into the foundation of your business. 

Thomas Edison once said, “The invention of the light bulb was just a circus trick. What truly progressed humanity was bringing electricity into every home, workplace, and school.” 

Are you a Germany-based company interested in hearing more about Prophet’s Talking Tacheles events, or rethinking your approach to AI?

For companies, achieving uncommon growth is a challenging goal. One important element is having a fact-based and data-backed strategy about who your customers are and how to target them. In reality, many blue-chip and large organizations are still not investing sufficient time and resources into addressing these questions. This is where smart segmentation can make a tangible difference. 

In marketing, customer segmentation has long been a tried-and-tested strategy to help leaders define what we call the “where-to-play”: Which customer segments to focus on as design target (a core set of consumers whose needs perfectly match their brand promise, products, services, and offerings etc. ) and as commercial targets (a broader group of potential customers with similar needs and therefore addressable). 

Once companies define “where-to-play”, the “how-to-win” question arises: How to best address the target segments in terms of product offering, marketing and sales? 

And this is exactly the spot where AI is now taking customer centricity to the next level by offering a deeper, faster, more intelligent analysis, interpretation and understanding of customer habits and preferences. This gives companies greater visibility and confidence about how they design their go-to-market approach.   

In recent work with a number of organizations, we have been pioneering a more innovative “how-to-win” approach to segmentation, by developing and testing so-called synthetic AI personas. We believe these AI-based personas have the potential, if properly managed, to give organizations next-level customer insights at their fingertips.

Transforming Audience Insights

Simply put, an AI is trained on all the qualitative and quantitative audience data from a segmentation project. The result is a digital twin that functions like a GPT, responding to text or voice input. You can “talk” to your target audience, a persona generated by AI, and ask it questions. It answers, depending on the model setup, in real time or after a short delay.   

The outcome? Clear, nuanced answers to questions about product and service offerings, price sensitivity, communication preferences, or decision-making behavior. Even more impressive, we’re seeing results that go beyond the typical scope of market research and the data set that was originally fed into the system.  

Of course, having clear guardrails and rules are critical to success. For example:  

• Instructions on expected response quality (e.g., “Include data points with every recommendation, always reference motivation drivers of the target group”)
• No-go zones (e.g., “Avoid any kind of generic recommendations or mass-market tactics in marketing efforts”)
• Quality checks (e.g., “Formulate all recommendations in a customer-ready format so they can be implemented immediately”)

Another essential factor is training the AI. In one of our recent projects, it was necessary to put in place a three-step human-machine process: first, removing obvious errors and so-called hallucinations. Then, a twofold review phase where an initial set of recommendations was deliberately compared with the deep industry expertise of our consultants.  

The results have superseded our expectations. Nothing less than “audience insights at the push of a button.” In effect, marketers can now have access to a 24/7 customer persona they can consult on brand, product, pricing, sales or marketing communication topics.  

Below are three recent examples that show how this works in real-world settings. 

Example One: Travel company 

For a leading European travel group, we defined target customer segments for its hotel brands using a unique segmentation approach that combines lifestyle and travel behavior and needs. This resulted in the creation of Travel Lifestyle Clusters.  

For these segments, we developed AI personas and used them to help the client design targeted product strategies and communications across the entire experience journey—from brand to marketing and sales. The twist: once trained (which requires deep technical and industry know-how), these personas can draw implications beyond the  initial data input.  

For example: When asked, “What would an ideal welcome sequence at a luxury boutique hotel look like for you?” the persona provides detailed product, service and communication suggestions. Or, if market research reveals that a target group enjoys “beach and garden games” during hotel stays, we could ask it to specify which games fit their lifestyle. The AI persona would deliver tailored suggestions in seconds, including full staging, materials, music, etc.  

Example Two: Education foundation 

For a large foundation active in education, we developed AI personas for teachers as part of a school development project. Unlike the travel case, there was no primary market research available. Instead, personas were conceptually defined and built as “AI avatars.” Psychological models on motivation, change readiness, and change capabilities were used as input, along with a wide range of secondary statistical data. The final boost came from interviews with real teachers, conducted to reflect different pedagogical archetypes and integrated into the AI model.  

To deepen the impact, we gave the AI avatars names and faces, making them feel very real. As with the travel example, the results marked a milestone in working with audience insights. “Which of the following slogans would you prefer for a marketing campaign surrounding new tools and offerings to aid school development?”—the AI provides clear, precise, and logical answers that hold up in A/B testing with real interviews.

Example Three: Fast Food Brand 

For a fast food brand, we helped teams translate segmentation insights into decisions aligned with brand principles and growth goals. The breakthrough? We transformed the target segment into an AI-powered assistant—one that behaves like the segment and speaks the brand’s language. It was trained on human insights (attitudes, behaviors, cultural signals), brand DNA knowledge (positioning, tone, promise), and market context (category dynamics, local norms).    

This assistant is a flexible and replicable system that can generate and filter ideas, such as menu concepts, partnerships, channel formats and more, so they’re shaped by what will truly resonate with the audience while staying on-brand.  

Crucially, this should be regarded as an inspiration tool, not a decision-maker: human judgment still assesses feasibility, risk appetite and commercial readiness. That balance between speed from AI and judgment from experts can lead to faster alignment, clearer briefs and a stronger pipeline of testable ideas. 

