Trending towards transparency in the Luxury Industry


Consumers of today have more access to information than ever before and this has changed previously high margin and opaque industries such as banking. Demand for transparency is also transferring into other industries such as luxury. Consumers are no longer satisfied by purchasing a high priced item, they want to compare offers, proof of quality and sustainability.

 


One way ticket to Global Citizenship

 

Generation X, born between 1966-1976, and Generation Y, born between 1977-1994, are just a little bit different to the Generations that have gone before. Older Generations tend to be much more autonomous and can be especially critical of the emergence of new media. On the other hand, Generation X is really comfortable with new channels of communication and Generation Y has already grown up within a highly sophisticated media and computer environment and are Internet savvy and even better experts than their Generation X forerunners. Generation Y characteristics could be described as entrepreneurs, idealists, family oriented, compassionate and most importantly global citizens. As global citizens they take responsibility for their actions and aim to make the world a better place by respecting and valuing diversity, fighting intolerance and battling for social injustice. They are concerned with making the world more equitable and sustainable.

 Some retailers have noticed this trend towards sustainability and are more conscious of it in their production and distribution chain. A number of retailers including Generation Y entrepreneurs, go a step further and embed these values into their corporate cultures. A prominent example is Stella McCartney; she is an advocate of sustainability and urges her fellow designers to follow her lead to stop sourcing fabric from ancient and endangered forests.

 

This new approach to sustainability not only caters to Generation Y consumers but it also forces older Generations to alter their awareness on world issues and change. This can be as simple as grandparents using Snapchat to communicate and relate to their grandchildren. As a result, pressures increase on retailers and those industries which have not been transparent in the past, such as the luxury industry, to change their ways.

 

A clearer view into the world of Luxury brands

 

In the past, there has been criticism of luxury brands for not fully understanding their production chain. Just what are the stages involved in the life cycle of an item for it to be ready for sale in a high-end boutique? When things go wrong in the supply chain and cases of child labor, labor exploitation or environmental pollution are made public, it can be detrimental to the image of the brand. The multinational luxury goods conglomerate, LVMH, has already started to open its doors to ensure that customers understand the handmade craftsmanship of its brands: Louis Vuitton, Gucci and Hermes. Furthermore, Tiffany started to certify its diamonds with the independent Kimberly Process which provides ‘conflict free’ certificates.

 

The consumer of today

 

The shift from a retail industry exercising a powerful control over the markets to the directing of the markets by consumers themselves has occurred within less than 20 years. The introduction of the internet, launched in 1991, brought the world closer together and marked an important step for businesses and information exchange. For consumers, this has had a drastic impact by expanding the choices of goods and brands available to them. Informing themselves about a luxury item is now only a mouse click away. Although this is can be positive for the consumer and the retailer, it adds pressure on luxury brands as the consumer is no longer as loyal to a particular premium brand as they used to be.

 

Today's buyers are much more knowledgeable of and interested in where the goods come from and how they are actually produced. This is also true for luxury brands making it hard to gloss over the origins of a USD 6,000 handbag!

 

The consumer is also more informed of disasters and scandals that take place across the world. For instance the shocking images of the collapse of a Bangladeshi clothing factory which resulted in 2,500 injured workers and a casualty list of over 1,000 people was seen around the world. Buyers with a conscience can now receive news alerts on such dreadful working conditions thanks to independent organizations such as Human Rights Watch. This information enables the consumer to be more aware of the world around them and to make informed choices about what to buy.

Today, those with both the inclination and the budget to buy a luxury item want to choose something with exquisite craftsmanship but not at the cost of humanity or the environment. The consumer in 2016 demands transparency and promotes equality, striving for a balance between taking and giving back.

 

It is still somewhat surprising, that according to rankabrand, luxury brands have a long way to go in reporting their policies on labor conditions or environmental sustainability. There is a risk in this as the markets the luxury brands seek to attract are only too aware of the negative cost of the production process through news on exploitation or environmental disasters. It would seem that luxury brands should have a more proactive approach to set out what they do in these areas and demonstrate that they hold embedded values which match those of their customers. A reactive approach is simply not going to be good enough.

 

Sustainable Awareness of Luxury Brands

 

To be truly competitive, brands need to react and start taking control and responsibility over their production processes right down to the raw material. The change in the luxury industry is not only about how to digitalize the brand in a 24 hour society but also how to make it more transparent. We, consumers, should have the peace of mind that a high end product is not only a quality item but also was made in an ethical way. Organizations such as Positive Luxury have started to provide transparency and put pressure on the industry by evaluating the leading fashion brands and giving out independent certificates. They have even gone as far as publishing their first Fashion Transparency Index report to build transparency in the market. However, according to the Fashion Transparency Index and rankabrand we still have a long way to go before the luxury industry is fully transparent.

 

Accelerate transparency

 

This trend not only starts from within a generation but it gathers real momentum from individuals such as Stella McCartney. High profile entrepreneurs and celebrities who are passionate about investing in sustainability can work with individuals and companies who strongly believe in transparency and building a better and more sustainable business model. They can then begin to  change an industry and a company for the better.

 

A new way emerging

 

The mythical world of luxury is part of the past. Now such high profile brands should strive for Global citizenship by being more transparent and accessible. The luxury sector is changing as do so many other previously opaque industries like banking. Some will take responsibility over their product life cycles faster than others but eventually the trend shows that all will surely follow. As new values become fully embedded in their culture, they will have to stay competitive and follow new regulations like the UK Modern Slavery Act which makes manufacturers and retailers responsible for their supply chain. There are many resources and consultancy firms available today to identify the full life cycle and to embed the values of global citizenship into a company's culture. But, it takes an individual to take the first step to make this change and convince the decision makers that this truly is the future.





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