Luxury Leaders Need To Lead Rather Than Follow Sustainability Fashion

The luxury industry increasingly likes to talk about sustainability. For example, it points to measures to improve workers’ conditions, to monitor more closely the origin of its fabrics and other materials and advertises initiatives designed to encourage recycling of clothing. But ultimately there is often a tension because sustainability relies on transparency and luxury values mystery.

However, it does not have to be that way. According to Gachoucha Kretz, a marketing professor at the HEC Paris business school, the two have more in common than might at first appear. She argues that by drawing on this connection the luxury industry can not only survive the growing demands for greater sustainability, but prosper. This will, of course, require becoming more transparent than has previously been the case in this industry. But she believes that discerning customers will value knowing the provenance of the items they are buying to such an extent that the luxury brands will actually be able to charge more for their pieces. There are already signs of this happening. Earlier this month, the Financial Times reported that luxury brands, including Chanel and Louis Vuitton, were raising prices, not just because of inflation but “to preserve the desirability of their products.” Meanwhile, others in fashion appear to be taking steps to counter the industry’s poor image. Gabriela Hearst, who is creative director of Chloe as well as running her own eponymous label, was recently quoted by the same newspaper as saying: “We belong to nature, it doesn’t belong to us.” She has also attained B Corp status — which involves opening up the books to outside auditors and requiring the business to focus on not just shareholders but suppliers, employees and other stakeholders — for the company, which is owned by Richemont of Switzerland.

One of the criticisms most often levelled at the luxury market, particularly the fashion sector, is that the seasonal cycles encourage buyers to acquire too many items. But, Prof Kretz says that some companies are already beginning to respond to that. Adopting a strategy based around “hero products” — items for which a brand is especially well-known, such as Chanel Blanket quilted bags or Hermes’s horse bridle-inspired leather goods — enables them to avoid having to constantly introduce new lines. Instead, it is encouraging customers to focus on key, “classic” pieces.

Another approach is to support reusing of items. Hitherto, a lot of attention has focused on the ability of clothing makers to use recycled material. But there is increasing interest in reusing the original items themselves, with online marketplaces — such as Vestiaire Collective — springing up to meet demand. And Prof Kretz says it will be interesting to see the extent to which luxury goods companies encourage traffic to these sites.

Still another approach is renting goods. Celebrities are often loaned or rented jewellery to wear at high-profile events. But the idea is becoming more widespread. For example, Decathlon, the French company known for its sporting goods, is offering a subscription service.

Although she points to these evolving business models as demonstrating how fashion and luxury can yet square the sustainability circle, Prof Kretz is not unaware of the challenges other parts of the fashion industry pose. For example, Zara, part of Spain’s Inditex group, continues to attract millions of customers to its fast fashion ethos, while the Chinese company Shein has taken the idea further, using algorithm-driven recommendations to encourage more shopping. She also believes that the coming years are going to be more difficult for brand extensions, the typically more accessible lines developed by luxury companies as an entry point for new customers, because of the problems of being sustainable without raising prices. The same could also apply to high-street brands.

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With climate change also blurring seasonal boundaries to the extent that brands can no longer rely on selling winter coats, for instance, in the late summer, it should be obvious to all leaders of companies in this sector that just producing more goods and selling to more people is not the answer. Not so long ago, companies thought it was enough to have corporate social responsibility departments and to claim that their packaging was environmentally-friendly. Now, discerning customers are demanding something much more holistic, starting with knowing where and how something was made. As a result, successful luxury and fashion companies are going to make sustainability a key part of their strategic thinking.

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