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LUXURYFASHION
MBA Digital
Marketing and
Business
Professional
Thesis
How luxury fashion brands can adopt a
sustainable approach and act as leaders
of global fashion sustainable change
through their online communication by
targeting younger generations?
Luxury Fashion move 
toward sustainability
Audrey Zamboni 2019
SUSTAINABLE
Thank you
2
Table of
Contents
1.0 Luxury in the 21st Century p.17
I. Theoretical Framework p.16
B. The luxury fashion : Moving to a stronger
sustainable engagement
To start
A. Luxury fashion definition
and challenges
2.0 Luxury fashion global challenges p.21
3.0. Luxury and sustainable development :
relationship p.48
4.0. Act now for a more sustainable supply chain in the
luxury fashion industry p.53
5.0. Communicating Sustainability in the Luxury
Fashion Industry p.76
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A. The research p.81
II. Applicative Framework
Objective: Understanding of new consumers attitude toward sustainability in luxury fashion
to share the right communication.
B. Presentation of the research results p.84
C. Survey findings p.88
D. Case application: Stella McCartney best practice p.94
Observation of the company communication strategy for applicative recommendations about sustainable
communication in luxury fashion based on new consumers
needs.
E. Results interpretations and recommendations : “what” sustainable message and “how” luxury fashion
brands should share it. p.109
F. Constructive criticisms about the survey and analysis p112
6.0 Global conclusion p.113
7.0 Annexes p.118
Table of
Contents
4
MBA Thesis - Sustainable Luxury Fashion
5
Summary
English
Nowadays, many thesis and work have been done about luxury fashion but none had shown
the best practices that luxury fashion brands must adapt to become more sustainable and have
a positive impact on society as industry leaders and influencers.
Through my researches and interviews, I have discovered that fashion is the second most
polluting industry in the world after oil and gas. The actual production model used in luxury
fashion is linear causing huge environmental and social impacts due to the extraction of a large
number of natural resources to produce luxury fashion items that end up in incineration or
landfill after use. Luxury fashion brands have the chance to be positioned as industry leaders
and to have an important influential impact on the rest of the fashion industry.
Thus through this thesis, I answered the following problematic: “How luxury fashion brands
can adopt a sustainable approach and act as leaders of global fashion sustainable change
through their online communication by targeting younger generations?”
To answer this problematic, I have provided a framework for luxury fashion actors to take
initiatives by adopting more sustainable practices in their production and distribution models.
The solutions shared with luxury fashion brands to become more sustainable were about the
change from a linear production model to vertical integration for better control of their supply
chain and the adoption of a circular value chain that would permit to achieve of a zero-waste
design process. Disruptive innovations about sustainability in the luxury fashion industry have
also been provided to help luxury fashion brands to take innovative actions. It has been shown
that thanks to the adoption of more sustainable and ethical practices, luxury fashion brands
would increase their competitive advantage, productivity, profitability, reduce their global
costs and could accelerate a transition towards a more sustainable fashion thanks to their power
of influence that would cause a global shift of the industry.
After analyzing in which ways luxury fashion brands (LFB) could become more sustainable.
The thesis has searched how LFB could talk about sustainability in their communication to
address millennials and generation Z which are the consumers who will purchase the most
MBA Thesis - Sustainable Luxury Fashion
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luxury in 2020 without being perceived as greenwashing. Based on a poll survey on younger
generations and the case study of Stella McCartney communication best practices,
recommendations about sustainable omnichannel messages strategy in luxury fashion has been
addressed.
Français
De nombreuses recherches ont été réalisées sur la mode de luxe mais aucune n’a proposé de
pratiques qui pourraient être adoptées par les marques de mode de luxe pour devenir plus
durables tout en ayant un impact positif sur la société de par leur positionnement de leaders
dans l’industrie de la mode.
L’industrie de la mode est la seconde industrie la plus polluante au monde après celle du pétrole
et du gaz. Le modèle de production principalement utilisé par la mode luxe est basé sur une
chaîne de production linéaire ayant un impact dévastateur d’un point de vue social et
environnemental. Les marques de mode de luxe ont la chance d’être positionnées dans
l’industrie de la mode comme leaders avec un fort pouvoir d’influence.
Cette thèse a cherché à répondre à la problématique suivante : “comment les marques de mode
de luxe peuvent elles adopter un comportement durable et agir en tant que leaders du
changement de l’industrie de la mode à travers leur communication en ligne en ciblant les
jeunes générations?”.
Pour répondre à cette problématique, un plan a été proposé aux acteurs de la mode de luxe afin
de prendre des initiatives plus durables tout au long de leur chaîne de valeur. Les solutions
proposées aux marques de mode de luxe pour devenir plus durables concernaient le passage
d'un modèle de production linéaire à un modèle de production verticale permettant de mieux
contrôler leur chaîne d'approvisionnement et l'adoption d'une chaîne de valeur circulaire qui
permettrait d'atteindre le “zéro déchet”. Des innovations disruptives sur la durabilité dans
l'industrie de la mode de luxe ont également été proposées aux marques de mode de luxe afin
de prendre des mesures durables innovantes. Il a été démontré que grâce à l'adoption de
pratiques plus durables et éthiques, les marques de mode de luxe augmenteraient leurs
avantages concurrentiels, leurs productivités, et leurs rentabilités. Cela pourrait également
MBA Thesis - Sustainable Luxury Fashion
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permettre d’accélérer une transition vers une mode plus durable grâce à un changement de
mentalités dans l’industrie de la mode.
Cette thèse a également cherché à savoir comment les marques de mode de luxe pourraient
parler de durabilité dans leurs communications en s'adressant aux milléniaux et à la génération
Z, qui sont consommateurs d’avenir du luxe, sans pour autant être perçus comme du
greenwashing. Sur la base d'un sondage réalisé auprès des jeunes générations sur leurs attentes
en matière de durabilité et de l'étude de la stratégie de communication de Stella McCartney,
des recommandations sur les messages durables et les moyens de les délivrer à travers une
stratégie omnichannel ont été proposées afin d’orienter les marques de luxes dans leur
transition durable.
Words Cloud:
MBA Thesis - Sustainable Luxury Fashion
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Synthetized Recommendations
This thesis has given several recommendations to luxury fashion brands based on :
1. How they could become more sustainable through a leaner management of their value
chain.
2. How they should communicate about their sustainable engagement online to younger
generations of consumers.
Through the next part, I will present a synthesis of my recommendations.
1. Recommendations for a more sustainable value chain:
If the fashion industry continues this path, it could “by 2050, use more than 26% of the carbon
budget associated with a 2°C pathway” (Ellen MacArthur Foundation 2017). All fashion brands
should thus change their current linear system to not reach the 2°C global warming limit.
Through this thesis, several challenges have been identified for luxury fashion brands in 2019:
the internationalization, the acceleration of the trend cycle, the increasing demand for quality
and transparency, the environmental impact of their production, the need to reduce losses and
increase profits in an increasingly competitive market.
According to Kati Chitrakorn “Unless fashion brands adopt best practices from outside the
industry and improve supply chain transparency from within, consumers will begin to wonder
what they have to hide.” To adopt a transparent strategy, luxury fashion brands must change
their strategy to a more sustainable approach in their production model.
My recommendations to adopt a more sustainable approach in their production model to luxury
fashion brands were about the adoption of a vertical integration strategy where brands have
control over their “suppliers, distributors or retail location to control the entire value or supply
chain.”. This strategy permits to keep control of the entire value chain and improve brand
benefits as they can get margins every step of the way and in the end. The entire control of the
value chain could thus allow luxury fashion brands to share transparent communication with
consumers.
Another recommendation that has been proposed to luxury fashion brands is the adoption of a
green supply chain management. The green supply chain management is the integration of the
environmental dimension into every logistics decisions, from design to end-of-life, through
production and distribution. To ensure a green supply chain management, recommendations to
MBA Thesis - Sustainable Luxury Fashion
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brands have been made about the following practices: responsible purchasing (green purchases
and social purchases), sustainable transport, sustainable packaging (sales packaging, storage
packaging and packaging for transportation), sustainable storage, reverse logistics.
The adoption of a circular value chain has been the greener alternative recommendation offered
to luxury fashion brands if they have the financial opportunity to support it. The circular
economy is based on the principle that luxury fashion brands must think when designing a
product about the consequences of their products and how it can be recycled. The recycling
process is integrated into the supply chain to put back old items into the new supply chain to
favor product reuse by recycling, selling old items or by upcycling unusable items into new
products. This strategy adoption will help in the development and improvement of human
living conditions and will not harm the society nor the ecosystems.
To develop a circular strategy, product design must be thought to reduce the number of
polluting substances and use as much as possible recyclable materials to achieve a “ zero
waste”. Local suppliers who will be able to satisfy, during the production process, the
environmental and technical criteria defined by the company (carbon emission, energy
efficiency, waste management...) in addition to the traditional requirements of quality, cost and
timeliness should be selected. Near-shoring, resource-efficient fabric production and the use of
automated production are recommendations made to luxury fashion brands in the adoption of
a circular strategy which could lead to reduce CO2 impact and improve the leading time of
fashion items, create higher garment quality and customize items based on consumers'
expectations.
Finally, disruptive innovations have been recommended to luxury fashion brands to take a step
forward to a greener management of their value chain. These innovations includes various
domains such as second hand and renting market, brands partnership, artificial intelligence,
blockchain, and technical textiles.
2. Recommendation about sustainable communication online to younger generations
of consumers
Recommendations about sustainable luxury fashion brand communication have been made
based on an online survey about younger generations' sustainability needs and expectations and
the study of Stella McCartney's communication strategy. These recommendations were about
what type of message and how this message should be shared with younger generations
(Millennials and Generation Z).
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My first recommendation has been that luxury fashion brands must share transparency,
honesty, and authenticity in their communication. Younger generations aren’t seeing ethical
and sustainable brands’ engagement as an explicit requirement of their luxury fashion purchase
but perceive it as a latent expectation.
Thus, luxury fashion brands must show to consumers how to purchase sustainable and what
are their personal benefits in the purchase of sustainable items. Brands should communicate to
consumers on social media, their websites and fashion websites as these channels influence the
most their luxury purchase. To do so brands must follow an omnichannel strategy which would
show the brand transparency at each touchpoints.
Younger generations of consumers also value innovation and personalization which needs to
be integrated into luxury fashion brands' communication strategy. An educative voice tone
must be adopted in their communication and an emotional approach with strong storytelling
must be followed. Luxury fashion brands should share tangible elements and information about
their sustainable engagement. Specific topics in their communication must be covered which
are employees’ work conditions, animal testing, gender equality and transparency about their
supply chain practices.
Brand messages should also be balanced between sustainability and fashion contents with
arguments about quality and product uniqueness.
Finally, brands must offer to consumers a unique shopping experience online and offline as
they are looking for it at each level of the purchase funnel.
INTRODUCTION
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Introduction
Since the 2000s and the emergence of web 2.0, contemporary societies have evolved and tend
today to a new mode of consumption and identification. Because of the emergence of the
internet and social media, individuals do not react and interact in the same way. It acts in the
interactions between individuals who now communicate easily and thus have more and more
access to information. The Internet has revolutionized the consumption patterns of
contemporary societies by removing the lack of transparency consumers are facing so far.
This increase in information access has an immediate impact on the consumption habits of
individuals.
Thanks to global access to companies’ information, consumers choose nowadays where they
want to buy their products or services. Also, this increase in access to information has an
immediate impact on the consumption habits of individuals. The traditional communication
channels previously used by brands are not relevant anymore to communicate effectively due
to a change in consumer behavior about media. Consumers are little by little moving away from
traditional communication channels such as phone communication, print or broadcast media.
Nowadays, communication between consumers and companies has become bilateral and
interactive; consumers can directly communicate with brands about their likes, dislikes, and
suggestions through social media (Rachid Amin, 2017). Consumers are no longer only present
on social media but are demanding control and dialogue with brands (Uché Okonko, 2010).
This change of media behavior among consumers shows the undeniable importance of using
online communication for brands. « On one side, web 2.0 users use this tool to look for other
clients' advice before purchasing products or services and on the other side, companies use the
web 2.0 as an information sharing and communication tool with consumers » (Dorsaf Omrane,
2010).
In addition to the need for brands to communicate closely with their clients online and become
fully digital comes the need for brands to provide transparency to their customers.
According to the study “State of Fashion Report 2019” created by McKinsey and Company's,
in collaboration with Business of Fashion, luxury fashion brands “need to take an active stance
MBA Thesis - Sustainable Luxury Fashion
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on social issues, satisfy consumer demands for ultra-transparency and sustainability”. Brands
must provide transparency and especially on their value chain from used materials, to how
textiles are manufactured, shipped and reused to their consumers. Even though many brands
face issues to monitor conditions across their supply chain as a great number of retailers do not
own their manufacturing facilities or use a system of agents and subcontractors known as
“indirect sourcing”, new technologies such as AI and blockchain can nowadays provide the
ability for brands to trace every value chain step making transparency possible.
Furthermore, nine in ten Generation Z and Millennials consumers believe companies have a
responsibility to address environmental and social issues (State of Fashion Report 2019,
McKinsey & Company) which means that communicating about these elements are keys
factors for luxury fashion brands to succeed in the global market.
By 2020, Gen Z alone will account for 40 percent of global consumers and Millennials will
outnumber Non-Millennials by 22 Million in the USA by 2030. Younger consumers aren’t the
only consumers concerned over environmental and social issues. According to the study “State
of Fashion Report 2019” two-thirds of consumers worldwide say they “would switch, avoid or
boycott brands based on their stance on controversial issues.” (see below Figure 1, 2019 fashion
brands challenges for year ahead).
Figure 1: Main challenges in Luxury fashion in 2020, State of Fashion Report 2019, McKinsey
& Company.
Thus, even if many fashion brands have taken into account these changes in their
communication strategy, the fashion industry is facing challenges. Fashion luxury brands lack
MBA Thesis - Sustainable Luxury Fashion
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knowledge on how becoming more sustainably responsible could positively impact their brand
image and the global society and on how to incorporate their social engagement and
transparency into their brand communication strategies without taking risks.
Indeed, luxury fashion brands' main challenge is to find strategies to create brand equity online
without affecting in a bad way their luxurious brand image and communicating about their
social impact “may also risk being perceived as hypocritical if they do not carefully ensure
consistency in their messages and actions.” (State of Fashion Report 2019, McKinsey &
Company, 2019).
In today’s world, the tendency is to consumers' business' distrust. Consumers are more and
more skeptic about the brand’s communication as they are to the government’s communication,
and media “fake news”. State and Fashion Report surveys say that trust in businesses fell in
“40 percent of countries in 2017, with more than two in five consumers saying they didn’t
know which brands to trust.
