LUXURY MARKETING INNOVATION SUMMIT 2021: A journey into the future of circular economy

The 2021 edition of the Luxury Marketing Innovation Summit held on Tuesday, March 30 was the occasion to take a look into the future of circular economy in the luxury industry and to address such topics as NFT, transparency, creativity, naturalness, timelessness and consumer consciousness. Topics which, in themselves, are not brand new but which have taken another dimension for the luxury sector under the rise of new expectations and behaviors of the industry clientele. At the time of the Covid 19 global sanitary crisis, consumption tends to take place in a vaccuum and national internal recycling becomes some kind of mandatory choice. Luxury brands are expected to provide proofs of reinsurance and need to review their standard business models. Discover how through this inspiring journey into the present and future of circular economy.

? Sustainability is a journey, not a goal in itself ?. There might not be any better abstract from the LMIS 2021 than this sentence by Isabelle MASSA, Partner and Head of luxury practice at Mazars. The different panels and keynotes that took place during the summit illustrated what the different stop-overs could be for luxury brands in that precious journey that aims at better connecting with the sectorial consumers’ new desires and concerns.

The day started with an overview by Isabelle Massa of the study ? Making over the luxury business model ? carried out by Mazars last year. The occasion to discover that newer generations have higher expectations towards sustainability and circularity than older generations and that technology, ecosystem partnerships, and circularity are shaping luxury services. Isabelle Massa pointed out that the life cycle of products in the luxury industry becomes longer and longer with a global second hand goods market that has reached €31 billion annually, thanks to 12% average annual growth in the last five years. A few interesting examples were provided in the key note such as Vestiaire Collective’s portfolio of 7 millions members worldwide or Eileen Fisher’s pioneering programme, Renew, that offer take-back and recycling programmes for customers seeking sustainable consumption.

Circularity and sustainability are also reasons why many luxury brands launch new services through ecosystem partnerships. Repairing, reusing, reselling, remaking (upcycling), and recycling are all part of economic circularity, although only recycling converts a luxury product into a new product, completing the circle. To that respect, Isabelle Massa pointed out that luxury recycling innovators include leading brands like Gucci, which has partnered with the Mumbai-based NGO, I was a Sari, for upcycling materials to produce embroidery, and Prada, which is aiming to source all of its iconic nylon accessories from recycled materials by the end of 2021.

Isabelle Massa explained furthermore that the Covid 19 sanitary crisis generated a loss of purchasing power in Northern America and Europe, pushing towards second hand consumption. Similarly, the international travel ban boosted domestic consumption in China, leading to some kind of internal recycling in the country.

 What can we expect next ? To conclude her key note, Isabelle Massa predicted that more and more second hand platforms would emerge in the future, pushed by digital practices and hybrid marketing. A 360° product value chain would need to be implemented with technology being more and more at the center of the strategy of luxury players. However, smaller independents players will also be driven by such considerations. There seems thus to be no way for brands of whatever size to escape the trend towards sustainability in the near future.

The panel that followed Isabelle Massa’s key note allowed a perfect transition by exploring the tools that can help fashion and luxury businesses to meet the challenge of circularity. Participants to that panel included Isabelle Massa again, as well as Pierre-Arnaud Grenade, CEO of Ba&sh, Pierre-Nicolas Hurstel, CEO of Arianee and Jonathan Andres, Co-founder of RSVP.

Pierre-Nicolas Hurstel introduced to the audience the new second-hand service launched on April 22nd 2021 (the Earth Day) by Ba&sh that allows second-hand sellers to offer online to other brand’s consumers products previously purchased from the French fashion house. A service that is guaranteed through a certificate issued by the independent, non-profit consortium Arianee, whose protocol makes it possible to associate each luxury product with its own unique, unforgeable digital identity. A digital twin that provides safety to the buyer by tracking product authenticity. This concern for warranty and the need to win over the trust of consumers is also the key issue faced by the brand RSVP when it started to offer its own products in a second-hand catalogue, after they had gone through a revamping in its local workshops. As a matter of fact, RSVP also uses the Arianee open-source and decentralized solution, powered by blockchain technology.

 A rich panel discussion that highlighted how much technology and artificial intelligence are crucial in implementing a trustworthy circularity for consumers. But AI is also a useful tool when it comes to cut costs and reduce wastes in the production process, as Isabelle Massa pointed out. Pierre-Nicolas Hurstel also provided further explanations on the use of technology in the circular luxury supply chain, emphasizing the importance of NFT as a cutting-edge technology used by brands to provide proof of ownership of an untangible asset.

