Welcome to the ‘Circular Luxury’ Era

Why Beauty and Luxury players are boosting now sustainability strategies? They are listening to the voice of core consumers.

Defining the core target for Luxury Brands

Focusing on GenZ is a top priority for Luxury brands. They are becoming the most influential consumer group, as elder generations look at them when taking their purchase decisions. These under-25YO consumers are already contributing to 5% to 15% of today luxury sales but projecting to be the biggest consumption group by 2030, above Millennials. Without creating a preference in GenZ, a luxury brand faces a tough present, and it has no future.

GenZ: framing values and motivations.

 Generally speaking, GenZ are the most digital generation, hyper-connected, value-driven and highly sensitive to planet health. They are hungry for circular products, swaps and recycling of materials. Covid19 has accelerated this mindset (even within Millennials: only 6% declare not to be interested in sustainability in 2020 vs 13% in 2019). To connect with them, a company must embed (real) sustainable practices within its strategies.

 Luxury companies: moving to be circular.

 Not a surprise seeing this 2021 how luxury, fashion and beauty players are boosting their environmentally friendly practices and circular economy models. This is just a quick review on early 2021 top Luxury players initiatives and directions:

Emerge of subscription models. Raph Lauren just launching a luxury apparel rental scheme to meet the needs of its growing younger clientele.

Resale. Kering Group, owner of Gucci, Saint Lauren, Balenciaga among others, just invested in Vestiaire Collective, a digital platform selling pre-owned/pre-loved luxury fashion. Mr Pinault, CEO of Kering stated: “Pre-owned luxury is now a real and deeply rooted trend, especially among younger customers (…) This fits naturally with our entrepreneurial spirit, our pioneering sustainability strategy, and our modern vision of Luxury.” Lorenzo Bertelli, son of Co-CEO, Patrizio Bertelli, announcing this week plans for Prada to run a resale business, while reinforcing that sustainability is core to his agenda.

Sustainable manufacturing practices, targeting drastically reducing carbon emissions and waste, and using new resources. Gucci presenting early this year its “Natural Climate Solutions”, L’Oreal announcing this march a new “green sciences approach’ and Coty a new partnership with LanzaTech to run a more environmentally friendly production system for their fragrances.

Obviously, DIGITALIZATION and the Internet of Things (IOT) are critical to make luxury and beauty circular, enabling traceability and transparency: a more sustainable ecosystem for both businesses and the planet*.

This pandemic, more than ever before, made us all realize that sustainability and circularity are crucial for the environment and for society as a whole and need to become imperative for businesses.

Companies already embedding sustainable practices within their strategies are proving to be more resilient and adaptable.

We are facing a tipping point in the history of luxury. From now onwards we will be interpreting fashion and beauty with a completely different set of values and metrics. Few brands will transform, recovering pre-pandemic levels while being relevant to the consumer. Others will not participate in the new reality, facing a long winter journey.

*To deep dive into this topic, I highly recommend reading the conclusions coming from Circular Fashion Report 2020, a collective report initiative by Circular Fashion Summit by lablaco in partnership with Vogue Business, PwC, Anthesis and Startupbootcamp. An eye-opener document that provides unique insights on the new digitized circular fashion industry. Thanks to my friend Stefano Galassi for making me a “VIP participant” on the conclusions!