Key points to remember:
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Brands that succeed in creating a sustainable, differentiated, innovative and value-creating business model – rather than doing what everyone else does – will win in the future.
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Before the pandemic, consumers sometimes asked questions about a brand’s sustainability, but that would never lead to action. But now an unsatisfactory response leads the customer to immediately leave the store and never come back.
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When a customer believes in a sustainability story, it doesn’t just happen. This only happens when a brand competitively assesses, strategizes, and masters the delivery of its story.
All the luxury brands on Earth are talking about it durability, by touching it in one way or another, regardless of the category. If you go to any luxury website, you’ll find a sustainability report, corporate social responsibility metrics, and a commitment to do better over time.
This development is extremely important, given that just a few years ago, sustainability was not high on the priority list for many companies. Not so long ago, at the end of 2017, I was invited to speak at the Luxury Sustainability conference at Politecnico Milano. I had just published a book chapter on the luxury sustainability paradox, claiming that combining luxury and sustainability is a challenge due to the extreme nature of luxury goods. I went on to say that brands that succeed in creating a sustainable, differentiated, innovative and value-creating business model – rather than doing what everyone else does – will win in the future.
My message was: play to win instead of play to play. At that time, The Green Carpet Fashion Award (GCFA) made its debut in Milan in collaboration with the Camera Nazionale Della Moda Italiana (CNMI). Dubbed the Fashion Oscars, it was the first awards show created to celebrate brands making inroads in sustainability. And it’s important to remember that this is a very recent development.
A lot has happened since then. Hermes just announced an innovative handbag using mushroom-based leather, brands like Gucci have stopped using fur. Tesla now only uses vegan leathers. And blockchain and traceability have become new buzzwords and almost every business is talking about it now. In the beauty industry, the term “clean beauty” has become practically ubiquitous as a synonym for reducing the number of ingredients and removing anything that could cause harm. Traditional automakers are fighting to keep up with Tesla’s lead in sustainable transportation. And even traditional brands like Bentley, which were never known for their low-emission or fuel-efficient cars, but rather for their gas-guzzling, highly emotional and meticulously designed engines, are now showing ambition to be a leader in sustainable development.
Even luxury watchmakers are caught up in this trend. When Cartier recently announced its iconic Tank watch now featured an innovative “Solarbeat” photovoltaic movement – via the claim that it could convert light into energy with solar panel-like elements in the Roman numerals of the watch face – it claimed to be a leader in sustainability by eliminating the need an electric winder.
These examples show how times have changed dramatically in just a few short years. There’s a new challenge for brands: doing what everyone else does doesn’t create value – it just allows a brand to catch up. Just talking about sustainability – when consumers can sense that brands may have other goals – will clearly reduce their confidence. And for luxury, it is dangerous because the perception of a luxury brand extreme value depends on the ability to innovate, influence and inspire. More identical words or just “warm words” will not create extreme value. In other words, luxury brands should think more like Cartier by innovating rather than just stating that they want to be a leader when in reality they are doing nothing.
Therefore, a different approach is needed on sustainability: seeking competitive advantage (in other words, playing to win, as I said earlier). It is only if consumers perceive you as innovative and inspiring when it comes to sustainability that they will see your brand as valuable in this area. Leaders are not leaders by telling the world what they already know. They are leaders in taking decisive action and risks, pushing boundaries, innovating and inspiring.
In contrast, brands that tell their customers that they “aspire” to be leaders in sustainability without a clear path they can perceive will do the opposite of value creation. Their message will not be seen as authentic or believable, which destroys the value of the brand instead of building it. This path should make luxury brands nervous now that sustainability is a critical part of consumers’ decision-making process. Thus, strategic brand narration on sustainability is critical and should never be an afterthought for luxury brands.
I remember a recent conversation with the head of the Asia-Pacific region of one of the world’s top ten fashion brands. He described the drastic consumer behavior change in China that has taken place in recent months in sustainability. He said that before the pandemic, consumers sometimes wondered about the sustainability of his brand. But the questions were sporadic and never led to action. In other words, before the pandemic, even though the staff at the brand’s store didn’t have a good answer on sustainability, people still bought the bag, belt, or shoe.
But, in recent months, that behavior has changed, he says. With an increasing number of Gen-Z customers, an unsatisfactory response leads the customer to immediately abandon their purchase. People will turn around and leave the store and never come back. These are disruptive real-world behavioral changes happening en masse for the first time in history. For many consumers, especially the younger and better-off, sustainability is already a key purchasing criterion. And a vague statement like ‘yes, we are sustainable’ or ‘we will be a leader in sustainability by 2030’ means nothing to them and will even lead them to break with the brand. Luxury is always the creation of extreme value, and if there is no value, there is no brand equity for the customer.
When merging luxury with sustainability, the same rules apply to luxury as to everything else. When a customer perceives a story of sustainability, they have to leave with a mind blowing mind. It will not happen by chance. It will only come from competitive benchmarking, perfecting brand strategy and mastering the delivery of the brand story, the quality of delivery depending on the story of sustainability.
To be clear: when I talk about sustainability brand storytelling, I’m not talking about fluffy marketing claims, “greenwashing,Or generic statements. I mean actions that are deeply rooted in the brand’s philosophy and purpose, driven by its core values and the brand’s overall history. If my brand story is about romance, then the sustainability aspects must create value on that specific dimension. The brand’s story and the story of sustainability must go hand in hand to create extreme value.
Yet many luxury brands fall short of their potential for sustainability. Most of the brands that I observe or audit do all the obvious things that everyone else does. While that’s not wrong, on its own it only registers as expected. And when something is expected, it is priced, which means there is no additional value created. Many luxury brands are losing their critical momentum – and even risking their future – by not innovating enough in sustainability and telling a sustainability story correctly and differently.
Brands generally prefer to play it safe. But my point of view is that playing it safe is playing to lose. The inspiration never came to play it safe. Luxury brands want to create desire and inspire Gen Z and older target groups to aspire to their products, but playing it safe will only destroy brand equity – with a high degree of certainty.
But brands that take bold risks and tell authentic, differentiating and engaging sustainability stories through their actions will become the winners of the future. Are you playing to lose or are you playing to win?
Daniel Langer is CEO of the luxury, lifestyle and consumer branding company Equity, and Professor of Luxury Strategy and Extreme Value Creation at Pepperdine University in Malibu, California. He consults some of the world’s leading luxury brands, is the author of several luxury management books, a global keynote speaker, and conducts luxury masterclasses in Europe, the United States and Asia. To pursue @drlanger
