Luxury beauty brands - Sustainability is good for business

Preventing the erosion of your luxury beauty brand’s identity:
Embracing sustainability
is good for business

Luxury products can appear inherently wasteful, seeming to have little specific use beyond
flaunting wealth and privilege. When sustainability and concern for the environment are seen
as critically important, surely it’s time to scale back luxury expenditure?
This view is both simplistic and misguided as in reality luxury products are made with longevity
in mind. The WPP report Sustainability and Luxury explains that “Luxury brands encourage
repairability ... and longevity of their products ... promote respect for and appropriate
compensation of craftsmanship ... and serve as sustainable trendsetters.” 1
Luxury products are expensive largely on account of the materials used and the time and
craftsmanship deployed. Cheap items are produced to be used briefly and then discarded. In
contrast, luxury items are produced by the best craftsmen, passionate about their skills and
their ability to make products whose style and beauty brings consumers both pleasure and
pride in ownership. An Hermès bag isn’t a throwaway item. A beauty consumable, perhaps a
Chanel fragrance, is bought to bring pleasure and perhaps show sophisticated taste and as
such is treasured.
As professor Jean-Noël Kapferer remarks “…luxury is at its essence very close to sustainable
preoccupations because it is nourished by rarity and beauty and thus has an interest in
preserving them.”2
and as Nicola Jenkin comments in The Ethical Fashion Source Intelligence,
“many of the attributes of luxury align comfortably with ... sustainability.”3
SUSTAINABILITY
Capacity to endure
Reduced impact on planet
Basic quality of life
Stewardship
Long-lived eco-systems
Ethical consumerism
Innovations to reduce consumption
LUXURY
Long-lasting
Superior quallity
Exclusivity
Heritage
Craftsmanship
Consumers worldwide are becoming
more concerned about environmental
issues. This creates an opportunity for
luxury beauty brands to respond.
Authenticity
Provenance
Purity
Innovative
Ethical Fashion Forum, Sustainable luxury fashion – is it possible? Nicola Jenkin
Embracing sustainability is good for business
Page 2

Luxury brands also have a responsibility to focus on sustainability, as without this, they risk
losing consumer trust. As the WFF-UK Deeper Luxury Report of November 2007 explains
“These consumers use luxury products as a symbol of success [but] many successful people
now want the brands they use to reflect their concerns and aspirations for a better world.”4
This means that luxury brands now have both the opportunity but also the responsibility
to act as thought leaders, impressing consumers with their commitment to sustainable
practice. This is not only the right course of action for ethical reasons, but it also makes good
business sense because it resonates with the concerns of consumers of luxury products.
Aligning a brand’s ethos with what consumers increasingly see as important and thereby
seeking to influence wider consumer aspiration and behaviour will in turn generate interest
and loyalty, and hence sales.
Focusing on sustainability
Some way to go
WWF-UK Deeper Luxury report 2014
Whilst improving the sustainability of their products is a good start, if luxury beauty
brands fail to also improve the sustainability of their point-of-sale materials (POS)
and don’t have in place a clear corporate social responsibility policy, they will still risk
losing consumer trust.
The response of luxury brands has been mixed. Anthony Kleanthous, co-author
of the WFF report, says “There is a certain complacency in regard to the explosive
growth of new markets. [Luxury companies] just don’t think people are going to be
asking the questions. But there has been a paradigm shift and that is just not true.”5
Page 3

Luxury beauty brands therefore have some way to go in order to align their practices with their
sustainability claims. The problem is that managing well the demands for POS materials whilst
at the same time ensuring brand integrity throughout a global network of suppliers and local
retail outlets is hard.
This problem is intensified by the number of seasonal and tactical campaigns required, and the
need to produce specialist displays. These displays and booths are often complex and need
to meet the individual and diverse demands of an extensive network of department stores
and retailers and this “greater product complexity clutters the supply pipeline, creates less
uniformity, builds more inventory and impacts load efficiency and freight costs.”6
.
Unsurprisingly, these factors add greatly to costs - not just for the production of materials but
also for storage, transport, insurance and more - and so need to be carefully controlled both
in order to avoid alienating consumers and to minimise wasteful expenditure. With up to 80%
of seasonal POS discarded7
, good forecasting, along with consideration given to what materials
can be recycled, is a must.
The sheer volume of POS required isn’t the only problem facing luxury beauty brands. The
high cost and carbon footprint of transporting POS worldwide together with ensuring that POS
is high quality, environmentally friendly, and produced by reliable suppliers who don’t impact
negatively on local environments or their own workforce are also important considerations.
TodsBulgariRichemontPPRSwatchTiﬀany & CoCoachLVMH
80
60
40
20
0
HermèsL’Oréal
C+
C+
C+ C
E
F
DD
D
D+
Figure 3: Ranking of environmental, social and governance performance and
reputation of luxury corporate groups
Deeper Luxury, Jem Bendell & Anthony Kleanthous, WWF-UK, November 2007
Page 4