Fashion market trust has highly decreased with the Rana Plaza disaster in Bangladesh on April
24th, 2013, which killed more than 1100 garment factory employees. Due to this disaster, an
international conversation around the social impact of the fashion industry has sparkled about
the world and created the movement “Fashion Revolution”. This movement called for a fairer,
safer, more transparent fashion industry with the hashtag on social media
#Whomademyclothes?. According to Orsola de Castro founder of the Fashion Revolution,
thanks to this movement “the luxury fashion industry is beginning to acknowledge that the
good business of the future requires systems that aren’t harmful to the environment, and which
do not rely on human exploitation for financial growth”.
Thus, consumers can highly impact brands behavior thanks to their online communication but
as brand and consumer relationship is bilateral, luxury fashion brands can also highly impact
consumers. Indeed, the luxury market highly impact our society, luxury fashion brands are
creating tendencies and then these tendencies are replicated in the mid and lower fashion
market. As the fashion industry is considered as the second most polluting industry in the world
after oil, luxury fashion brands responsible communications could impact the global fashion
industry to rethink their business model for a better world.
MBA Thesis - Sustainable Luxury Fashion
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Then this bachelor thesis will analyze “How luxury fashion brands can adopt a sustainable
approach and act as leaders of global fashion sustainable change through their online
communication by targeting younger generations?”.
This thesis will integrate different key points such as luxury fashion, brand equity, consumer
behavior, linear value chain, vertical integration, circular value chain, and sustainable
development.
Consumers’ understanding is the key point for brands to provide effective communication
through the mass media (Sue Elms). Indeed, if a business is to be successful, it has to
understand its consumers and has to understand how the consumer relates to the product
category and the brand in question (MG Parameswaran). According to the Hitwise magazine,
Generation Z and Millennials are the “Shoppers of Tomorrow”, they represent an increasing
market for luxury fashion brands. As these generations embody the future market of fashion
luxury brands, this thesis will analyze their needs and motivations toward sustainability in the
fashion industry.
To analyze “How luxury fashion brands can adopt a sustainable approach and act as
leaders of global fashion sustainable change through their online communication by
targeting younger generations?”. First, I will run an online questionnaire, to understand
Generation Z and Millennials' behavior on luxury fashion brands online communication.
Secondly, I will run a study relying on primary data collected through an ethnography of Stella
Mc Cartney online strategy that has adopted a sustainable approach on its global
communication strategy.
This analysis will be used to analyze how luxury fashion brands should communicate to
Generation Z and Millennials, and why its communication is working so efficiently on
Generation Z and Millennials. Other secondary data from articles, newspapers, and books
written by marketing, and luxury fashion experts, will also be used to understand new
consumers' behavior and the strategy that brands need to adapt to satisfy consumers' needs.
FRAMEWORK
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Theoretical Framework
This luxury definition part is extracted from a research paper I wrote last year about luxury
fashion brands in the USA.
1. Luxury in the 21st century
In a society where the Internet-based is becoming a norm to communicate and interact,
consumers, are changing their consumption behavior. The internet has made it possible for one
person to communicate with hundreds or even thousands of other people about products and
the companies that provide them. According to W Glynn, 2009, social media is a hybrid
element of the promotion mix because in a traditional sense it enables companies to talk to their
customers, while in a nontraditional sense it enables customers to talk directly to one another.
When Web 2.0 started to become popular among consumers, fashion luxury brands were not
trusting it and entered the world of Web 2.0 several years after accessible fashion brands
(Okonkwo, 2010). Nowadays, the luxury fashion is becoming more and more accessible due
to the emergence of social media (Danziger, 2004).
Luxury fashion brands are characterized by precise positioning based on uniqueness and
association with high society (Vigneron and Johnson, 2004). The use of innovative
communication and retailing technologies is then a challenge for luxury fashion brands to
maintain their integrity and brand image (Kwon, Ratneshwar, and Thorson 2017, Okonkwo
2009).
1.1 The concept of luxury
« You don't buy luxury to enter a community, but to set yourself apart from others. »
Francois-Henri Pinault.
According to the Oxford Latin Dictionary, luxury comes from the Latin « Luxus » which means
« soft or extravagant living, sumptuousness, opulence ». The luxury doesn’t specifically refer
to a category of products but rather indicates a conceptual and symbolic dimension, which is
strongly identified with the cultural values of the society of a particular period (Emmanuelle
Rigaud-Lacresse, 2017). It is associated with the scarcity principle and the idea that luxury
products are only accessible to a small group of people (Nueno & Quelceh, 1998). According
to Saviolo, Corbellini, 2010 “Today, luxury is a multi-dimensional concept that means different
MBA Thesis - Sustainable Luxury Fashion
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things to different people”. Even if the definition of luxury is broad because the luxury concept
is evolving according to the age and the individual perception, all definition of luxury are highly
related with as the idea of expensive products. The Oxford Dictionary (2014) defined luxury
as ‘’a state of great comfort or elegance, especially when involving great expense’’. To Brun
& Castelli (2013), luxury is defined as the idea that wealth, power and exclusivity have always
been linked with luxury goods. Until the end of the 19th century, the world of luxury was
virtually isolated from the rest of the economy, its pleasure and delights reserved for a small
elite (Bastien & Kapferer, 2012). Indeed, traditional luxury brands strategy was based on
uniqueness and limited offer that justified the high price of their products.
It’s until the emergence of French luxury designer brands like Chanel, Louis Vuitton, Hermes,
Cartier at the end of the 19 century and the industrial revolution that luxury became associated
with emotion. Because of the economic prosperity following the industrial revolution and
democratic stability, it led to a huge change in the luxury industry. Prosperity has created a
possibility of evolution between social classes. The luxury wasn’t limited to the elite anymore
but was accessible to a larger proportion of the population. According to Kapferer 2012, in our
postmodern societies, the new luxury is opposite to the vision of the old luxury were only a
small elite had the right to purchase luxury goods. Kapferer said that everyone has nowadays
the right to access luxury.
The new luxury has emotional value and provides social benefits to consumers (Okonkwo,
2010). Luxury products are identified by their high quality and the emotion provided through
the product purchase (Bernard Catry, 2007). Through the purchase of new luxury products,
emotional engagement is created by consumers. For example, purchasing a Louis Vuitton
handbag will provide a feeling of uniqueness to a consumer because of the high quality and
shopping experience provided by the brand. As Roux said in 1994, there are six important rules
to follow in luxury « In the luxury sector, you can’t neither lie about a product, about its creation
and innovation, about its quality, its price or the brand greeting ».
1.2 The components of a Luxury product
If the definition of luxury is variable according to the time and the authors, luxury products are
identified under the main characteristics. To Giacosa E., a company’s luxury products are a
union of tangible and intangible elements. Vicker and Redan (2003) developed the theory that
MBA Thesis - Sustainable Luxury Fashion
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the only way to differentiate a luxury to a non-luxury product is through three main elements:
functionalism, experientialism, and symbolic interactionism.
According to Vicker and Redan 2003, functionalism is defined as “a product features that could
solve a problem or prevent a potential one”. Experientialism incorporates features that could
stimulate sensory pleasure and hedonic consumption such as ‘’traditional and exclusive design,
the elegance of day gone by.” The symbolic interactionism refers to statuses such as a
prestigious name or recognizable designer style. These three components of a luxury product
identified by Vicker and Redan can be related to another luxury product theory developed by
Laurent and Dubois (1996). They identified six elements describing a luxury product on a
cross-cultural level consumer based in Western Europe, United States and Pacific Asia with
are: price, quality, uniqueness, aesthetics, personal history, and superfluousness (see Figure 2).
Facet Description
Excellent quality Exceptional
ingredients,
components,
delicacy and
expertise,
craftsmanship
Very high price Expensive, elite and
premium pricing
Scarcity and Uniqueness Restricted
distribution, limited
number, tailor-made
Aesthetics and Poly-sensuality Piece of art, beauty,
dream
Ancestral heritage and personal
history
Long history,
tradition, pass-on to
generations
Superfluousness Uselessness, non-
functional
Figure 2: Six elements describing a luxury product, Dubois, Laurent and Czellar, 2005.
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These components of a luxury product are related to the VRIN Theory, which implies that to
develop and maintain a competitive advantage a company’s product must be Valuable, Rare,
Inimitable, and Non-substitutable. Authors then referred to the idea that the non-sustainable
luxury products are non-sustainable because of the ownership of the product and the intangible
affect that the product was referred to. The product utility is not questioned when it comes to
the non-use of luxury products. The actual element that influences consumers to stop using
luxury products is the pleasure decrease after the ownership of a luxury good.
Finally, Tony Hines and Margaret Bruce identified characteristics of a luxury product from a
consumer viewpoint. According to these authors, from a consumer point of view, a luxury
product is based on two levels of representation. The first level is material it includes the
products and the brands such as its history, its talent, its design, its know-how…
The second level of a luxury product representation is psychological and covers representation
which is defined by our social environment and brand values. (Tony Hines, Margaret Bruce,
2007). According to Lloyd-Jones, 1998 “luxury goods are those which are in the top sector
across a range of products including clothing, jewelry, watches, leather goods, cosmetics,
fragrances, and other personal goods.”
1.3 Fashion and Luxury
After defining the characteristics of luxury and luxury goods, it’s important to understand the
link between fashion and luxury in our society.
Nowadays there is a strong relation between luxury and fashion. Indeed, even if the two
concepts are different as fashion is omnipresence and ephemeral while luxury is timeless and
rare (Jackson, 2004), they are related in consumers’ minds. Jackson 2004, said that the reason
of the relationship between fashion and luxury is mainly based on the “increased awareness of
brands that have been repositioned in the luxury brand sectors, “such as Louis Vuitton, Gucci,
and Burberry that have repositioned their brand offer as fashion brands in the 1990s.
non-sustituable
non-sustituable
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Morgan Stanley Dean Witter’s identified seven key points of a luxury brand:
1. Global Recognition
2. Critical mass
3. Core competence and other products
4. High product quality and innovation
5. Powerful advertising
6. Immaculate store presentation
7. Super customer service
Brands like Givenchy, Yves Saint Laurent, Balenciaga, or Chanel possess a large heritage
based on the quality of their products and, the diversity of their portfolios and products.
Furthermore, luxury brand designers are also a way to link fashion with luxury. Prestigious
designers act as a representation of brands and create new stories. Their prestigious public
images are related to the brands and give a new story to tell (Jackson, 2004). Fashion brands'
stories are told through media supported by photographs of designers’ extravagant style. For
example, the brand Christian Dior is as likely to appear on media for its product offers as for
its Artistic Director and Chief Designer, John Galliano. Due to the prestigious lifestyle of
luxury fashion brands designers, it reinforces the want of consumers for the products of the
brands as they are associated with luxury and exclusivity.
2.0 Luxury fashion global challenges
“Today, luxury is everywhere. Managers and marketing people regularly invent new terms to
qualify luxury: true luxury, masstige, premium, ultra premium, opuluxe, hyperluxe.” Bastien
& Kapferer, 2012
Because of the globalization of the society, the increase of information access through the
internet and the implementation of luxury fashion brands on social media, luxury is becoming
more and more accessible. Indeed, globalization has accelerated the rise in the spending power
of the population. According to Bastien & Kapferer 2012, “through wage increases and falling
prices of most manufactured products, globalization plays a dual role as a driver of luxury”.
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The globalization has also permitted to globalize the luxury products. For example, French
wine, Chinese silk or Arabic spice are now accessible everywhere around the world. The
globalization has permitted the democratization of the luxury goods.
According to Bastien & Kapferer 2012, globalization leads to a “leveling out of all cultures and
relativism in all religions: a perfectly globalized society would have just one language and one
religion.” Then, the luxury which used to appear as a symbol of social stratification will also
be associated with the cultural and geographic localization of a product in a globalized world.
The luxury products are now evidence of social stratification and are rooted in culture (Bastien
& Kapferer, 2012). For example, a Chanel bag made in France will be immediately rooted in
the French culture and its symbols and values, such as High Quality, Elegance, Sophisticated...
The increase in information access has also modified the luxury environment. According to
Phau, I., 2000, one of the main principles of luxury is the « Rarity Principle » which suggests
that to maintain prestige, luxury brands must sustain high levels of awareness and tightly
controlled brand diffusion to enhance exclusivity. However, because of the access to a luxury
brand’s information through the internet, the « Rarity Principle » is questioned. As luxury is a
changing concept, today’s definition of luxury is not the same as yesterday’s luxury definition.
Luxury used to be associated with perceptions of comfort, beauty and a sumptuous lifestyle
(Dubois, 2002). However, these perceptions are evolving and vary. In 2013, Walley identified
five different dimensions of perceived luxury goods for English consumers: the affect,
characteristics, status, gifting, and involvement. These five dimensions are a representation of
the main elements influencing consumers’ purchasing behavior. Consumer’s perception may
vary based on his environment: such as his country of origin (Anholt, 2005), his sense of
belongingness (Brun & Castelli, 2013), his disposable income, his age and the new media
(Forbes, 2003).
The evolution of consumer’s perception is due to the evolution of the general environment of
our societies. An important element discussed by Bastien & Kapferer in 2012, is that luxury
shouldn't be associated with premium. As explained earlier, a luxury product has to be rooted
in a special culture. A luxury product has to be produced in a place that represents its prestige
and rooted culture. A premium product, in opposition to a luxury product, has “to seek out the
most suitable and most economical manufacturing location possible, so long as quality and
service levels can be maintained.”
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Bastien & Kapferer, 2012 said that because of the luxury democratization of brands and
products, we no longer speak of luxury, but of three different luxury types, the traditional
luxury, the affordable luxury, and the mass luxury (see Figure 3).
Figure 3: Luxury market segmentation from ADN Magazine, 2018.
According to Professor Thomas Malnigh 2004, the consumers are more and more looking for
‘feeling good’ and well being over ‘owning’ as a status symbol when consuming luxury.
Figure 4: The Luxury Triangle
Through Figure 4, we can observe that the luxury market is divided into three markets. The
traditional luxury includes all the luxury brands that produce their products in the best location
to create a high-quality product at a high price. Luxury brands have highly exclusive
distribution and scarce availability justified by the time and manual ability required for
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production. They are produced in limited editions or often as single pieces, with strong
customized, handcrafted or semi handcrafted elements representing important company
heritage (Uché Okonko, 2010). We can say that brands like Hermès for example, are a
traditional luxury brand. The brand has kept its high quality and produces all its products in
France and has kept its brand image for decades with handcrafted leather goods.