We would like to thank Erik Muenster, Zadkiel Yeo and Prophet’s AI team for their contributions.

As we approach 2025, global economic challenges persist, with growth projections remaining modest and some even predicting a third consecutive year of mild recession. Across Germany, businesses in core industries are feeling the pressure of high interest rates, waning consumer demand and market volatility. In response, many firms are turning inward, prioritizing operational efficiencies over expansion. Yet, a focus solely on cost-cutting and efficiency poses deeper challenges for business leaders: how to sustain employee motivation and engagement, preserve hard-won progress and lay a solid foundation for a return to or even new versions of growth.

To guide your organization back to a growth track in 2025, here are five essential strategies: 

1. Re-Set Your Narrative With an Updated Story of Value

Challenging times can send out mixed signals – both internally and externally. Now more than ever, organizations need a unifying narrative that resonates deeply with employees and offers customers a clear, differentiated value. Especially in today’s recessionary climate, as we’re currently seeing in Germany, articulating your value in a way that is authentic and optimistic is essential.  

“When top employees and valued customers feel a compelling sense of purpose, engagement rises.”

When top employees and valued customers feel a compelling sense of purpose, engagement rises. Prophet’s new leadership tool, The Story of Value, brings tangible and intangible business assets into a distinctive and inspiring narrative. It crystallizes the unique value the business offers to shareholders, customers and employees. It simplifies a complex business into a compelling statement of value, creating a common language that inspires executives and employees internally while resonating with the market externally. 

2. Unlock the Moves that Propel Impact 

Now is the time for pragmatic innovation. In any business, there are actionable moves that can drive significant, measurable impact – whether by challenging a competitor or seizing a gap in the market. Identify actionable strategies based on customer needs and market opportunities that can be measured, optimized and scaled. Here are some examples of growth-oriented moves:  

• Vision: Formulate a clear and reachable north star that every team member can rally around. Articulate the positive impact for individuals, the organization and society.  
• Portfolio: Optimize your product portfolio for efficiencies.  
• Marketing: Tap into new segments or double-down on loyalty with your most profitable audiences. 
• Distribution: Test new routes to market, like direct-to-consumer models.  
• Operations: Streamline processes and refine operational models.  
• Talent: Foster mentorship between experienced employees and new hires in key areas like generative AI. Mentors provide guidance, while mentees bring fresh perspectives, benefiting both parties and building motivation through shared growth. 

3. Nurture Your Leadership and Team Collaboration  

Leadership teams, much like individuals, are dynamic ecosystems that require constant nurturing. Our proven method surfaces hidden challenges and fears, enabling leaders to address these openly and build a strong foundation of trust. This trust is essential for cultivating a high-performing leadership team unified by shared goals. 

Our annual Catalysts research shows that successful transformations hinge on genuine collaboration, where enterprise and individual goals are seamlessly integrated. High-functioning teams that shift from a siloed mindset to a team-oriented approach foster mutual accountability and alignment while also benefiting customers and the bottom line. 

The basis for this work is Prophet’s Human-Centered Transformation Model (HCTM), a comprehensive, people-centered approach designed to fuel growth across the organization. It’s built on the premise that organizations, like people, consist of interconnected elements: DNA, mind, body and soul. 

For leadership teams to thrive, they should follow a similar model where trust, collaboration and a shared sense of purpose are cultivated to drive meaningful outcomes.  The Human-Centered Leadership Team Effectiveness Model emphasizes that addressing all dimensions of the human system is crucial to unlocking potential and achieving impactful, sustained outcomes. 

4. Invest in Your Brand – Inside and Out 

In challenging economies, the power of a strong brand becomes ever more evident, underscoring the critical need to invest in it for continued growth. Yet, this imperative often isn’t fully recognized across the executive team. Without broad leadership commitment to brand investment as a strategic priority, efforts to secure and sustain resources can encounter resistance, limiting the brand’s potential impact on overall business outcomes. Market experience and research consistently show that established brands tend to grow market share in down economies, as customers seek reliability and stability. For instance, brands that increased their share of voice during the 2008 recession grew market share 4.5 times faster than those that did not. Investing in your brand drives business value through three key lenses: 

• Revenue and margin: A strong brand enhances customer choice, loyalty and price premium.  
• Valuation: Brand equity bolsters enterprise value and shareholder return. 
• Talent attraction: A reputable brand strengthens the talent pipeline and reduces talent acquisition costs. 

5. Implement an Agile Change Management Strategy  

Returning to growth demands a robust, people-centered change management strategy that addresses both the cognitive and emotional dimensions of the team. Leaders need to be equipped to guide teams through the complexities of change, dealing with underlying thoughts and feelings to build trust, resilience and alignment.   

To be effective, change management requires a holistic approach that considers multiple dimensions. Define clear actions within each area to maintain a comprehensive focus, rather than concentrating on just one or two aspects. Navigating transformation is complex and demands a balanced strategy that meets organizational needs while empowering the people driving them. Skillful coordination is essential. Bringing in an experienced partner like Prophet, who excels in orchestrating comprehensive change initiatives can be invaluable in helping your organization thrive in today’s challenging business environment.