Applying sustainable practices
Brands therefore need to work closely with suppliers who are themselves committed to
and knowledgeable about sustainability. The better suppliers know that by advising how to
minimise POS production they will be recognised as ethical partners capable of producing
high quality POS materials, designed for repurposing and reuse, so sharing and supporting
the values of their luxury beauty brand clients.
Brands Suppliers
Materials
used
Good quality
Health and safety
compliant
Green products
Recyclable materials
Sustainable
production
Complex displays
that can be reused or
repurposed
No unethical work
practices
Identify & eliminate
potential hazards to
the environment
Have a positive
impact on local
communities
CSR
strategy
Expertise
Audit
Audit
Audit
Page 5

There has been some progress. In 2004 Louis Vuitton stopped using plastic wrapping for
deliveries to their customers, an approach which reduced the company’s consumption
of plastic by some 20 tons per year.8
In 2012 LVMH developed its LIFE programme, an
approach embedding environmental factors more deeply into its management processes
and facilitating the development of environmental management tools.9
L’Oréal has made
a commitment that by 2020 all of its products will show social or environmental benefit
and that it will reduce its environmental footprint by 60% from a 2005 baseline.10
The LVMH initiative, CEDRE (Centre Environmental de Déconditionement et Recyclage
Ecologique), focuses on the recovery of waste from packaging and other processes
associated with cosmetics manufacture. In 2013 it processed around 1,600 tons of waste
and achieved an average recycling rate of 88%, duly reselling materials such as glass,
cardboard, alcohol, metal and plastics to specialist recyclers. A number of perfume and
cosmetics houses are now using this type of service. 11
The Latvian luxury cosmetics company Mádara - the name is Latvian for wild madder
- has grown rapidly by focusing on organic products with no artificial additives and
packaging these in recyclable materials such as paper produced with a very low carbon
footprint and wood certified under the Forest Stewardship Council as sustainable. Using
organic products is not new, but extending it to packaging is more recent, and is certainly
a policy endorsed by consumers. Designers such as Stella McCartney are moving in a
similar direction by offering organic skincare products and ensuring that their production
and packaging materials are sustainable.
Commitment and progress
Page 6

Luxury beauty brands need to make a number of changes to put them on the path to
becoming more sustainable.
Forecasting POS requirements accurately is the first step, as often in an effort to reach
minimum order quantities and price break points, local teams end up buying too much POS,
particularly around seasonal and tactical campaigns.
This is something which can be improved greatly using a real time, dedicated platform such
as Geneus from ProProcure, to marshal all the elements needing to be considered - historic,
seasonal, minimum order quantities and so on.
Aggregating POS orders, maybe at local or regional level, also allows minimum order
quantities to be more easily achieved. This may be through the simple process of adding
together the same items or the more complex but no less important one of comparing
orders from different teams to see whether small changes can result in better aggregation
without affecting important POS requirements.
Becoming more sustainable
Page 7

Accurate forecasting using a real-time platform
ACCURATE FORECASTING
ACCURATEFORECASTING
VISIBILITYOVERSPEND
VISIBILITYOVERSPEND
GLOBAL TEAM LOCAL TEAMS
SUPPLIERS DISTRIBUTORS
Business intelligence -
historic, seasonal & regional
POS information -
minimum order quantities,
price break points, inventory
Aggregation of POS
orders across
markets
Communication &
co-operation between
all teams
JUNE
Further, by enabling good communication between different teams and allowing adjustments
right up to the point of placing an order the difficult task of forecasting accurately will become
easier and more efficient.
These practices will ultimately ensure the right quantities of POS are ordered, thus limiting
storage and waste.
Given the complexity of POS displays, a brand can utilise innovative engineering approaches
to produce the underlying infrastructure. This means that these displays don’t need to be
discarded but rather the fascias or other elements simply changed to give a fresh new look for
each new promotion. This approach will also reduce costs.
Page 8

Some brands favour using local or regional warehouses. This approach adds cost initially,
but the benefits gained are worth considering. Regional warehouses allow rapid speed-to-
market when needed and so can help to reduce planning and deployment time, as well as
transportation cost and carbon footprint. In addition stock can more easily be moved to
another warehouse if needed elsewhere locally.
Beneﬁts of a global warehouse
• Minimise produced volume
• Minimise costs
• Recycle, reuse, repurpose
Local markets
Placing seasonal and complex POS orders
Beneﬁts of a regional warehouse
• Speed to local markets
• Minimise transport costs
• Reduce carbon footprint
Getting the balance right between global and regional warehouses
Page 9