No longer addressing its traditional clientele, the luxury sector has found the means for its
growth among the middle classes and has, therefore "democratized". Indeed, a growing crowd
of consumers from the new middle classes with an increasing purchasing power have pushed
luxury brands to rethink their offer. According to Professor Thomas Malnight, “the ‘affordable
luxury’ market has attracted large consumer brand companies suffering from slowing growth
rates, private-label competition, and increasing threats from concentration in distribution
channels.”
These affordable luxury brands are brands that offer high-quality products but with a large
product offer and that seek out the most suitable and most economical manufacturing location
possible so long as quality and service levels can be maintained (Jean-Noël Kapferer and
Vincent Bastien, 2009). The affordable luxury provides “non-customized, mass-produced or
limited-edition products, with quality and style, with an easily recognizable brand,
commercialized through selective channels. The product often derives from an expensive
reproduction of individual and unique products belonging to non-affordable luxury” (Uché
Okonko, 2010). For example, brands like Bottega Veneta are commercializing limited-editions
products worldwide to satisfy “sophisticated customers looking for customization and
exclusiveness.”
Finally, the mass luxury is the growth and spread of luxury brands to a wider range of
consumers. Mass luxury products are more affordable products that range from luxury brands
such as perfumes, cosmetics, glasses, and accessories. The mass luxury offers high style
products at more affordable prices; “ it’s a luxury dream at a more affordable price.’’
The mass luxury represents what is called the “new luxury”, where consumers generally do not
consume luxury products buy one during sales (Jean-Noël Kapferer and Vincent Bastien,
2009). This massification of the luxury market allows brands to diversify their products offers
and access a wider range of consumers.
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Then, the luxury brands are divided and are classified according to their product offer
exclusivity and their manufacturing location.
As a factor of exclusivity, product accessibility also differentiates luxury brands. According to
Bastien & Kapferer,"the greater the inaccessibility – whether actual or virtual – the greater the
desire”. Luxury brands are differentiating their level of luxury according to their product
accessibility.
Figure 5: Time factors play a role in fashion desire - Personal elaboration
Indeed, according to Figure 5, the time factor plays an important role in luxury. According to
Bastien & Kapferer, brands have to know “how to set up the necessary obstacles to the straining
of desire, and keep them in place.” Luxury obstacles can be variable such as financial,
logistical, or time obstacles.
Then, luxury is a principle that has evolved during years and this evolution is only caused by
the general environment of the luxury market. Thanks to the understanding of the trend of the
luxury fashion market industry, I will be able to understand luxury fashion consumers’ needs
and wants.
2.1 New trends influencing the fashion luxury market
“Fashion is not something that exists in dresses only. Fashion is in the sky, in the street; fashion
has to do with ideas, the way we live, what is happening.” Coco Chanel.
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This quote of Coco-Chanel couldn't be more relevant to the luxury fashion industry in our
society. Indeed, after a slow start luxury fashion is taking place in the digital market. Brands
are now interacting more and more with consumers through their own branded online store and
on multi-brand e-tailers. This new trend has emerged because it’s easier for brands to target a
larger portion of the growth in online luxury fashion, as single-brand sites have more limited
growth potential. According to Jennifer Smith 2015, 2018, “global digital sales for women’s
luxury fashion are expected to grow from a current 3 percent of the total market to 17 percent,
for a total market size of $12 billion”.
As this thesis has for main objective to analyze luxury fashion sustainable strategy,
understanding the next trends that will directly impact the luxury fashion global market is key.
As we can see in Figure 4, the European market is the major consumer of fashion luxury
products. According to a study run by Deloitte in 2018, France was the best-performing country
in terms of sales growth and also contributed the largest share to the Top 100 luxury goods
sales in 2018.
Figure 6: Europe remained the top region for luxury sales in 2018 from the Luxury Goods
Worldwide market study, fall-winter 2018.
Currently worth €260 billion, representing 6% growth (2% at current exchange rates) (Luxury
goods worldwide market study, Fall-Winter 2018, Bain & Company) the luxury goods market
is expected to increase by 3% to 5% through 2025, with the market for personal luxury goods
reaching €320 billion to €365 billion.
6,
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The luxury fashion market saw retail value grows exponentially from the last past years, and
this retail growth is mainly explained by the increase of online selling. In 2019, we encounter
more than 4.39 billion internet users, with an increase of 366 million users. There are 3.48
billion social media users in 2019, with the worldwide total growing by 288 million (9 percent)
since this time last year (see figure 7).
Figure 7 : Digital users around the world in 2019 from Hootsuite and We are social, global
digital overview report 2019.
To face this increase of online users where nearly “half of luxury goods buying decisions are
already influenced by what consumers hear or see online” (Jennifer Schmidt, 2015), luxury
fashion brands are adapting. Luxury fashion brands are highly investing to increase their
presence in internet retailing to provide a smooth shopping experience to consumers.
For example, department stores like Barneys New York and Nordstrom are offering special
services to consumers. They offer same-day deliveries, buy online/pick-up in-store capabilities
and easy exchange/return policies for products sold through their website in select US locations
(Fllur Roberts, 2017). Thanks to department stores online retail, luxury fashion brands can
target a wider range of consumers because it offers the opportunity to consumers who don’t
have time to shop in-stores or on different mono-brand websites to shop for their products.
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According to Bain & Company (Luxury Goods Worldwide Market Study, Fall-Winter 2018)
by 2025, 25% of the market’s value will be made through the online channel, up from 10%
today and almost all luxury purchases will be influenced by online communication or
interaction. Reports also show that half of all luxury purchases will be digitally enabled
resulting from the implementation of new technologies along the value chain, such as
augmented reality, virtual reality or mobile payments.
The emergence of new technologies like advanced analytics augmented and virtual reality,
artificial intelligence and mobile internet are gonna disrupt fashion. These new technologies
are helping brands to provide a personalized consumer experience online and offline.
“Today’s luxury consumer wants the personalization of the human interaction mixed with the
efficiency and speed of technology,” Andrukonis says.
Brands like Gucci or Chanel are early adopters of the use of new technologies in their user-
centric strategy to provide a better consumer experience. For example, Gucci has recently
opened a 25,000-square-foot call center staffed by 150 highly-trained service professionals
where consumers can interact with “call-center assistants by phone, email or live chat and those
assistants are encouraged to develop personal relationships with shoppers, just like a personal
store assistant would”.
Chanel has imagined a flagship store “Atelier Beauté” in Soho Manhattan, where consumers
only need their phones to beneficiate from a personalized shopping experience. When
consumers enter the store they can leave their belongings into lockers and take their phones in
the Chanel flagship to enjoy full mobile shopping experience. According to Forbes.com, thanks
to Chanel’s web-enabled app consumers can “get product information, application tips and
save their favorite products for shopping later”. Chanel’s web app offers consumer
personalized shopping experience thanks to the new consumer location technology “Ibeacon”.
Ibeacon works with Bluetooth low energy, the app listens for signals from beacons located in
the store and react accordingly with personalized messages based on consumers' location and
profile (see Ibeacon process in Figure 8).
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Figure 8: Ibeacon Technology Process - Personal Elaboration
Through this service, consumers can beneficiate from an immediate, efficient and personalized
shopping experience. For Pamela N. Danziger 2019, “the new mobile-enabled access gives in-
store customers more personalized service options if in-store staff are unavailable or they desire
information or products beyond what the store carries.”
Thanks to artificial intelligence and machine learning, we can track on-site and customer data
points in real-time to offer a personalized consumer experience. Data can be collected at
different collection points that permit specific consumer shopping personalization (Kunle
Campbell, 2019):
● Traffic.
● On-site interactions (category and product page visits).
● Email.
● Personal Data.
● Paid Media Pixels (both social and search).
● Purchases.
● Search.
● Pricing.
After consumer data collection, brands can create a personalization strategy for their consumers
based on their business size and needs. Brands' personalization strategy will depend on tools
used (see an example of Ibeacon below), store sales volume and the size of brands’ consumer
base.
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Another trend that is going to impact the global fashion market is the emergence of multiple
goods offered by companies. As we can see in Figure 7, all product categories sales are
performing well in 2017, but multiple luxury goods are the most performing companies.
Multiple goods brands represent companies with sales in more than one of the following luxury
goods product sectors :
• Clothing and footwear
• Bags and accessories
• Cosmetics and fragrances
• Jewelry and watches
• Multiple luxury goods
We count multiple examples of brands performing efficiently in the multiple goods offer but
we can cite the most successful ones such as Tapestry, Kering, LVMH, and Chanel. Based on
the Year to Year sales growth, the multiple goods sector ranked as the second-fastest growth
and performing sector after one of cosmetics and fragrances in 2019.
Thus, luxury fashion brands looking to increase their sales revenue and touch multiple buyers
should widen their product offer with multiple goods.
Figure 9: Performance by product sector, FY2017 from Deloitte Touche Tohmatsu Limited.
Global Powers of Luxury Goods 2019.
9
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One of the next trends that luxury fashion companies will face in the following years is the
increasing demand for fashion luxury in emerging countries. According to McKinsey Global
Fashion study, by 2018, more than half of apparel and footwear sales will originate outside of
Europe and North America. Growing cities in emerging markets now represent important
growth centers for the fashion industry, and consumers from emerging countries have different
needs and wants than Western consumers.
Figure 10: Chinese consumers are driving annual luxury growth 2018, Bain.com 2018.
Furthermore, another important trend that is affecting fashion luxury is the adoption of
sustainable behavior. Thanks to globalization and the increase of information access,
consumers are more and more aware of the environmental impact of fashion. As the fashion
industry is the second polluting industry, it comes with an urgent need to place environmental,
social, and ethical improvements on management’s agenda.
Indeed, luxury fashion used to be associated with abondance, high costs, and consumerism, but
as new consumers are taking over the market with their new values, consumer’s expectations
of luxury fashion brands are evolving. According to Stella McCartney which is the luxury
fashion pioneer brand in sustainability, « the future of luxury fashion is sustainability ».
New generations of consumers have different needs than the old generations. These generations
of consumers are indeed considering various elements when buying products such as labor
practices, sustainability, animal welfare or positive impact on communities.
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Thus, as we evolve in a society where brands are highly influenced and impacted by consumers'
behavior, luxury fashion brands must value transparency, integrate a sustainable approach into
their global strategy and offer seamless personalized shopping experience. To better understand
how luxury fashion brands should structure their business strategy it is key to understand their
consumer’s needs and expectations.
2.2 Luxury fashion consumer’s needs & expectations
The “generational theory” describes the idea that consumer’s needs and wants are different
according to their generation (Christine Barton, Jeff Fromm, and Chris Egan, 2012).
According to the cohorts theory based on the generational one, the important historical or social
events affect individuals. The events can include traumatic experiences like a world war,
ideology revolution such as Woodstock, or heroic figures like Nelson Mandela. If these events
unfold during the formative years of individuals it can affect an individual’s inclinations,
beliefs attitudes, and values. Then, individuals born during the same time period share
cognitive styles and inclinations (Christine Barton, Jeff Fromm, and Chris Egan, 2012).
As generational needs are evolving, the luxury fashion market is changing. The top segments
of the luxury market are still dominated by baby-boomers and generation X. These generations
include individuals born between 1946 and 1980. Their consumption behaviors were formed
at an earlier age. They are brand loyal, they respond to traditional brand messages and they
value traditional store buying with personal contact.
Even if these generations are dominating the market, they are becoming supplanted by new
generations called “Millennials” and “Generation Z”.
They have grown up in the Internet era. Their needs, wants and, individuals inclinations are
different than those ones of the older generations. Millennials are born between 1980 and 1994
while Generation Z are born between 1995 and 2015. Nowadays, Millennials and Generation
Z are already influencing the luxury fashion market but they will soon become the dominant
segments in the market (see Figure 11).
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Figure 11: Global Millennials and Generation Z spending power is set to overtake all
generations spending power by 2020 and will continue to rise from the World Data Lab.
Then, luxury fashion brands must understand their mindset to rethink their brands and
marketing accordingly, to offer products and services that meet their needs.
Through online surveys based on quantitative and qualitative, the Boston Consulting Group in
2012 analyzed the behavior of U.S Millennials and the McKinsey study analyzed the behavior
of Generation Z. Through these surveys, different characteristics of millennials and Generation
Z appeared.
Like the previous generations, millennials and generation Z share similar consumption
behavior. First, they care a lot about instant gratification (Christine Barton, Jeff Fromm, and
Chris Egan, 2012). Millennials and Generation Z want to have it fast and now. They favor fast
service, delivery, and convenience in all their purchases. As the basic concept of luxury is
related to the time concept and the idea that consumers need to face obstacles and wait a certain
time to purchase a product, luxury fashion brands need to rethink their strategy to target these
consumers. Luxury fashion brands need to make sure that their products and services are
accessible in a fast way to these generations of consumers. Through this strategy, brands can
use multiple ways such as stores, department stores, and media channels to reach these
consumers in a hurry.
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These generations aren’t brand loyal as they are extremely skeptical about brands as they can
check almost everything online. Thanks to social media and brands rating websites like Good
on You or Clear fashion consumers have the direct power to analyze brands' societal
responsibilities and product quality. Then, if luxury fashion brands want to earn their trust, they
must work hard on their transparency.
Another characteristic of these generations is that they favor word of mouth advice from their
friends or relatives. Indeed, according to Dr. Ganesh Shermon, 2017, an expert who is “a person
with the credibility to recommend brands, products, and services” referred to as professional
or academic credentials is defined differently by millennials and generation z. According to
these ranges of consumers, an expert is more a peer or a friend with firsthand experience with
a product or a brand. Then they referred more to friends and peer for products and services
pieces of advice.
Millennials and Generation Z favor crowdsourcing to get product information. Crowdsourcing
is defined as an online, distributed problem-solving that tap the collective intelligence of online
communities (Daren C. Brabham, 2017 and Christine Barton, Jeff Fromm, and Chris Egan,
2012). These new consumers then, use more online reviews while shopping. According to
Christine Barton, Jeff Fromm, and Chris Egan (2012), 53 percent of the Millenials interview
said using a mobile device to read user reviews and research products during their shopping,
while only 21 percent of non-millennials reported doing the same.
The increase in accessibility and reach of social media is changing the way consumers access
products and brand information. Nowadays, every brand’s users can become an expert in
brands and products information. Users' reviews and advice are spread even faster thanks to
social media and forums where consumers are sharing their consumption experience. Then, as
consumers are reaching faster brand information, brands must rethink their clients-service
strategy to make sure that their brand image will stay positive. Another important aspect that
fashion luxury brands have to take account of through their reach of new consumers is that
millennials and generation Z are extremely connected. For example, through Figure 9, we can
observe that Millennials are spending on average 3:38 hours on their smartphones and
Generation Z are spending 4 hours on it. According to the website of data analytics Statista
2018, 81% of the U.S population has a social media profile but the range of the population
using the most social media are millennials.
