In the luxury market, the golden decade of sustainability has already begun. The crisis due to Covid has only accelerated the pressures in this sense e Generation Z will increasingly reward brands that have a positive impact on the environment and society, risking to abandon those who do not take a position and do not act on these issues. This is what emerges from the report LuxCo2030: A Vision of Sustainable Luxury , published by Bain & Company in collaboration with Positive Luxury , which defines the characteristics of an imaginary Luxco (company or listed luxury company) in 2030, through a call-to-action for today’s brands.
The five strategic strands identified by Claudia d’Arpizio
The hypothetical LuxCo will be successful because it will focus on five main pillars: the redefinition of the purpose of the brand, the decoupling of growth from volumes, the traceability of the supply chain, the maximization of environmental and social commitments and the creation of economic value from sustainability. “Luxury brands perceive a growing expectation from consumers – explains Claudia D’Arpizio, global head for the Fashion & Luxury section of Bain & Company and co-author of the report -. And if many of them have already moved with declarations of intent, with the aim of not finishing last in the race for sustainability, in the next 10 years we will see if they will be able to keep these commitments and achieve the long-term goal of a business. sustainable and profitable. A restyling of the models will not be enough: brands that want to be successful in 2030 will have to start re-imagining themselves deeply today».
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Ten years of necessary commitment
In this decade, according to the report, brands will have to gradually review their corporate culture and business models, since sustainability could be one of the drivers of growth strategies. “For decades, the main objective of luxury brands has been to provide products and services whose craftsmanship and exclusivity stimulated the desire and aspiration of consumers – adds Matteo Capellini, associate Ppartner of Bain & Company and co-author of the report. -. Consumer orientation could change significantly between 2020 and 2030, and luxury will likely be associated with something more akin to the ancient Greek concept of kalokagathia, “What is beautiful and good”, for people and for the planet ».
The positive side of the Covid-related emergency
The pandemic, in addition to demonstrating the strength of market fundamentals, has also forced companies to lay the foundations for long-term change, convincing brands that the growing consumer demand for more sustainable luxury goods – partly driven from the desire for more durable and higher quality products – it was not just a fashion, but a structural revolution. “Land the most virtuous companies will be those that will be able to separate business growth from volume growth, through the adoption on a scale of circular models such as second hand and rental – adds Claudia D’Arpizio -. Not only. Successful companies – also thanks to the support they will receive from artificial intelligence – will be those able to reduce surpluses in warehouses, favoring orders and offering the customer, in the process, more customization options ».
Rethink sales and distribution channels
The leading brands in 2030 will be those who will also choose to internalize resale processes, after experimenting with third-party multi-brand platforms. In fact, in 2030, successful brands could see a second-hand market share of up to 20% of turnover, with an increase in the profit margin of the single product of 40%. In this scenario, even the rental of garments and products could account for 10% of turnover. “In 2030, the supply chain of the successful brand could be more localized and count on fewer suppliers, with whom, however, the company would commit itself in a deeper and more concrete way to achieve the objectives set in terms of environmental and social impact, as well as quality and production. Creating a modern ecosystem of this type could be a source of resilience for brands ”, underlines Matteo Capellini.