By Rebecca & Amadeus (featured in HMKM Eye #2 - Selling Sustainability)
Luxury's change agents
Luxury brands are leading the way on sustainability, using their deep commitment to excellence and innovation to meet today’s challenges. Rebecca Robins has an exclusive account.
Luxury continued to assert its presence in Interbrand’s 20th Best Global Brands study; it was the top performing industry for the second consecutive year. It’s been another strong year for luxury, and yet: “When it comes to climate change, we can no longer wait to take real action.” That call to action by François-Henri Pinault, CEO of Kering, reflects a paradigm shift for which all business leaders are responsible. The Business Roundtable has raised the stakes on the imperative shift from the singularity of shareholder value to the collective value of wider stakeholders. In the context of an industry that has outperformed other sectors, where businesses are based on the entire premise of excellence and leading the way, the luxury industry has an opportunity to take collective action to set transformational standards for its own businesses and beyond.
One of the most compelling moves has been made by Prada. Known for their unique ability to both defy and define the evolution of luxury, the fashion house has recently committed to a ‘‘world-first’’ sustainability deal – ostensibly setting a new standard for every luxury brand.
In early November, Prada agreed to a five-year sustainability term loan with Crédit Agricole Group, enabling the fashion house to favorably adjust its annual interest rates upon hitting specified sustainability goals. And it was the brand’s CFO who was notable by his voice on this announcement. This was evidence of a luxury brand proving its commitment to sustainability because it’s hardwired to their bottom line.
This was a singularly bold move from a singularly bold brand. But what else can luxury brands do to extol their sustainable virtues? And how do they recast customer expectation in endlessly inventive new ways across ever more fluid generations and markets? Interbrand’s Best Global Brands report has analyzed this for 20 years and our 2019 data shows a continuation and an acceleration of this aptitude.
Legacy brands are pivoting from luxury as deeply exclusive, to more dynamically inclusive. New brands are emerging to define new categories and business models. And all in the restless pursuit of consumers who now ask to access luxury on their own terms. As we look at the brands which are demonstrating growth in luxury, they are the brands connecting the inside to the outside. Gucci has sustained its pivot through a hyper-focus on a culture of creativity and innovation, a commitment to talent and its Culture of Purpose, the brand’s ten-year sustainable-impact plan. At Dior, Creative Director Maria Grazia Chiuri has been clear that “fashion today should take on the responsibility of being an activist.” Having been the pioneers of bespoke, luxury brands are now digging deeper into reinventing it with new levels of relevance. The brands that are excelling are those who obsess about learning – and they are learning as much from their employees as from their customers.
The origins of leading luxury brands are inherently rooted in the restlessness of their founding pioneers. These are brands born out of a relentless quest to create something better, to do something better. To recall the inimitable words from Patek Philippe, “You never actually own a Patek Philippe, you merely look after it for future generations,” we should remember that luxury brands are some of the most sustainable in the world, because their products are built to last. Their craftsmanship is poised for the new economies of rental and resale, and their rarity is primed for long-term investment.
Enter the rise of re-commerce, as a prime learning example. Re-commerce is a rising new economy tapping into much of what is driving Millennial and Gen Z luxury consumption: from access, flexibility and on-demand aspiration, to clicking with a conscience. New paths to purchase have been opened up through the rise of ‘‘Generation RE,’’ by brands that saw the scale of the potential to define new categories in rental and resale. Rent the Runway and Stitch Fix are two leading lights tapping into evolving ways of living and consuming, where access, and ease of access, are everything. A new value exchange has emerged for luxury brands, where rental is opening up new levels of access and awareness, and resale is fuelled by the very brands that are creating product that’s built to last (QED the IPO of The Real Real).
The trend is not only growing, it’s diversifying along the way. Japan is proving to be an indicator here. Against the context of a culture rooted in the most exacting of tastes in minimalist aesthetics, cleanliness and quality, a market is already rising in secondhand beauty. But when is too much access a tipping point for an industry that’s also driven by rarity and exclusivity? Luxury brands will have to navigate the balance of new levels of access (rental) and authenticity (resale), looking to deepen relevance of their iconic products, as well as looking to new forms of rarity and to more creative collaborations.
The calls to action raging across the world on climate change and commitments to human change for good, are reaching further and deeper into the fashion industry. Brands who are absent and silent in their actions on sustainability, on diversity and inclusion, are noticed – and will, increasingly, be called out. As François-Henri Pinault states in the commitments to sustainability with the French government: “We have to work collectively. It’s about leaders who will put themselves in an uncomfortable situation to force themselves to move.”
So, what changes? And what does real change look like? When we reflect on the brands we have tracked over two decades in our Best Global Brands study, luxury is not a category that they have “decided to be in.” Whether these brands have their origins in fashion,
leather goods or jewelry, they all arose from one fundamental purpose: to do something better, to create something better, to seek and set a standard in excellence.
As we look ahead 20 years, what will new disruptions in the industry look like? What if we could count on a commitment beyond an individual brand level, to a collective, collaborating on a united front to apply that pioneering DNA in the quest for better, to the greater good? Agendas and change on diversity and inclusion and sustainability are very real for many of these brands. The time is now to set the agenda in excellence in solving problems in ways that are faster, more effective, and have greater impact than anyone else. There are big moves that we are all looking to, that we are holding business, ourselves and each other accountable to. The iconic move of the industry would be to collaborate around a deep and accelerated commitment to change for good, in everything from diversity and inclusion, to sustainability. In 20 years, let’s forecast a more powerful narrative on what these brands succeeded in changing for good. It’s time to call time on ourselves, as ever-more-conscious consumers, as we call time on brands to be more conscious creators.
To read more of our thoughts on Sustainability, check out HMKM Eye #2 - Selling Sustainability: https://rebrand.ly/HMKM_WeLove1