12,
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Figure 12: Social media use for Millennials and Generation Z from the Global Web Index.
Millennials and Generation Z use social media to connect with more and more people at the
same time. Indeed, as they are time-saving, the use of social media allows them to connect with
a large number of individuals at once. As they like to connect with their friends on social media,
they like to interact with brands online. Indeed, through social media millennials and generation
z create real bonds with their followers. Likes and comments help them to get validated by the
community.
Then when brands communicate online, likes and comments help consumers to recognize
community recognition and feel the need to purchase their products and services to get as well
the community recognition. Fashion luxury brands need to be part of the digital revolution and
to be active on social media to create real bonds with consumers. These bounds will push
millennials and generation z to recommend the brand to their friends and to consume more.
Finally, another common characteristic of millennials and generation z is that they have been
raised to protect the environment and make the world a better place. Indeed, since they have
been raised with environmental awareness and the idea that each behavior can have an impact
on the planet, they tend to prefer brands that have a positive impact on the environment.
Furthermore, through their purchase Millennials and Generation Z need to express their “status
currency”. It is “the status and values that consumers wish to project through their purchasing
decisions and their brand affiliations” (Christine Barton, 2014). Then eco-friendly brands allow
consumers to project their engaged values in their purchase.
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For example, through Figure 13, millennials worldwide place high importance on ethical
brands when purchasing high-end fashion or luxury worldwide in 2017. In the survey, we can
observe that 30.7 percent of respondents said they always made sure a luxury item is sustainable
or from an ethical brand before purchasing.
Figure 13: The Importance of sustainability and ethic to millennials when purchasing high-
end fashion or luxury items worldwide in 2017.
Then, we can see that luxury fashion brands must be more sustainable, respect the environment
and take responsible initiatives in their actions to target millennials and generation Z.
Another reason why millennials and generation Z are valuing eco-friendly brand is because of
their specific mindset characterized by their intrinsic value. They are valuating more lifestyle
than the actual stuff. They value more the quality over the quantity (Jeff Fromm, 2017). These
range of consumers want to live a purposeful life and use products that will fit their lifestyle
and that will feel valuable. The products they want to purchase need to add value to their life
by giving them a chance to express their intentionality, creativity and frugality. Through their
purchase they need to feel that the product identity will fit theirs (Jeff Fromm, 2017).
They are also careful about how they spend money. New generations don’t want to spend the
full price for products. Jason Dorsey, a Gen Z consultant and researcher who delivered a TEDx
Talk said that value can be achieved in two ways:
- “by shopping for clothing from brands that already have low prices
- by buying more expensive things that last longer.”
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However, because of their constant connectivity on social media Generation, Z and Millennials
feel the pressure to constantly wear new and original clothes as they are likely to be the most
photographed generation. This aspect appears in opposition to generation z and millennials’
eco-friendly mindsets.
Thus new ethical consumption behaviors are emerging. Nontraditional modes of shopping such
as rental and resale or thrift are becoming the new trends. These new shopping modes allow
consumers to access very unique items with a very low carbon impact.
If luxury fashion brands are willing to stay competitive they should invest in these new
shopping modes. In 2019, the resale market is growing 4 times faster than the traditional luxury
goods market and is worth 22 billion euros. It is expected to reach 31 billion euros by 2021.
According to the fashion network 2019, “ Chanel, Louis Vuitton and Gucci top the ranking for
second-hand sales, followed by Burberry, Dior, Balenciaga, and Alexander McQueen.”
New generations use items to express their identity. They put a high value on the perception of
others on the brand they are wearing (Christine Barton, 2014). They like to mix different items
to create their style and identity. Brands need to make sure their brand will be authentic, so
consumers can wear products that will match with their unique style.
Finally, even though generation z and millennials have a lot of similar characteristics, they also
do have differences that I have decided to present in a recapitulative infographic in Figure 14
(see Figure 14).
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Figure 14 : Differences and similarities of consumers behavior between Generation Z and
Millennials
Then to conclude, millennials and generation z are the future generations that will impact and
influence the most luxury fashion brands market. Young generations are a paradox, they are
environmentally engaged as well money conscious, seduced by new trends and getting items
at a fast pace. To stay competitive brands must adapt their communication and business strategy
to fit with their high expectations. To do so I will present in the next part, how luxury fashion
brands should develop a relevant brand strategy through their unique brand equity to keep
consumers loyal.
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2.3. Luxury brand equity management : earn consumers’ loyalty through
an omnichannel strategy
A product is something that is made in a factory; a brand is something that is bought by a
customer. A product can be copied by a competitor; a brand is unique. A product can be quickly
outdated; a successful brand is timeless.
Stephen king WPP Group, London
As we talked about in the previous parts, through the definition of luxury and fashion, a luxury
brand can be defined as one that is selective and exclusive, and which has an additional creative
and emotional value for the consumer that is perceived as timeless (Michel Chevalier. 2008).
Consumers of luxury fashion brands used to be perceived as extremely loyal to luxury fashion
brands and willing to pay for their brand image but as millennials and generation Z are non-
loyal and are becoming the consumers of tomorrow, brands must rethink their strategy.
A high brand image pushes consumers to purchase products because of the symbol and
representation of the brand. A good brand reputation means that customers are preferable for
this product on attitude; which means that they will take action to buy the brand products. Then
we can say that a good brand reputation is positively influencing consumers' brand loyalty.
Customers are more likely to “retain optimistic faith, attitude, and action if they face a brand
with a strong reputation” (Junjun Mao, 2010). Brand strength can be measured by its high and
spontaneous brand awareness. To develop a strong brand and consumer loyalty, brands have
to invest in their brand equity. David A. Aaker, 1991, defined brand equity as a “set of assets
such as name awareness, loyal customers, perceived quality and associations (e.g. being
“pure”) that are linked to the brand (its name and symbols) and add (or subtract) value to the
product or service being offered”.
As explained previously, the luxury fashion market is evolving. Luxury fashion brands are
perceived as late adopters of digitization processes and digital marketing. Indeed, during a long
period luxury brands used to be skeptical towards digital marketing and the use of multiple
channels to reach their consumers. Luxury consumers used to look for personal interaction and
touch with brands that were only possible through in-store interactions with products, brands,
personnel and services (Heine & Berghaus, 2014, Kapferer and Bastien 2009, Dell’Olmo, Riley
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& Lacroix, 2003). However, since the last few years, luxury fashion brands are adopting new
strategies facing the digitization of services.
Nowadays, consumers have new needs and expectations. The increasing use of digital
technologies has empowered luxury consumers. They need to interact, influence and be the
brands they buy. As we can see in Figure 15, on the old one-way communication (Linear Model
of Communication), brands used to interact with consumers through a single channel without
any feedback. Nowadays, luxury fashion brands need to adapt to their clients through multiple
channels to interact and make them part of the brand (Figure 16, Interactional Model of
Communication).
Figure 15: Linear Model of Communication: Shannon & Weaver.
Figure 16: Interactional Model of Communication.
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Now, consumers tend to purchase through different retail channels during their purchasing
process. To adapt to this changing consumer behavior brands need to offer a multichannel retail
experience that will provide full customer interaction and retailer integration.
As we can observe in the following figure, lines between digital and physic are blurring and
touchpoints are increasing :
Figure 17: Shopping Intention Survey Wave 2012 from Ipsos OTX/Google
According to McKinsey in 2019, customers shopping journeys comes down into three
categories which are:
● Transparency and reliability
● The flexibility of the services and speed
● Interaction, personalization, and attention to their needs
Thus brands must take into account these elements to build strong brand equity.
Through the adoption of an omnichannel strategy, the vertical digital transformation of a brand
is possible. The omnichannel strategy is defined by Nick Winkler, 2019 as the “integration of
each touchpoint to offer the customer exactly what they need, the moment they need it,
anywhere they are and on any device.”. The omnichannel is based on a multichannel approach
to sales that provide customers with a smooth shopping experience, from online on mobile or
desktop devices to offline in a brick and mortar store. (Search Online Experience, 2019). (see
figure 18 to better understand the omnichannel experience).
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Figure 18: In 2019, consumers are expecting a seamless omnichannel experience by CHRIS
WALTON.
Nowadays, an omnichannel strategy is a must for luxury fashion brands if they are willing to
offer the best consumer experience. It has been shown that brands could highly increase their
profits by adopting this strategy, based on Shopify through omnichannel “customers spend 4%
more on every shopping occasion in-store, and 10% more online than single-channel
customers.” Through the adoption of an omnichannel strategy, consumers are more rapidly
trusting brands leading to higher brand loyalty and higher customer retention.
Indeed, as we have seen previously millennials and generation Z aren’t loyal consumers. To
gain their trust, brands must satisfy their needs and show transparency in their communication
strategy. Thus, the adoption of an omnichannel strategy will show brands’ transparency across
all channels. This global transparency shows that brands have earned their reputation which
pushes consumers to better and faster trust it.
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Figure 19: Impact of an omnichannel customer experience strategy by Aberdeen Group.
The implementation of an omnichannel strategy for luxury fashion brands is related to four
dimensions that affect the company at all touchpoints: time, finance, space, and equity.
To implement a relevant digital strategy that will enhance luxury brand’s equity, brands have
to make sure to implement their digital strategy in all their departments and not only focus on
just one area, such as Marketing or Sales or individual programs or projects – with limited or
very slow returns.
To implement a smooth and even digital strategy in all their departments, luxury fashion brands
should be careful about their content design. Luxury fashion brand content should be designed
to support the brand narrative and allow consumers to purchase the brand’s product easily.
Brands’ content should be related to “customer’s profiles, product characteristics, and
availability, services” (Ozuem Wilson and Azemi Yllka, 2018) such as product special features.
The content design should also take into account the kind of technology customers are using in
their daily life, their geographical position and what is the purpose of their purchase.
To implement a relevant omnichannel strategy, luxury brand brands should also focus on the
context design. The contexts are defined by Ozuem Wilson and Azemi Yllka, 2018, as the way
in which customers access the content at different stages of their journey. The environment
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where consumers will access luxury fashion products will play an important role in the rich
experiences of the purchase. Great consumer experience must include content that identifies
consumers’ geolocalization and react consequently. (Ozuem Wilson and Azemi Yllka, 2018).
Ibeacon technology, Wifi based systems and RFID (radio frequency identification), are
relevant technologies to track consumers and offer personalized content based on their buying
habits.
Thirdly, luxury fashion brands should also focus on their infrastructure design. Infrastructure
is defined as a mix of channels (digital and physical), that will permit an effective consumer
experience (Ozuem Wilson and Azemi Yllka, 2018). This mix of channels should be perceived
as a single one that will help to deliver a seamless experience in which consumers do not feel
any change between a digital or physical channel.
Furthermore, another important aspect of the adoption of an omnichannel for luxury fashion
brands is the use of catwalk. Catwalks are now used as a final market promotional tool more
than a channel support.
Indeed, the collection design and promotion process are changing due to the adoption of the
omnichannel strategy.
The role of fashion weeks and catwalks in the new collection entry in the retail market has
changed. Fashion weeks are traditionally designed to present the product to consumers to start
the manufacturing process. For this reason, fashion weeks have always been presented months
before the beginning of the season to make sure new products will be delivered to consumers
on time.
However, because of the introduction of e-retail, the option to make the collection available
just after the catwalk is possible. This new element affects luxury fashion brands at all levels.
From the communication calendar to the whole merchandise, to the collection design process,
the manufacturing cycle, and the supply chain, brands have to rethink their entire internal
organization. The products have to be ready right after the fashion show, which means that
brands have to anticipate their consumer’s behavior and purchase. Brands like Tommy Hilfiger
and Burberry, have already implemented this omnichannel strategy during their catwalks. For
example, the catwalk will take place later in the year than a few months before the collection
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release. The show will be broadcast on digital media to allow consumers to purchase the
products just after the show.
Furthermore, one of the last changes luxury fashion brands need to be aware of in the adoption
of omnichannel strategies is the changing role of physical stores. The salespersons have to
make sure to drive consumers toward different brand channels.
Stores used to be the only point of purchase where store employees were creating bonds with
consumers and selling products. Nowadays, stores are used as an interaction point with
consumers where employees promote multiple brands’ channels. This impact the skills and the
way salesperson are motivated and remunerated. This new element has to be integrated into the
strategies of brands to make sure that the employee recruiting and training process will feet
their new role.
Thus, the digitalization of luxury fashion brands is key in our century where brands have to
rethink their organizational culture to put more and more consumers at its head.
To implement correctly an omnichannel strategy and digitalize their brand, luxury fashion
brands should make sure to design and implement different interactions through the customer
journey. Ozuem Wilson and Azemi Yllka, 2018, suggested that brands should call consumers
for actions at a different level of their communication process.
The implementation of a luxury brand digitalization has to be done progressively to make sure
it will be integrated vertically in the companies.
Schallmo 2013, defined the digital transformation of a brand as the generation of new
applications or services (demand predictions) through the use of technologies (big data).
Daniel J. Power (2013) defined Big Data, as the phenomenon of capturing and trying to use all
of the semi-structured and unstructured data. The use of big data is key but has to be
incorporated strategically to brands’ business decisions. Indeed, trust and purchase intention
are highly related. Data must be used wisely by brands to offer personalized offers that will
gain consumers’ trust.
MBA Thesis - Sustainable Luxury Fashion
46
Figure 20: Data collection for a better consumer understanding and shopping experience.
Data collection and analytics need to be prioritized by luxury brands to make sure they
understand the mindset of their consumers. Through their digital tools, brands can collect
consumers’ information about their consumption behavior, product habits, decision drivers
and, preferences.
This data collection can help brands to better know their consumers by segmenting their market
based on their profile. Brand strategies can then be developed to reach properly customers'
groups based on their needs and expectations.
As we have seen previously consumers are more and more valuing personalization and
authenticity. They don’t want to only buy a product anymore, but to be part of the brand. To
do so luxury fashion brands can offer ultra-personalization in their shopping experience.
“To achieve this ultra-personalization, information access and analytics need to be
incorporated in luxury fashion brand management strategies” Roger Lay, 2019.
Today, the quality of big data is transforming. Big data is no longer only semi-structured based
on demographic and basic consumers' information such as their sex, name, income or age.
Because of the rapid real-time flows of information collected through the internet, data
collection is now mainly based on unstructured data such as high-end customer engagement
across an omnichannel purchase funnel, consumer social media comments on luxury pages, or
influencers photos likes and comments (The Economist, 2019).
MBA Thesis - Sustainable Luxury Fashion
47
Simon Beauloye, co-founder and CTO of mOOnshot digital, said that “Brands who are capable
of combining their online customer data with offline insights will gain market shares.” He also
said that even though digital-first brands have integrated the digital market years ago compared
to luxury fashion brands, luxury brands beneficiate from a unique competitive advantage which
is the important size of their offline retail stores.
