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ONCE CONSIDERED A COMPETITIVE ADVANTAGE BY LUXURY,
‘GREEN’ APPROACH NOW IMPERATIVE FOR SECTOR’S HEALTH

 

Concern about the environment, in part driven by global warming and climate change, is likely to have a profound impact on the luxury product industry and on the policies of companies operating in its space. This is a one of the key findings of a report, entitled “Luxury Outlook 2022,” released by the Boston Consulting Group (BCG) and Comité Colbert, which is a state-sanctioned association that brings together 92 French luxury maisons, 17 cultural institutions and six other European luxury maisons.

Consumers today believe that the luxury brands have certain social and environmental responsibilities, the report states. Luxury is “to preserve, develop, and pass on to future generations,” said Laurent Boillot, President and CEO of Hennessy and the newly elected Chairman of Comité Colbert, quoted in its introduction.

With climate change there is increasing pressure on natural physical resources, and luxury fashion houses have been among the first to face scarcity in their production chains, the report says. At the same time, the brands are being required to adjust to a more stringent legal environment, with regulatory demands such as a traceability increasingly playing a role in the way they operate.

“Today, it has become essential to innovate and make environmentally responsible products, but the process is still constraining, and we face difficulties to produce on an industrial scale,” stated Philippe Bénacin, cofounder, president, and CEO of Inter Parfums.

What this calls for, the report says, is that that fashion houses should not pursue such efforts separately, but should come together to develop and create sustainable materials for the future.

FOUR OPTIMIZATION MODELS

With natural resources under pressure, the luxury fashion houses must consider how consumers use their products throughout a products’ life cycle, the report states. It cites four major optimization models that have emerged.

The first is developing repair services to help ensure the longevity of their products. At Hermès, for example, customers bring more than 12,000 items each year to be fixed and renewed.

The second model involves the development of markets for used products. 

Source: “Luxury Outlook 2022,” published by the Boston Consulting Group and Comité Colbert.

“The second-hand market also presents a unique opportunity to move a portion of the population toward better-quality and therefore more sustainable products,” the report states.

The third model involves recycling or upcycling products to give them a second life.

The fourth model is maximizing use the use of products through rental. While this market is still relatively small, it is projected by the reports to reach a value of €2 billion by 2025.

Source: “Luxury Outlook 2022,” published by the Boston Consulting Group and Comité Colbert.

DUTY TOWARD LEGACY

According to the report, in 2021, some 60 percent of luxury consumers stated that they considered the corporate responsibility of the brands they purchase from, up from 45 percent in 2013.

Greater consumer awareness of companies environmental and social record is a general trend, but it is particularly relevant in the luxury product sector. When polled as to why luxury brands should be involved in a transition to more responsible environmental management, the report said that consumers emphasize the sector’s ability to influence, as well as its international reach and financial resources.

“They believe that luxury brands have the responsibility to make the sustainable desirable, just as they make their products desirable,” the report’s authors stated.

“An innovative environmental approach is sustainable in the long run only if it is financially viable,” the report states. “To achieve this, sharing ideas and initiatives between luxury fashion houses within the same group, as well as between fashion houses of different groups may be sound strategies, enabling participants to accelerate change and make the necessary investments.”

Some brands have likely seen their environmental policies has providing them with a competitive advantage in the luxury sector, but such strategies may be shortsighted, the report suggests.  “The luxury fashion houses that were trailblazers on these issues must now encourage the rest of the industry to place sustainable development at the heart of all practices,” it notes. “Based on their DNA of leading by example and having robust and environmentally friendly processes, they must now transition from a duty toward quality to a duty toward legacy.”

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