In all this, identifying and working with reputable suppliers is critical. Suppliers need not only
to be good at producing product, but also to show corporate social responsibility and be fully
alert to sustainability. Traceability of materials and products is well established in certain areas
such as for organic produce or Fairtrade supply but is less good, although no less important,
elsewhere. As brand consultant Laura Sullivan explains, “Increasingly luxury consumers are
concerned about the provenance of every aspect of a product.”12
She cites the Kimberley
process, which seeks to make conflict diamonds unusable, as an example of success.
Supplier networks, which can be easily accessed by both suppliers and teams worldwide, are
a good solution. These give central teams complete and real-time visibility over any suppliers
added to the network and allows them to ensure they meet their CSR criteria.
The supplier network provided by ProProcure is a good example of the success of such
networks. Not only does it give brands confidence in the integrity and capability of their
suppliers, but also makes the process of placing tenders a lot easier and more efficient.
Page 10

Gourmands to gourmets
The business environment is changing.
“The wealthy are increasingly concerned about environmental issues” says Ledbury Research
in a report on Europe’s luxury market.13
Green issues are cool. Gourmands are becoming
gourmets, savouring style, craftsmanship and sustainability rather than consuming mindlessly.
This means that luxury beauty brands need to become fully alert to what their consumers
want, namely a recognition of the importance of following sustainable practice as fully as
possible. This is particularly the case in respect of merchandising in general and of POS
practice in particular.
As Cara David, managing partner of YouGov, New York, comments “All of these trends
present a new consumer who is eager to purchase luxury products with a more educated
and reserved mentality. It is important for brands to cater to these traits and mature with
consumers in the post-recession economy.”14
Page 11

Page 12

1. Could sustainability be the future of luxury? 27 December, 2011
www.wpp.com/wpp/marketing/consumerinsights/sustainability-and-luxury/
2. Could sustainability be the future of luxury? 27 December, 2011
www.wpp.com/wpp/marketing/consumerinsights/sustainability-and-luxury/
3. Sustainable luxury fashion – is it possible?, 17 September, 2012
www.source.ethicalfashionforum.com/article/sustainable-luxury-fashion-is-it-possible
4. Deeper Luxury, Jem Bendell & Anthony Kleanthous, WWF-UK, November 2007
www.wwf.org.uk/deeperluxury/report.html
6. Snapshot: Cosmetics and Skin Care, January 2010
www.inboundlogistics.com/cms/article/snapshot-cosmetics-and-skin-care/
7. ProProcure luxury beauty brand research, May 2015
www.proprocure.co.uk
8. Sustainability – Deeper Luxury, April 29, 2015
www.herringbonemag.com/#!SUSTAINABILITY-Deeper Luxury/
c1kod/5541312e0cf2adc1acfbd89f
9. LVMH Commitments, Environment , 2015
www.lvmh.com/group/lvmh-commitments/environment
10. L’Oréal announces ambitious sustainability commitment for 2020, Jennifer Elks, October
23, 2013
www.sustainablebrands.com/news_and_views/communications/jennifer-elks/loreal-
announces-sharing-beauty-all-its-new-sustainabili
11. Le plateforme de recyclage CEDRE, 2015
www.lvmh.fr/groupe/engagements/environnement/la-plateforme-de-recyclage-cedre
References
Page 13

12. Luxury sector goes vertical, Simon Brooke, August 12, 2014
www.supplymanagement.com/analysis/features/2014/luxury-sector-goes-vertical
14. 4 trends dominate affluent purchasing post-recession claims YouGov exec, May 2015
www.luxurydaily.com/trends-dominate-affluent-purchasing-post-recession-yougov-exec/
Page 14

ProProcure tackles the lack of co-operation that commonly exists between procurement
and marketing in global and multi-national companies.
Technology is at the heart of the business. Geneus, the marketing spend management
platform is built to seamlessly integrate with existing business systems and successfully
manages client’s POS complexity giving complete visibility over costs, providing an
unrivalled aggregation solution and ensuring brand compliancy.
For the last 14 years, ProProcure has worked with a number of luxury brands, including
Perrier-Jouët, Mumm, and Martell.
About ProProcure
Page 15

ProProcure Limited
Europa Court, Marsham Way, Gerrards Cross, Buckinghamshire. SL9 8BQ United Kingdom
+44 (0) 870 380 1717 | info@proprocure.co.uk
If you wish to discuss the contents of this paper or to find out more about ProProcure,
please call Edwige Riou on +44 (0) 870 123 5143 or email edwige.riou@proprocure.co.uk
For Further Information

Luxury beauty brands - Sustainability is good for business

Recommended

Recommended

More Related Content

What's hot

What's hot (8)

Similar to Luxury beauty brands - Sustainability is good for business

Similar to Luxury beauty brands - Sustainability is good for business (20)

Luxury beauty brands - Sustainability is good for business