Thus, by providing a unique consumer experience through their digital and physical platforms
luxury fashion could gain back digital presence.
One example of a digital brand personalization through the use of big data is digital clienteling.
This process is a new way to deliver a personalized customer experience across multiple
channels (Roger Lay, 2018). This process is used traditionally in highly expensive areas and
department stores where sales associates greeted know frequent consumers and serve them
champagne and coffee in special rooms and offer them an unadvertised discount at the point of
purchase. This ultra-personalization used in traditional retail channels is now used in the digital
world. As the implementation of big data analytics is an increasing process for fashion luxury
brands, luxury brands are more and more implementing digital clienteling.
The different interactions brands have with customers through their laptops, feature phones,
and tablets, permit brands to collect more data about customers. Through the collection of data,
brands can evaluate customers’ value and target the right consumers range for their
advertisements and discounts. One of the most popular luxury fashion brand offering a
personalized consumer experience through data collection is Burberry. Indeed, the brand has
adopted an omnichannel strategy where data collection is key and where the digital and
physical worlds are mixed to offer the best consumer experience.
For example in London, the brand has created a digitally integrated showroom where thanks to
what clothes consumers are trying on, (thanks to the RFID technology) consumers profile are
defined. Through these profiles, Burberry is personalizing its offer and messaging on its digital
platform and physical store.
The use of big data has also allowed Burberry to map its consumers and identify the key role
of Millenials in their sales revenue. As millennials are highly connected and tech-savvy,
Burberry decided to reorganize its marketing department and put up an internal creative content
media team. Furthermore, another example of how digital and physical is mixed and integrated
into Burberry strategy is the internal referring to its website. More consumers are now visiting
MBA Thesis - Sustainable Luxury Fashion
48
Burberry’s website than their offline retail stores globally. Thus Burberry began to refer inside
the company to its website as “the million square feet store”.
Then, luxury fashion brands' management strategy is evolving due to the change in consumers'
needs. The change from a single channel to a multi-channel to omnichannel strategy is due to
the changing needs of consumers who are now expecting to interact personally with brands.
Though the adoption of an omnichannel strategy, luxury fashion brands can stronger their
brand equity and gain loyal consumers, through their global transparency by showing they have
earned their reputation across all channels.
After analyzing how luxury fashion brands should optimize their brand equity to gain
consumers loyalty, we will analyze how the concepts of luxury fashion and sustainable
development are linked to each other and how luxury fashion brands should integrate it to
satisfy the needs of younger generations based on transparency, brand value, sustainable
impact, and fast items access.
3.0 Luxury and sustainable development : relationship
“I think we can only talk about luxury now if it is sustainable. I look forward to the term
"sustainable luxury" becoming a pleonasm.”Barbara Coignet, 2019.
Nowadays, consumers are expecting brands' radical transparency. With this transparency
comes the need for corporate integrity and social responsibility. To survive in the current
fashion industry, companies must provide transparency beyond the surface level.
According to Kati Chitrakorn “Unless fashion brands adopt best practices from outside the
industry and improve supply chain transparency from within, consumers will begin to wonder
what they have to hide.”
To adopt a transparent strategy, brands must adopt a more ethical approach. Indeed, given the
situation emergency, the economy must react to ensure its sustainability. However, it is
possible that luxury, by its very nature, has additional reasons to integrate sustainable
development. According to Jean-Noël Kapferer, 2015 :
MBA Thesis - Sustainable Luxury Fashion
49
"Very close to sustainable development because it feeds on scarcity, the luxury sector that sells
intense happiness can not by definition accept to pollute and contribute to the ugliness of the
planet".
Luxury fashion must integrate sustainable development into its business strategy as younger
generations are more and more demanding about brands’ transparency. Luxury fashion and
sustainable development might look like opposite terms but many similarities are existing
between luxury fashion and sustainable development.
When sustainable development and fashion meet it forms the term: Sustainable fashion.
Sustainable fashion is defined by Green Strategy 2019 as “clothing, shoes, and accessories that
are manufactured, marketed and used in the most sustainable manner possible, taking into
account both environmental and socio-economic aspects.“( 2012 – 2019 Green Strategy).
If we take the trouble to go beyond appearances and return to the very definition of luxury, it
appears that sustainability and respect for the environment should be an integral part of its
DNA.
3.1. Durability and longevity of fashion items.
First, because luxury fashion places great importance on the longevity and durability of its
products. Luxury is by nature a vector of a timeless elegance that escapes the seasons, the
ephemeral, it designs and manufactures quality products that accompany throughout a lifetime
and thus carry in them implicit sustainability: consume better and less, unlike products with
short life cycles and impulsive consumption stimulated by low prices.
Luxury is in a long-term perspective, it does not feed on planned obsolescence, whether it is in
the functions that it fills thanks to solid materials, contrary to fast fashion products whose
quality is intentionally mediocre, or in its design, which aims timelessness.
According to Kapferer & Bastien, 2009, “Luxury items are durable and even see its value grow
over time". Luxury fashion items are passed from generation to generation. "Luxury is what
you repair," says Jean-Claude Ellena, of Hermès. Therefore, most luxury brands provide after-
sales service themselves and carry out repairs in their workshops. For example, Louis Vuitton
guarantees its leather goods for life.
MBA Thesis - Sustainable Luxury Fashion
50
3.2. Scarcity and garment respect
As seen in the components of a luxury product, it is based on the scarcity principle. Raw
materials are used to produce luxury products. It is then the role of luxury brands to preserve
raw materials to keep their production efficiency. This scarcity principle thus pushes luxury
brands to produce in lower quantity making the luxury and sustainable development
compatible. Furthermore, luxury also takes account of garment respect. When producing, many
fashion luxury brands are being careful of the respect of the garment at try to reuse most of it
in their production. For example, in 1930, Emile Hermès came up with the idea of creating
leather agendas to value unused scrap and kept in his workshops. Later, even smaller falls gave
rise to the "Petit H" art collection.
3.3 Human and work respect
Luxury items are designed and created to be timeless and sustainable in time. Timelessness
refers to the fact that luxury goods go through the times while preserving their identity. In other
words, they have a long history and their development takes place in respect of manufacturing
traditions.
Luxury favors skilled work and helps to enhance and preserve rare jobs. Luxury and sustainable
development put the human relationship at the center. The luxury product is handmade and
sold from one individual to another. To favor the method of artisanal production rather than
the factory work at the chain is to respect the craftsman and his work.
Hermès is the perfect illustration: using nomads from North Africa for metal belt buckles, the
brand respects their pace and way of life, does not impose any time constraint on them and
ensures them fair compensation - the exact opposite of the methods of sweatshops providing
mass consumption. Belts are put on sale when the available volume is deemed sufficient,
without a predefined schedule.
Luxury distribution is also job-creating, unlike retail and more generally self-service, which
dehumanizes and reduces staff to a few unskilled employees. The product (and even more the
service) of luxury requires the intervention of the hand of the man and thus guarantees the
maintenance of the jobs. Also, it is anchored geographically, and does not suffer offshoring:
employment is therefore local and paid precisely, and the product does not travel too far. It's
MBA Thesis - Sustainable Luxury Fashion
51
better to boost the economy with luxury than digging and filling holes. Luxury is a great way
to increase Gross National Product (GNP), create jobs, promote international trade and increase
wealth (Jean Castarède, 2008).
In other words, they have a long history and their development takes place in respect of
manufacturing traditions. The relocation of luxury is likely to be a break with the past of luxury
homes and thus break the dream that consumers aspire. According to Jaffé and Nebenzahl 2001,
the perception of brands for prestige or status products is strongly linked to that of their country
of origin, which would make any relocation impossible.
However, even if luxury and sustainability share common characteristics, many luxury fashion
brands due to the intense competition of the fashion industry and the pressure of consumers to
get items at a fast paste have outsourced their production and adopted a linear production model
which is out of the basic principles of luxury. In the next part, we will analyze the current crisis
luxury fashion brands are facing and how they should change their production model to a more
sustainable one and get closer to the basic principles and definition of luxury.
ACT NOW FOR A
MORE SUSTAINABLE
SUPPLY CHAIN IN
THE LUXURY
FASHION INDUSTRY
IN LUXURY FASHION
52
MBA Thesis - Sustainable Luxury Fashion
53
4.0. Act now for a more sustainable supply chain in the luxury fashion industry
4.1 Current crisis of the fashion Industry - The issues of the actual linear value chain
According to the online journal TechTarget, a supply chain can be defined as the entire network
of all the resources, activities, technologies and organizations involved. In the fashion industry
the value chain is composed of different steps:
1. Growing fibers
2. Harvesting fibers
3. Ginning and spinning
4. Knitting and weaving
5. Processing
6. Cut-make-trim
7. Trading
8. Retailing
Nowadays, many luxury fashion brands are working under a linear value chain model. The
linear value chain model is defined as the process of extracting raw materials are from resource
countries, shipped to manufacturing powerhouses, like China, and processed into fashion items.
The issue with this mode of production is that it creates pressure on natural resources, pollutes
the environment and creates a negative impact on society. This model is using an important
quantity of nonrenewable resources to produce clothes that are worn for a shorter period than
in the past (see figure 21) which end up in landfills or are incinerated.
from resource
MBA Thesis - Sustainable Luxury Fashion
54
Figure 21: Growth of sales and decline in clothing utilisation since 2000. Euromonitor
International Apparel & Footwear 2016 Edition (volume sales trends 2005–2015); World
Bank, World development indicators – GD (2017).
Through linear manufacturing and distribution a high volume of scraps are produced and waste
to satisfy increasing consumers’ needs and expectations to update constantly their wardrobes
at a fast paste. Through fashion production, polluting chemicals such as dyeing chemicals and
also toxic gases are released.
Figure 22 : Simplified representation of today’s clothing system - Ellen MacArthur
Foundation, drawing from Braungart & McDonough, Cradle to Cradle (C2C)
MBA Thesis - Sustainable Luxury Fashion
55
It has been proved that fashion production has huge negative impact on the planet and
biodiversity. The production causes resources depletion, water pollution, air pollution, habitat
deconstruction, human rights abuses, food insecurity, animal suffering and climate change.
Moreover, the huge volume of packaging and inefficient employees’ energy management in
linear manufacturing and distribution are slowing down the production process. According to
Ellen MacArthur Foundation, “less than 1% of the material used to produce clothing is recycled
into new clothing, representing a loss of more than USD 100 billion worth of materials each
year.”
Figure 23: The negative impacts of the textiles industry are set to drastically increase by 2050.
Circular Fibres Initiatives Analysis.
If the fashion industry continues to produce as it does today the consequences could potentially
be catastrophic. Indeed, if the fashion industry continues this path, it could “by 2050, use more
than 26% of the carbon budget associated with a 2°C pathway” (Ellen MacArthur Foundation
2017). All fashion brands should thus change their current linear system to not reach the 2°C
global warming limit.
MBA Thesis - Sustainable Luxury Fashion
56
Furthermore, new regulations are implemented by governments globally to reduce fashion
pollution and engage in better work conditions which will push brands to take action. For
instance, in Bangladesh where the Rana Plaza factory collapse has killed more than 1,100
people and injured 2,000 people, new important regulations have been implemented.
As an example, a strong program has been carried out in Bangladesh called “the Fire and
Safety”. To improve security, prevent another manufacture's collapse and improve
manufacturing facilities stricter rules and audits have been implemented in Bangladesh to
improve working conditions for employees. According to the Business and Human Rights
resource center in 2018, the remediation measures have permitted to reduce life-threatening
and increase safety by 84% in Bangladesh with “proper fire exits and alarms” and “structural
factory retrofitting”.
However, even with these efforts, other achievements are required to successfully address
workers’ and human rights in the fashion sector, notably discrimination, child labor, fair wages
and freedom of association. Covering these gaps call for an important supply chain
management system for the fashion industry.
Based on a study on 457 fashion companies developed by Sustainalytics.com, the majority of
fashion industry brands aren’t managing correctly their supply chain. Indeed, 56% of the
companies audited were not disclosing supply chain management programs meaning these
brands can still be exposed to reputation issues if new polemics emerge (see Figure 24).
Figure 24: Supply Chain Management Programs (Percentage) from Sustainanlytics Research
2018.
MBA Thesis - Sustainable Luxury Fashion
57
Thus, luxury fashion brands are facing many challenges all at once in 2019:
● the internationalization,
● the acceleration of the trend cycle,
● the increasing demand for quality and transparency,
● the environmental impact of their production,
● the need to reduce losses and increase profits in an increasingly competitive market.
4.2. Vertical Integration Strategy a solution to better control the supply chain
In the past, luxury fashion production strategy was mainly based on a vertical strategy. A
vertical integration strategy is a strategy where brands have control over their “suppliers,
distributors or retail location to control the entire value or supply chain.” (Will Kenton, 2019).
This strategy is extremely efficient to retain control over the quality and uniqueness of the
merchandise and thus allows brands to ask for items premium price (Brun et al., 2008).
Indeed, vertical integration is extremely efficient to control the entire production, distribution
process, and improve efficiency due to the reduction of intermediaries in the supply and
distribution chain.
The vertical integration strategy can be integrated into all these production steps or only some
steps:
- Creation, design;
- The production of intermediate goods (fabrics, leathers ...);
- The manufacture of finished products;
- Distribution, wholesale then retail.
Due to increasing consumers' needs to update their wardrobe brands are outsourcing their
production as they are being put constantly under pressure. According to the European House
- Ambrosetti four elements are pushing luxury fashion brands to produce even more:
1. The proliferation of special projects, such as capsule collections and other
collaborations.
2. The increase of the frequency of the launches
3. The unpredictability of the volumes
4. The obsolete information systems
MBA Thesis - Sustainable Luxury Fashion
58
5. Luxury fashion houses are looking to reduce cost benefits through the outsourcing of
their production to lower countries labour cost.
Quelin in 1997 notes five factors that have pushed companies to massively outsource some of
their production to third parties countries. This process is called disaggregation, where each
activity of the supply chain is located in diverse locations.
Figure 25: Value Chain Disaggregation, Mudambi 2008.
The first element that pushes luxury fashion brands to outsource their activities is the refocusing
of strategic activities. This first element means that only the functions that significantly
contribute to the company's competitive advantage will remain in the fold of the brand.
The second reason why luxury fashion brands have decided to outsource their production is the
economies of scale and cost. Quelin said that "in some cases, economies of scale are much
more easily achieved by the supplier than the company". A supplier providing orders of several
brands could thus be able to deliver more efficiently than if each of the brands had their
individual manufacture.
The third element of brand production outsource is the reorganization of their politics. Luxury
fashion brands are focusing their work more on their core activities based on their business
type and more outsourcing activities having a less closed direct relationship with the brand.