However, circularity should not be viewed from a bare financial point of view as it is rarely a key contributor in terms of profit for a brand, as underlines Pierre-Arnaud Grenade, but this is a service that is needed and expected ; it is part of a bigger topic, the one of preserving the eco-system as a whole. All panel participants agreed that circularity increases the number of touch points with the customer while offering something beneficial, which, in a word, has a true meaning. Above all, ethic and values should be put at the center of circular economy. A lesson to be learned by luxury brands.

 After a short digital trip to Hong Kong with Angelica Leung from Invest HK who introduced the specificities of the Chinese special administrative area for luxury retailers and offered an overview of the local circular practices in the fashion field such as the initiative of the Hong Kong Research Institute of Textiles and Apparel to transform food wastes into fibers, voice was given to Mina El Hadraoui, Head of France at the Natural Diamond Council and spokesperson of the Collectif Diamant.

In her keynote, Mina El Hadraoui introduced a survey carried out with OpinionWay towards a panel of consumers in order to better pinpoint their understanding of the diamond market and above all their comprehension of the terminology around the diamond offer : natural diamond, cultured diamond, synthetic diamond… many words used, mostly wrongly, to refer to a good which, by French decree, can only be designated under the term of diamond if this is a stone formed in the natural deposits from which it was extracted and which did not undergo other interventions of the man than cutting and polishing. And yet, misleading wording is often used in the advertising of luxury brands whereas consumers definitely expect transparent communication from them in both a will to be legally protected but also to clearly understand how ethic and sustainable their purchases may be.

Transparency appears thus to be key to rebuild trust and consumer confidence. The second panel of the summit was the occasion to further explore that concept with the testimonies of Mina El Hadraoui, Olivier Segua, Scientific Director at l’Ecole des Arts Joailliers Van Cleef & Arpels, Arnaud Haefelin, CEO of Gainerie 91 and Noémie Dumesnils, COO of Authentic Material.

Can there really be vegetable leather ? To the same extent that only natural diamond can be called as such, only leather made from animal skins can be refered to by decree as natural leather. A point that was made clear by Arnaud Haefelin, who also explained that ? leather ? alternatives made from pineapple or grapes, among other examples, are not as tear resistant, tensile strong, porous or flexible as animal leather can be. Even if the vegan trend becomes a massive attraction for consumers, Arnaud Haefelin insists on the fact that brands using the term of leather wrongly for vegan alternatives are actually somehow guilty of unfair competition.

What is really at stake here ? The issue is not to decide whether it’s good or bad to buy synthetic stones or vegan alternatives to leathers rather than their natural counterparts, but rather to be vigilant to the promise made to the luxury consumers. In a sector eager to develop new value proposals in adequation with the rising awareness of today’s consumers towards environmental responsibility and with their desire for new purchasing expériences, it is important that these consumers are not simply taken for fools when brands are claiming values around naturalness. Mina El Hadraoui and Olivier Segua both pointed out how much confusion can be a source of disappointment for luxury buyers.

In that respect, patented solutions such as the ones offered by Authentic Material, that could be summarized by circularity in a loop, could be innovative options to be considered by luxury brands with a will to promote their engagement towards environmental responsibility. Indeed, as explained by Noémie Dumesnils, Authentic Material allows for the production of new materials based on discarded natural materials coming from the luxury industries for their own reuse. The perfect way indeed to close the circular loop by reducing wastages and offering added value to consumers.

Finally, as all journeys have a final destination, the last key note by Muriel Ballayer from the Wands agency concluded the summit with an interesting angle about how to upcycle creative contents. An innovative topic as the issue of circular economy is often considered solely from the material perspective whereas the Wands agency offers to apply the concept of circularity to immaterial assets such as marketing contents and communication campaigns. In a society overwhelmed by digital productions (3 billion images broadcasted per 24 hours as underlined Muriel Ballayer), the abiity to re-use, re-design and re-purpose the brand digital materials seems a logical circular approach that allows proactivity on the editorial calendar while providing actual cost efficiency.

 To conclude about the LMIS 2021, it is clear that there is no get away for luxury brands when it comes to including circular economy and sustainability in their value chain as this is a goal shared by many of luxury’s new customers, but there are several gateways : second-hand services, blockchain technology, innovation, transparency, new communicative approaches towards naturalness, digital creativity, ethical sourcing, responsible design, economic partnerships, to name a few. The key point to retain is that the value chain is no longer horizontal, sorry to say that, Mr Porter. It’s all about circles now !