Sustainability, Business & Consumer Behavior: Challenges for Luxury Brands

The Luxury Industry, known for its opulence, indulgence and exclusivity, is increasingly recognizing the importance of Sustainability. While it might be at an advantageous position when it comes to resources available, a holistic transition to sustainable practices, and business, poses unique challenges in the industry. Luxury has always faced prejudice for its hedonistic characteristics. However, have we ever thought that like every business, maybe it’s only delivering what the consumers are demanding? Sure brands have a responsibility to uphold but we as consumers also have the responsibility to support them.

The business of Luxury follows the same rule of economics as every other business. The scales and the standards might be different but nonetheless, the rule remains the same. While they will always be willing to cater to your preferences, just like in any other business, it should generate enough revenues, demand from the market and an ROI that justifies the resources invested.

Let’s take a look at some of the challenges that affect Luxury’s investment in Sustainability.

One of the biggest considerations for the Luxury Industry could be navigating the Luxury Consumer’s perception of it. While Sustainable Luxury might be gaining traction, consumers still associate luxury with opulence and excess rather than responsible consumption. Luxury brands would need to educate them about the positive impacts of sustainability and how it is possible for sustainability and luxury to coexist without compromising on exclusivity or quality. However, it’s not easy. Many Luxury consumers fail to fully grasp how sustainable luxury goods can have environmental and social benefits that align with their personal values and beliefs.

For luxury brands to adapt sustainable practices, maintaining a strong brand identity is the most challenging part. Sustainability often requires a shift in raw materials, design aesthetics and production process. So, while incorporating these changes, brands must keep in mind the aspirational needs of its consumers whose individualism drives their luxury status. This balance is necessary to avoid brand dilution and to cater consumers of all motivations- hedonistic or otherwise, traditional or new-age. One of Luxury’s most fascinating features is its aesthetics. It greatly influences purchase decisions for consumers. Some consumers perceive sustainable products as lacking in design appeal or exclusivity compared to traditional luxury items.

What consumers need to realize is, while luxury may have more available resources than mass or smaller brands, the cost of production for luxury products is also considerably much higher. Given this, amongst other factors, luxury brands cannot afford to invest a lot of resources in products that don’t generate enough demand and eventually sales.

While businesses should be held accountable for helping consumers educate themselves about the advantages of investing in sustainable products, the consumers must also take into consideration their Attitude-Behavior Gap, however justified. Changing this has remained luxury’s biggest challenge yet. While Sustainability is gaining traction, some luxury consumers still prioritize traditional aspects of luxury, such as opulence and exclusivity.

And for businesses to invest in communication plans, and other programmes that create transparency amongst consumers (thus ultimately justifying the price points as well), unless the consumer’s intention changes into action, the brands might not be able to hold out for long at the cost of business. Disseminating information about luxury’s sustainable practices like the use of eco-friendly materials, the preservation of traditional craftsmanship, product longevity, etc. is not easy - and certainly not cheap. It is an important measure for how brands can bridge the awareness gap and inspire consumer decisions but the market resistance towards acceptance of that knowledge is a sizable roadblock.

For the most part, sustainability these days has also become a marketing gimmick. With such widespread prevalence of greenwashing activities and misleading sustainability claims, consumers’ skepticism and hesitance is somewhat understandable. Luxury brands are making efforts to address these issues by being more transparent and authentic in their communications and interactions with the consumers. Certifications, tracemaps and genuine collaborations have come in handy to build consumer trust but they still have a long way to go.

But, does there exist a middle ground to be explored?