The fourth element is the technological changes. Brands are outsourcing because new
technologies and information systems push brands to implement stronger and more strict
controls. Thus, the outsourcing of production is a great way for brands to not take risks in
investing in new technologies if they aren’t sure of it.
MBA Thesis - Sustainable Luxury Fashion
59
Finally, the last reason why brands are outsourcing their production is the increase of the global
competition pushing brands to outsource their production to stay competitive.
However, not all brands are outsourcing their production and some are choosing vertical
integration in some part of the production process. As we can see in the following figure, the
vertical integration of the production varies based on the product type.
Figure 26: Vertical Integration of the production varies based on product categories, IFM.
French couture brands like Chanel or Hermès have chosen to internalize the production
function. This internalization has for main objective to keep control over the product quality
and the artisan skills that structure the production of luxury goods.
This internalization of the production as been proved to be extremely efficient for luxury
fashion brands as it permits to keep control of the entire value chain and thus to share a
transparent communication to consumers.
Furthermore, the use of a vertical integration strategy can improve brand benefits and turnover.
Franck Delpal, an expert in vertical integration and a professor at IFM, a fashion school in
Paris, told the New York Times: "If you control most of your supply chain, you get margins
every step of the way and in the end, it can be very profitable.”
In 2013, Kering bought one of the most renowned tanneries in France, France Croco, a Norman
tannery specializing in the sourcing, tanning, and treatment of crocodile skin.
By integrating sustainability into its entire supply chain and setting targets for its sustainability
strategy for 2025, Kering has achieved unprecedented results. More importantly, the company
"aspires to find commercial approaches and supply chain solutions that contribute to the
restoration and regeneration of natural capital, support the protection of biodiversity, and treat
health and safety by eliminating dangerous chemicals and respect the highest standards of
animal welfare. "
MBA Thesis - Sustainable Luxury Fashion
60
The strategy of integration can thus help brands to have a positive environmental impact thanks
to the global brand control and to reduce production costs.
To reduce the environmental impact of luxury fashion brands new KPI has been implemented
to measure and help fashion companies to reduce their impact. The most impactful KPI to
measure the actions and sustainable performances of fashion brands is the Pulse Curve.
This curve permits to measure brands' actions over time and compare their engagement
compared to their competitors. In 2019, the premium segment saw its Pulse Scores increase by
one to three points over the last year.
Figure 27: Pulse Scores by segment and sizes 2019 vs 2018.
To keep improving a “roadmap to scale”, has been offered to companies to prioritize their
sustainable actions. Sustainable actions are based on 4 enablers which allow companies to
improve their sustainability practices:
● resources
● strategy
● traceability
● communication
Through the next part, we will analyze how the integration of these 4 elements can permit to
positively impact luxury fashion sustainable practices.
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020
Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020

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Professional thesis - sustainable luxury fashion - Audrey Zamboni - 2020

  • 1. LUXURYFASHION MBA Digital Marketing and Business Professional Thesis How luxury fashion brands can adopt a sustainable approach and act as leaders of global fashion sustainable change through their online communication by targeting younger generations? Luxury Fashion move  toward sustainability Audrey Zamboni 2019 SUSTAINABLE
  • 3. Table of Contents 1.0 Luxury in the 21st Century p.17 I. Theoretical Framework p.16 B. The luxury fashion : Moving to a stronger sustainable engagement To start A. Luxury fashion definition and challenges 2.0 Luxury fashion global challenges p.21 3.0. Luxury and sustainable development : relationship p.48 4.0. Act now for a more sustainable supply chain in the luxury fashion industry p.53 5.0. Communicating Sustainability in the Luxury Fashion Industry p.76 3
  • 4. A. The research p.81 II. Applicative Framework Objective: Understanding of new consumers attitude toward sustainability in luxury fashion to share the right communication. B. Presentation of the research results p.84 C. Survey findings p.88 D. Case application: Stella McCartney best practice p.94 Observation of the company communication strategy for applicative recommendations about sustainable communication in luxury fashion based on new consumers needs. E. Results interpretations and recommendations : “what” sustainable message and “how” luxury fashion brands should share it. p.109 F. Constructive criticisms about the survey and analysis p112 6.0 Global conclusion p.113 7.0 Annexes p.118 Table of Contents 4
  • 5. MBA Thesis - Sustainable Luxury Fashion 5 Summary English Nowadays, many thesis and work have been done about luxury fashion but none had shown the best practices that luxury fashion brands must adapt to become more sustainable and have a positive impact on society as industry leaders and influencers. Through my researches and interviews, I have discovered that fashion is the second most polluting industry in the world after oil and gas. The actual production model used in luxury fashion is linear causing huge environmental and social impacts due to the extraction of a large number of natural resources to produce luxury fashion items that end up in incineration or landfill after use. Luxury fashion brands have the chance to be positioned as industry leaders and to have an important influential impact on the rest of the fashion industry. Thus through this thesis, I answered the following problematic: “How luxury fashion brands can adopt a sustainable approach and act as leaders of global fashion sustainable change through their online communication by targeting younger generations?” To answer this problematic, I have provided a framework for luxury fashion actors to take initiatives by adopting more sustainable practices in their production and distribution models. The solutions shared with luxury fashion brands to become more sustainable were about the change from a linear production model to vertical integration for better control of their supply chain and the adoption of a circular value chain that would permit to achieve of a zero-waste design process. Disruptive innovations about sustainability in the luxury fashion industry have also been provided to help luxury fashion brands to take innovative actions. It has been shown that thanks to the adoption of more sustainable and ethical practices, luxury fashion brands would increase their competitive advantage, productivity, profitability, reduce their global costs and could accelerate a transition towards a more sustainable fashion thanks to their power of influence that would cause a global shift of the industry. After analyzing in which ways luxury fashion brands (LFB) could become more sustainable. The thesis has searched how LFB could talk about sustainability in their communication to address millennials and generation Z which are the consumers who will purchase the most
  • 6. MBA Thesis - Sustainable Luxury Fashion 6 luxury in 2020 without being perceived as greenwashing. Based on a poll survey on younger generations and the case study of Stella McCartney communication best practices, recommendations about sustainable omnichannel messages strategy in luxury fashion has been addressed. Français De nombreuses recherches ont été réalisées sur la mode de luxe mais aucune n’a proposé de pratiques qui pourraient être adoptées par les marques de mode de luxe pour devenir plus durables tout en ayant un impact positif sur la société de par leur positionnement de leaders dans l’industrie de la mode. L’industrie de la mode est la seconde industrie la plus polluante au monde après celle du pétrole et du gaz. Le modèle de production principalement utilisé par la mode luxe est basé sur une chaîne de production linéaire ayant un impact dévastateur d’un point de vue social et environnemental. Les marques de mode de luxe ont la chance d’être positionnées dans l’industrie de la mode comme leaders avec un fort pouvoir d’influence. Cette thèse a cherché à répondre à la problématique suivante : “comment les marques de mode de luxe peuvent elles adopter un comportement durable et agir en tant que leaders du changement de l’industrie de la mode à travers leur communication en ligne en ciblant les jeunes générations?”. Pour répondre à cette problématique, un plan a été proposé aux acteurs de la mode de luxe afin de prendre des initiatives plus durables tout au long de leur chaîne de valeur. Les solutions proposées aux marques de mode de luxe pour devenir plus durables concernaient le passage d'un modèle de production linéaire à un modèle de production verticale permettant de mieux contrôler leur chaîne d'approvisionnement et l'adoption d'une chaîne de valeur circulaire qui permettrait d'atteindre le “zéro déchet”. Des innovations disruptives sur la durabilité dans l'industrie de la mode de luxe ont également été proposées aux marques de mode de luxe afin de prendre des mesures durables innovantes. Il a été démontré que grâce à l'adoption de pratiques plus durables et éthiques, les marques de mode de luxe augmenteraient leurs avantages concurrentiels, leurs productivités, et leurs rentabilités. Cela pourrait également
  • 7. MBA Thesis - Sustainable Luxury Fashion 7 permettre d’accélérer une transition vers une mode plus durable grâce à un changement de mentalités dans l’industrie de la mode. Cette thèse a également cherché à savoir comment les marques de mode de luxe pourraient parler de durabilité dans leurs communications en s'adressant aux milléniaux et à la génération Z, qui sont consommateurs d’avenir du luxe, sans pour autant être perçus comme du greenwashing. Sur la base d'un sondage réalisé auprès des jeunes générations sur leurs attentes en matière de durabilité et de l'étude de la stratégie de communication de Stella McCartney, des recommandations sur les messages durables et les moyens de les délivrer à travers une stratégie omnichannel ont été proposées afin d’orienter les marques de luxes dans leur transition durable. Words Cloud:
  • 8. MBA Thesis - Sustainable Luxury Fashion 8 Synthetized Recommendations This thesis has given several recommendations to luxury fashion brands based on : 1. How they could become more sustainable through a leaner management of their value chain. 2. How they should communicate about their sustainable engagement online to younger generations of consumers. Through the next part, I will present a synthesis of my recommendations. 1. Recommendations for a more sustainable value chain: If the fashion industry continues this path, it could “by 2050, use more than 26% of the carbon budget associated with a 2°C pathway” (Ellen MacArthur Foundation 2017). All fashion brands should thus change their current linear system to not reach the 2°C global warming limit. Through this thesis, several challenges have been identified for luxury fashion brands in 2019: the internationalization, the acceleration of the trend cycle, the increasing demand for quality and transparency, the environmental impact of their production, the need to reduce losses and increase profits in an increasingly competitive market. According to Kati Chitrakorn “Unless fashion brands adopt best practices from outside the industry and improve supply chain transparency from within, consumers will begin to wonder what they have to hide.” To adopt a transparent strategy, luxury fashion brands must change their strategy to a more sustainable approach in their production model. My recommendations to adopt a more sustainable approach in their production model to luxury fashion brands were about the adoption of a vertical integration strategy where brands have control over their “suppliers, distributors or retail location to control the entire value or supply chain.”. This strategy permits to keep control of the entire value chain and improve brand benefits as they can get margins every step of the way and in the end. The entire control of the value chain could thus allow luxury fashion brands to share transparent communication with consumers. Another recommendation that has been proposed to luxury fashion brands is the adoption of a green supply chain management. The green supply chain management is the integration of the environmental dimension into every logistics decisions, from design to end-of-life, through production and distribution. To ensure a green supply chain management, recommendations to
  • 9. MBA Thesis - Sustainable Luxury Fashion 9 brands have been made about the following practices: responsible purchasing (green purchases and social purchases), sustainable transport, sustainable packaging (sales packaging, storage packaging and packaging for transportation), sustainable storage, reverse logistics. The adoption of a circular value chain has been the greener alternative recommendation offered to luxury fashion brands if they have the financial opportunity to support it. The circular economy is based on the principle that luxury fashion brands must think when designing a product about the consequences of their products and how it can be recycled. The recycling process is integrated into the supply chain to put back old items into the new supply chain to favor product reuse by recycling, selling old items or by upcycling unusable items into new products. This strategy adoption will help in the development and improvement of human living conditions and will not harm the society nor the ecosystems. To develop a circular strategy, product design must be thought to reduce the number of polluting substances and use as much as possible recyclable materials to achieve a “ zero waste”. Local suppliers who will be able to satisfy, during the production process, the environmental and technical criteria defined by the company (carbon emission, energy efficiency, waste management...) in addition to the traditional requirements of quality, cost and timeliness should be selected. Near-shoring, resource-efficient fabric production and the use of automated production are recommendations made to luxury fashion brands in the adoption of a circular strategy which could lead to reduce CO2 impact and improve the leading time of fashion items, create higher garment quality and customize items based on consumers' expectations. Finally, disruptive innovations have been recommended to luxury fashion brands to take a step forward to a greener management of their value chain. These innovations includes various domains such as second hand and renting market, brands partnership, artificial intelligence, blockchain, and technical textiles. 2. Recommendation about sustainable communication online to younger generations of consumers Recommendations about sustainable luxury fashion brand communication have been made based on an online survey about younger generations' sustainability needs and expectations and the study of Stella McCartney's communication strategy. These recommendations were about what type of message and how this message should be shared with younger generations (Millennials and Generation Z).
  • 10. MBA Thesis - Sustainable Luxury Fashion 10 My first recommendation has been that luxury fashion brands must share transparency, honesty, and authenticity in their communication. Younger generations aren’t seeing ethical and sustainable brands’ engagement as an explicit requirement of their luxury fashion purchase but perceive it as a latent expectation. Thus, luxury fashion brands must show to consumers how to purchase sustainable and what are their personal benefits in the purchase of sustainable items. Brands should communicate to consumers on social media, their websites and fashion websites as these channels influence the most their luxury purchase. To do so brands must follow an omnichannel strategy which would show the brand transparency at each touchpoints. Younger generations of consumers also value innovation and personalization which needs to be integrated into luxury fashion brands' communication strategy. An educative voice tone must be adopted in their communication and an emotional approach with strong storytelling must be followed. Luxury fashion brands should share tangible elements and information about their sustainable engagement. Specific topics in their communication must be covered which are employees’ work conditions, animal testing, gender equality and transparency about their supply chain practices. Brand messages should also be balanced between sustainability and fashion contents with arguments about quality and product uniqueness. Finally, brands must offer to consumers a unique shopping experience online and offline as they are looking for it at each level of the purchase funnel.
  • 12. MBA Thesis - Sustainable Luxury Fashion 12 Introduction Since the 2000s and the emergence of web 2.0, contemporary societies have evolved and tend today to a new mode of consumption and identification. Because of the emergence of the internet and social media, individuals do not react and interact in the same way. It acts in the interactions between individuals who now communicate easily and thus have more and more access to information. The Internet has revolutionized the consumption patterns of contemporary societies by removing the lack of transparency consumers are facing so far. This increase in information access has an immediate impact on the consumption habits of individuals. Thanks to global access to companies’ information, consumers choose nowadays where they want to buy their products or services. Also, this increase in access to information has an immediate impact on the consumption habits of individuals. The traditional communication channels previously used by brands are not relevant anymore to communicate effectively due to a change in consumer behavior about media. Consumers are little by little moving away from traditional communication channels such as phone communication, print or broadcast media. Nowadays, communication between consumers and companies has become bilateral and interactive; consumers can directly communicate with brands about their likes, dislikes, and suggestions through social media (Rachid Amin, 2017). Consumers are no longer only present on social media but are demanding control and dialogue with brands (Uché Okonko, 2010). This change of media behavior among consumers shows the undeniable importance of using online communication for brands. « On one side, web 2.0 users use this tool to look for other clients' advice before purchasing products or services and on the other side, companies use the web 2.0 as an information sharing and communication tool with consumers » (Dorsaf Omrane, 2010). In addition to the need for brands to communicate closely with their clients online and become fully digital comes the need for brands to provide transparency to their customers. According to the study “State of Fashion Report 2019” created by McKinsey and Company's, in collaboration with Business of Fashion, luxury fashion brands “need to take an active stance
  • 13. MBA Thesis - Sustainable Luxury Fashion 13 on social issues, satisfy consumer demands for ultra-transparency and sustainability”. Brands must provide transparency and especially on their value chain from used materials, to how textiles are manufactured, shipped and reused to their consumers. Even though many brands face issues to monitor conditions across their supply chain as a great number of retailers do not own their manufacturing facilities or use a system of agents and subcontractors known as “indirect sourcing”, new technologies such as AI and blockchain can nowadays provide the ability for brands to trace every value chain step making transparency possible. Furthermore, nine in ten Generation Z and Millennials consumers believe companies have a responsibility to address environmental and social issues (State of Fashion Report 2019, McKinsey & Company) which means that communicating about these elements are keys factors for luxury fashion brands to succeed in the global market. By 2020, Gen Z alone will account for 40 percent of global consumers and Millennials will outnumber Non-Millennials by 22 Million in the USA by 2030. Younger consumers aren’t the only consumers concerned over environmental and social issues. According to the study “State of Fashion Report 2019” two-thirds of consumers worldwide say they “would switch, avoid or boycott brands based on their stance on controversial issues.” (see below Figure 1, 2019 fashion brands challenges for year ahead). Figure 1: Main challenges in Luxury fashion in 2020, State of Fashion Report 2019, McKinsey & Company. Thus, even if many fashion brands have taken into account these changes in their communication strategy, the fashion industry is facing challenges. Fashion luxury brands lack
  • 14. MBA Thesis - Sustainable Luxury Fashion 14 knowledge on how becoming more sustainably responsible could positively impact their brand image and the global society and on how to incorporate their social engagement and transparency into their brand communication strategies without taking risks. Indeed, luxury fashion brands' main challenge is to find strategies to create brand equity online without affecting in a bad way their luxurious brand image and communicating about their social impact “may also risk being perceived as hypocritical if they do not carefully ensure consistency in their messages and actions.” (State of Fashion Report 2019, McKinsey & Company, 2019). In today’s world, the tendency is to consumers' business' distrust. Consumers are more and more skeptic about the brand’s communication as they are to the government’s communication, and media “fake news”. State and Fashion Report surveys say that trust in businesses fell in “40 percent of countries in 2017, with more than two in five consumers saying they didn’t know which brands to trust. Fashion market trust has highly decreased with the Rana Plaza disaster in Bangladesh on April 24th, 2013, which killed more than 1100 garment factory employees. Due to this disaster, an international conversation around the social impact of the fashion industry has sparkled about the world and created the movement “Fashion Revolution”. This movement called for a fairer, safer, more transparent fashion industry with the hashtag on social media #Whomademyclothes?. According to Orsola de Castro founder of the Fashion Revolution, thanks to this movement “the luxury fashion industry is beginning to acknowledge that the good business of the future requires systems that aren’t harmful to the environment, and which do not rely on human exploitation for financial growth”. Thus, consumers can highly impact brands behavior thanks to their online communication but as brand and consumer relationship is bilateral, luxury fashion brands can also highly impact consumers. Indeed, the luxury market highly impact our society, luxury fashion brands are creating tendencies and then these tendencies are replicated in the mid and lower fashion market. As the fashion industry is considered as the second most polluting industry in the world after oil, luxury fashion brands responsible communications could impact the global fashion industry to rethink their business model for a better world.
  • 15. MBA Thesis - Sustainable Luxury Fashion 15 Then this bachelor thesis will analyze “How luxury fashion brands can adopt a sustainable approach and act as leaders of global fashion sustainable change through their online communication by targeting younger generations?”. This thesis will integrate different key points such as luxury fashion, brand equity, consumer behavior, linear value chain, vertical integration, circular value chain, and sustainable development. Consumers’ understanding is the key point for brands to provide effective communication through the mass media (Sue Elms). Indeed, if a business is to be successful, it has to understand its consumers and has to understand how the consumer relates to the product category and the brand in question (MG Parameswaran). According to the Hitwise magazine, Generation Z and Millennials are the “Shoppers of Tomorrow”, they represent an increasing market for luxury fashion brands. As these generations embody the future market of fashion luxury brands, this thesis will analyze their needs and motivations toward sustainability in the fashion industry. To analyze “How luxury fashion brands can adopt a sustainable approach and act as leaders of global fashion sustainable change through their online communication by targeting younger generations?”. First, I will run an online questionnaire, to understand Generation Z and Millennials' behavior on luxury fashion brands online communication. Secondly, I will run a study relying on primary data collected through an ethnography of Stella Mc Cartney online strategy that has adopted a sustainable approach on its global communication strategy. This analysis will be used to analyze how luxury fashion brands should communicate to Generation Z and Millennials, and why its communication is working so efficiently on Generation Z and Millennials. Other secondary data from articles, newspapers, and books written by marketing, and luxury fashion experts, will also be used to understand new consumers' behavior and the strategy that brands need to adapt to satisfy consumers' needs.
  • 17. MBA Thesis - Sustainable Luxury Fashion 17 Theoretical Framework This luxury definition part is extracted from a research paper I wrote last year about luxury fashion brands in the USA. 1. Luxury in the 21st century In a society where the Internet-based is becoming a norm to communicate and interact, consumers, are changing their consumption behavior. The internet has made it possible for one person to communicate with hundreds or even thousands of other people about products and the companies that provide them. According to W Glynn, 2009, social media is a hybrid element of the promotion mix because in a traditional sense it enables companies to talk to their customers, while in a nontraditional sense it enables customers to talk directly to one another. When Web 2.0 started to become popular among consumers, fashion luxury brands were not trusting it and entered the world of Web 2.0 several years after accessible fashion brands (Okonkwo, 2010). Nowadays, the luxury fashion is becoming more and more accessible due to the emergence of social media (Danziger, 2004). Luxury fashion brands are characterized by precise positioning based on uniqueness and association with high society (Vigneron and Johnson, 2004). The use of innovative communication and retailing technologies is then a challenge for luxury fashion brands to maintain their integrity and brand image (Kwon, Ratneshwar, and Thorson 2017, Okonkwo 2009). 1.1 The concept of luxury « You don't buy luxury to enter a community, but to set yourself apart from others. » Francois-Henri Pinault. According to the Oxford Latin Dictionary, luxury comes from the Latin « Luxus » which means « soft or extravagant living, sumptuousness, opulence ». The luxury doesn’t specifically refer to a category of products but rather indicates a conceptual and symbolic dimension, which is strongly identified with the cultural values of the society of a particular period (Emmanuelle Rigaud-Lacresse, 2017). It is associated with the scarcity principle and the idea that luxury products are only accessible to a small group of people (Nueno & Quelceh, 1998). According to Saviolo, Corbellini, 2010 “Today, luxury is a multi-dimensional concept that means different
  • 18. MBA Thesis - Sustainable Luxury Fashion 18 things to different people”. Even if the definition of luxury is broad because the luxury concept is evolving according to the age and the individual perception, all definition of luxury are highly related with as the idea of expensive products. The Oxford Dictionary (2014) defined luxury as ‘’a state of great comfort or elegance, especially when involving great expense’’. To Brun & Castelli (2013), luxury is defined as the idea that wealth, power and exclusivity have always been linked with luxury goods. Until the end of the 19th century, the world of luxury was virtually isolated from the rest of the economy, its pleasure and delights reserved for a small elite (Bastien & Kapferer, 2012). Indeed, traditional luxury brands strategy was based on uniqueness and limited offer that justified the high price of their products. It’s until the emergence of French luxury designer brands like Chanel, Louis Vuitton, Hermes, Cartier at the end of the 19 century and the industrial revolution that luxury became associated with emotion. Because of the economic prosperity following the industrial revolution and democratic stability, it led to a huge change in the luxury industry. Prosperity has created a possibility of evolution between social classes. The luxury wasn’t limited to the elite anymore but was accessible to a larger proportion of the population. According to Kapferer 2012, in our postmodern societies, the new luxury is opposite to the vision of the old luxury were only a small elite had the right to purchase luxury goods. Kapferer said that everyone has nowadays the right to access luxury. The new luxury has emotional value and provides social benefits to consumers (Okonkwo, 2010). Luxury products are identified by their high quality and the emotion provided through the product purchase (Bernard Catry, 2007). Through the purchase of new luxury products, emotional engagement is created by consumers. For example, purchasing a Louis Vuitton handbag will provide a feeling of uniqueness to a consumer because of the high quality and shopping experience provided by the brand. As Roux said in 1994, there are six important rules to follow in luxury « In the luxury sector, you can’t neither lie about a product, about its creation and innovation, about its quality, its price or the brand greeting ». 1.2 The components of a Luxury product If the definition of luxury is variable according to the time and the authors, luxury products are identified under the main characteristics. To Giacosa E., a company’s luxury products are a union of tangible and intangible elements. Vicker and Redan (2003) developed the theory that
  • 19. MBA Thesis - Sustainable Luxury Fashion 19 the only way to differentiate a luxury to a non-luxury product is through three main elements: functionalism, experientialism, and symbolic interactionism. According to Vicker and Redan 2003, functionalism is defined as “a product features that could solve a problem or prevent a potential one”. Experientialism incorporates features that could stimulate sensory pleasure and hedonic consumption such as ‘’traditional and exclusive design, the elegance of day gone by.” The symbolic interactionism refers to statuses such as a prestigious name or recognizable designer style. These three components of a luxury product identified by Vicker and Redan can be related to another luxury product theory developed by Laurent and Dubois (1996). They identified six elements describing a luxury product on a cross-cultural level consumer based in Western Europe, United States and Pacific Asia with are: price, quality, uniqueness, aesthetics, personal history, and superfluousness (see Figure 2). Facet Description Excellent quality Exceptional ingredients, components, delicacy and expertise, craftsmanship Very high price Expensive, elite and premium pricing Scarcity and Uniqueness Restricted distribution, limited number, tailor-made Aesthetics and Poly-sensuality Piece of art, beauty, dream Ancestral heritage and personal history Long history, tradition, pass-on to generations Superfluousness Uselessness, non- functional Figure 2: Six elements describing a luxury product, Dubois, Laurent and Czellar, 2005.
  • 20. MBA Thesis - Sustainable Luxury Fashion 20 These components of a luxury product are related to the VRIN Theory, which implies that to develop and maintain a competitive advantage a company’s product must be Valuable, Rare, Inimitable, and Non-substitutable. Authors then referred to the idea that the non-sustainable luxury products are non-sustainable because of the ownership of the product and the intangible affect that the product was referred to. The product utility is not questioned when it comes to the non-use of luxury products. The actual element that influences consumers to stop using luxury products is the pleasure decrease after the ownership of a luxury good. Finally, Tony Hines and Margaret Bruce identified characteristics of a luxury product from a consumer viewpoint. According to these authors, from a consumer point of view, a luxury product is based on two levels of representation. The first level is material it includes the products and the brands such as its history, its talent, its design, its know-how… The second level of a luxury product representation is psychological and covers representation which is defined by our social environment and brand values. (Tony Hines, Margaret Bruce, 2007). According to Lloyd-Jones, 1998 “luxury goods are those which are in the top sector across a range of products including clothing, jewelry, watches, leather goods, cosmetics, fragrances, and other personal goods.” 1.3 Fashion and Luxury After defining the characteristics of luxury and luxury goods, it’s important to understand the link between fashion and luxury in our society. Nowadays there is a strong relation between luxury and fashion. Indeed, even if the two concepts are different as fashion is omnipresence and ephemeral while luxury is timeless and rare (Jackson, 2004), they are related in consumers’ minds. Jackson 2004, said that the reason of the relationship between fashion and luxury is mainly based on the “increased awareness of brands that have been repositioned in the luxury brand sectors, “such as Louis Vuitton, Gucci, and Burberry that have repositioned their brand offer as fashion brands in the 1990s. non-sustituable non-sustituable
  • 21. MBA Thesis - Sustainable Luxury Fashion 21 Morgan Stanley Dean Witter’s identified seven key points of a luxury brand: 1. Global Recognition 2. Critical mass 3. Core competence and other products 4. High product quality and innovation 5. Powerful advertising 6. Immaculate store presentation 7. Super customer service Brands like Givenchy, Yves Saint Laurent, Balenciaga, or Chanel possess a large heritage based on the quality of their products and, the diversity of their portfolios and products. Furthermore, luxury brand designers are also a way to link fashion with luxury. Prestigious designers act as a representation of brands and create new stories. Their prestigious public images are related to the brands and give a new story to tell (Jackson, 2004). Fashion brands' stories are told through media supported by photographs of designers’ extravagant style. For example, the brand Christian Dior is as likely to appear on media for its product offers as for its Artistic Director and Chief Designer, John Galliano. Due to the prestigious lifestyle of luxury fashion brands designers, it reinforces the want of consumers for the products of the brands as they are associated with luxury and exclusivity. 2.0 Luxury fashion global challenges “Today, luxury is everywhere. Managers and marketing people regularly invent new terms to qualify luxury: true luxury, masstige, premium, ultra premium, opuluxe, hyperluxe.” Bastien & Kapferer, 2012 Because of the globalization of the society, the increase of information access through the internet and the implementation of luxury fashion brands on social media, luxury is becoming more and more accessible. Indeed, globalization has accelerated the rise in the spending power of the population. According to Bastien & Kapferer 2012, “through wage increases and falling prices of most manufactured products, globalization plays a dual role as a driver of luxury”.
  • 22. MBA Thesis - Sustainable Luxury Fashion 22 The globalization has also permitted to globalize the luxury products. For example, French wine, Chinese silk or Arabic spice are now accessible everywhere around the world. The globalization has permitted the democratization of the luxury goods. According to Bastien & Kapferer 2012, globalization leads to a “leveling out of all cultures and relativism in all religions: a perfectly globalized society would have just one language and one religion.” Then, the luxury which used to appear as a symbol of social stratification will also be associated with the cultural and geographic localization of a product in a globalized world. The luxury products are now evidence of social stratification and are rooted in culture (Bastien & Kapferer, 2012). For example, a Chanel bag made in France will be immediately rooted in the French culture and its symbols and values, such as High Quality, Elegance, Sophisticated... The increase in information access has also modified the luxury environment. According to Phau, I., 2000, one of the main principles of luxury is the « Rarity Principle » which suggests that to maintain prestige, luxury brands must sustain high levels of awareness and tightly controlled brand diffusion to enhance exclusivity. However, because of the access to a luxury brand’s information through the internet, the « Rarity Principle » is questioned. As luxury is a changing concept, today’s definition of luxury is not the same as yesterday’s luxury definition. Luxury used to be associated with perceptions of comfort, beauty and a sumptuous lifestyle (Dubois, 2002). However, these perceptions are evolving and vary. In 2013, Walley identified five different dimensions of perceived luxury goods for English consumers: the affect, characteristics, status, gifting, and involvement. These five dimensions are a representation of the main elements influencing consumers’ purchasing behavior. Consumer’s perception may vary based on his environment: such as his country of origin (Anholt, 2005), his sense of belongingness (Brun & Castelli, 2013), his disposable income, his age and the new media (Forbes, 2003). The evolution of consumer’s perception is due to the evolution of the general environment of our societies. An important element discussed by Bastien & Kapferer in 2012, is that luxury shouldn't be associated with premium. As explained earlier, a luxury product has to be rooted in a special culture. A luxury product has to be produced in a place that represents its prestige and rooted culture. A premium product, in opposition to a luxury product, has “to seek out the most suitable and most economical manufacturing location possible, so long as quality and service levels can be maintained.”
  • 23. MBA Thesis - Sustainable Luxury Fashion 23 Bastien & Kapferer, 2012 said that because of the luxury democratization of brands and products, we no longer speak of luxury, but of three different luxury types, the traditional luxury, the affordable luxury, and the mass luxury (see Figure 3). Figure 3: Luxury market segmentation from ADN Magazine, 2018. According to Professor Thomas Malnigh 2004, the consumers are more and more looking for ‘feeling good’ and well being over ‘owning’ as a status symbol when consuming luxury. Figure 4: The Luxury Triangle Through Figure 4, we can observe that the luxury market is divided into three markets. The traditional luxury includes all the luxury brands that produce their products in the best location to create a high-quality product at a high price. Luxury brands have highly exclusive distribution and scarce availability justified by the time and manual ability required for
  • 24. MBA Thesis - Sustainable Luxury Fashion 24 production. They are produced in limited editions or often as single pieces, with strong customized, handcrafted or semi handcrafted elements representing important company heritage (Uché Okonko, 2010). We can say that brands like Hermès for example, are a traditional luxury brand. The brand has kept its high quality and produces all its products in France and has kept its brand image for decades with handcrafted leather goods. No longer addressing its traditional clientele, the luxury sector has found the means for its growth among the middle classes and has, therefore "democratized". Indeed, a growing crowd of consumers from the new middle classes with an increasing purchasing power have pushed luxury brands to rethink their offer. According to Professor Thomas Malnight, “the ‘affordable luxury’ market has attracted large consumer brand companies suffering from slowing growth rates, private-label competition, and increasing threats from concentration in distribution channels.” These affordable luxury brands are brands that offer high-quality products but with a large product offer and that seek out the most suitable and most economical manufacturing location possible so long as quality and service levels can be maintained (Jean-Noël Kapferer and Vincent Bastien, 2009). The affordable luxury provides “non-customized, mass-produced or limited-edition products, with quality and style, with an easily recognizable brand, commercialized through selective channels. The product often derives from an expensive reproduction of individual and unique products belonging to non-affordable luxury” (Uché Okonko, 2010). For example, brands like Bottega Veneta are commercializing limited-editions products worldwide to satisfy “sophisticated customers looking for customization and exclusiveness.” Finally, the mass luxury is the growth and spread of luxury brands to a wider range of consumers. Mass luxury products are more affordable products that range from luxury brands such as perfumes, cosmetics, glasses, and accessories. The mass luxury offers high style products at more affordable prices; “ it’s a luxury dream at a more affordable price.’’ The mass luxury represents what is called the “new luxury”, where consumers generally do not consume luxury products buy one during sales (Jean-Noël Kapferer and Vincent Bastien, 2009). This massification of the luxury market allows brands to diversify their products offers and access a wider range of consumers.
  • 25. MBA Thesis - Sustainable Luxury Fashion 25 Then, the luxury brands are divided and are classified according to their product offer exclusivity and their manufacturing location. As a factor of exclusivity, product accessibility also differentiates luxury brands. According to Bastien & Kapferer,"the greater the inaccessibility – whether actual or virtual – the greater the desire”. Luxury brands are differentiating their level of luxury according to their product accessibility. Figure 5: Time factors play a role in fashion desire - Personal elaboration Indeed, according to Figure 5, the time factor plays an important role in luxury. According to Bastien & Kapferer, brands have to know “how to set up the necessary obstacles to the straining of desire, and keep them in place.” Luxury obstacles can be variable such as financial, logistical, or time obstacles. Then, luxury is a principle that has evolved during years and this evolution is only caused by the general environment of the luxury market. Thanks to the understanding of the trend of the luxury fashion market industry, I will be able to understand luxury fashion consumers’ needs and wants. 2.1 New trends influencing the fashion luxury market “Fashion is not something that exists in dresses only. Fashion is in the sky, in the street; fashion has to do with ideas, the way we live, what is happening.” Coco Chanel.
  • 26. MBA Thesis - Sustainable Luxury Fashion 26 This quote of Coco-Chanel couldn't be more relevant to the luxury fashion industry in our society. Indeed, after a slow start luxury fashion is taking place in the digital market. Brands are now interacting more and more with consumers through their own branded online store and on multi-brand e-tailers. This new trend has emerged because it’s easier for brands to target a larger portion of the growth in online luxury fashion, as single-brand sites have more limited growth potential. According to Jennifer Smith 2015, 2018, “global digital sales for women’s luxury fashion are expected to grow from a current 3 percent of the total market to 17 percent, for a total market size of $12 billion”. As this thesis has for main objective to analyze luxury fashion sustainable strategy, understanding the next trends that will directly impact the luxury fashion global market is key. As we can see in Figure 4, the European market is the major consumer of fashion luxury products. According to a study run by Deloitte in 2018, France was the best-performing country in terms of sales growth and also contributed the largest share to the Top 100 luxury goods sales in 2018. Figure 6: Europe remained the top region for luxury sales in 2018 from the Luxury Goods Worldwide market study, fall-winter 2018. Currently worth €260 billion, representing 6% growth (2% at current exchange rates) (Luxury goods worldwide market study, Fall-Winter 2018, Bain & Company) the luxury goods market is expected to increase by 3% to 5% through 2025, with the market for personal luxury goods reaching €320 billion to €365 billion. 6,
  • 27. MBA Thesis - Sustainable Luxury Fashion 27 The luxury fashion market saw retail value grows exponentially from the last past years, and this retail growth is mainly explained by the increase of online selling. In 2019, we encounter more than 4.39 billion internet users, with an increase of 366 million users. There are 3.48 billion social media users in 2019, with the worldwide total growing by 288 million (9 percent) since this time last year (see figure 7). Figure 7 : Digital users around the world in 2019 from Hootsuite and We are social, global digital overview report 2019. To face this increase of online users where nearly “half of luxury goods buying decisions are already influenced by what consumers hear or see online” (Jennifer Schmidt, 2015), luxury fashion brands are adapting. Luxury fashion brands are highly investing to increase their presence in internet retailing to provide a smooth shopping experience to consumers. For example, department stores like Barneys New York and Nordstrom are offering special services to consumers. They offer same-day deliveries, buy online/pick-up in-store capabilities and easy exchange/return policies for products sold through their website in select US locations (Fllur Roberts, 2017). Thanks to department stores online retail, luxury fashion brands can target a wider range of consumers because it offers the opportunity to consumers who don’t have time to shop in-stores or on different mono-brand websites to shop for their products.
  • 28. MBA Thesis - Sustainable Luxury Fashion 28 According to Bain & Company (Luxury Goods Worldwide Market Study, Fall-Winter 2018) by 2025, 25% of the market’s value will be made through the online channel, up from 10% today and almost all luxury purchases will be influenced by online communication or interaction. Reports also show that half of all luxury purchases will be digitally enabled resulting from the implementation of new technologies along the value chain, such as augmented reality, virtual reality or mobile payments. The emergence of new technologies like advanced analytics augmented and virtual reality, artificial intelligence and mobile internet are gonna disrupt fashion. These new technologies are helping brands to provide a personalized consumer experience online and offline. “Today’s luxury consumer wants the personalization of the human interaction mixed with the efficiency and speed of technology,” Andrukonis says. Brands like Gucci or Chanel are early adopters of the use of new technologies in their user- centric strategy to provide a better consumer experience. For example, Gucci has recently opened a 25,000-square-foot call center staffed by 150 highly-trained service professionals where consumers can interact with “call-center assistants by phone, email or live chat and those assistants are encouraged to develop personal relationships with shoppers, just like a personal store assistant would”. Chanel has imagined a flagship store “Atelier Beauté” in Soho Manhattan, where consumers only need their phones to beneficiate from a personalized shopping experience. When consumers enter the store they can leave their belongings into lockers and take their phones in the Chanel flagship to enjoy full mobile shopping experience. According to Forbes.com, thanks to Chanel’s web-enabled app consumers can “get product information, application tips and save their favorite products for shopping later”. Chanel’s web app offers consumer personalized shopping experience thanks to the new consumer location technology “Ibeacon”. Ibeacon works with Bluetooth low energy, the app listens for signals from beacons located in the store and react accordingly with personalized messages based on consumers' location and profile (see Ibeacon process in Figure 8).
  • 29. MBA Thesis - Sustainable Luxury Fashion 29 Figure 8: Ibeacon Technology Process - Personal Elaboration Through this service, consumers can beneficiate from an immediate, efficient and personalized shopping experience. For Pamela N. Danziger 2019, “the new mobile-enabled access gives in- store customers more personalized service options if in-store staff are unavailable or they desire information or products beyond what the store carries.” Thanks to artificial intelligence and machine learning, we can track on-site and customer data points in real-time to offer a personalized consumer experience. Data can be collected at different collection points that permit specific consumer shopping personalization (Kunle Campbell, 2019): ● Traffic. ● On-site interactions (category and product page visits). ● Email. ● Personal Data. ● Paid Media Pixels (both social and search). ● Purchases. ● Search. ● Pricing. After consumer data collection, brands can create a personalization strategy for their consumers based on their business size and needs. Brands' personalization strategy will depend on tools used (see an example of Ibeacon below), store sales volume and the size of brands’ consumer base.
  • 30. MBA Thesis - Sustainable Luxury Fashion 30 Another trend that is going to impact the global fashion market is the emergence of multiple goods offered by companies. As we can see in Figure 7, all product categories sales are performing well in 2017, but multiple luxury goods are the most performing companies. Multiple goods brands represent companies with sales in more than one of the following luxury goods product sectors : • Clothing and footwear • Bags and accessories • Cosmetics and fragrances • Jewelry and watches • Multiple luxury goods We count multiple examples of brands performing efficiently in the multiple goods offer but we can cite the most successful ones such as Tapestry, Kering, LVMH, and Chanel. Based on the Year to Year sales growth, the multiple goods sector ranked as the second-fastest growth and performing sector after one of cosmetics and fragrances in 2019. Thus, luxury fashion brands looking to increase their sales revenue and touch multiple buyers should widen their product offer with multiple goods. Figure 9: Performance by product sector, FY2017 from Deloitte Touche Tohmatsu Limited. Global Powers of Luxury Goods 2019. 9
  • 31. MBA Thesis - Sustainable Luxury Fashion 31 One of the next trends that luxury fashion companies will face in the following years is the increasing demand for fashion luxury in emerging countries. According to McKinsey Global Fashion study, by 2018, more than half of apparel and footwear sales will originate outside of Europe and North America. Growing cities in emerging markets now represent important growth centers for the fashion industry, and consumers from emerging countries have different needs and wants than Western consumers. Figure 10: Chinese consumers are driving annual luxury growth 2018, Bain.com 2018. Furthermore, another important trend that is affecting fashion luxury is the adoption of sustainable behavior. Thanks to globalization and the increase of information access, consumers are more and more aware of the environmental impact of fashion. As the fashion industry is the second polluting industry, it comes with an urgent need to place environmental, social, and ethical improvements on management’s agenda. Indeed, luxury fashion used to be associated with abondance, high costs, and consumerism, but as new consumers are taking over the market with their new values, consumer’s expectations of luxury fashion brands are evolving. According to Stella McCartney which is the luxury fashion pioneer brand in sustainability, « the future of luxury fashion is sustainability ». New generations of consumers have different needs than the old generations. These generations of consumers are indeed considering various elements when buying products such as labor practices, sustainability, animal welfare or positive impact on communities.
  • 32. MBA Thesis - Sustainable Luxury Fashion 32 Thus, as we evolve in a society where brands are highly influenced and impacted by consumers' behavior, luxury fashion brands must value transparency, integrate a sustainable approach into their global strategy and offer seamless personalized shopping experience. To better understand how luxury fashion brands should structure their business strategy it is key to understand their consumer’s needs and expectations. 2.2 Luxury fashion consumer’s needs & expectations The “generational theory” describes the idea that consumer’s needs and wants are different according to their generation (Christine Barton, Jeff Fromm, and Chris Egan, 2012). According to the cohorts theory based on the generational one, the important historical or social events affect individuals. The events can include traumatic experiences like a world war, ideology revolution such as Woodstock, or heroic figures like Nelson Mandela. If these events unfold during the formative years of individuals it can affect an individual’s inclinations, beliefs attitudes, and values. Then, individuals born during the same time period share cognitive styles and inclinations (Christine Barton, Jeff Fromm, and Chris Egan, 2012). As generational needs are evolving, the luxury fashion market is changing. The top segments of the luxury market are still dominated by baby-boomers and generation X. These generations include individuals born between 1946 and 1980. Their consumption behaviors were formed at an earlier age. They are brand loyal, they respond to traditional brand messages and they value traditional store buying with personal contact. Even if these generations are dominating the market, they are becoming supplanted by new generations called “Millennials” and “Generation Z”. They have grown up in the Internet era. Their needs, wants and, individuals inclinations are different than those ones of the older generations. Millennials are born between 1980 and 1994 while Generation Z are born between 1995 and 2015. Nowadays, Millennials and Generation Z are already influencing the luxury fashion market but they will soon become the dominant segments in the market (see Figure 11).
  • 33. MBA Thesis - Sustainable Luxury Fashion 33 Figure 11: Global Millennials and Generation Z spending power is set to overtake all generations spending power by 2020 and will continue to rise from the World Data Lab. Then, luxury fashion brands must understand their mindset to rethink their brands and marketing accordingly, to offer products and services that meet their needs. Through online surveys based on quantitative and qualitative, the Boston Consulting Group in 2012 analyzed the behavior of U.S Millennials and the McKinsey study analyzed the behavior of Generation Z. Through these surveys, different characteristics of millennials and Generation Z appeared. Like the previous generations, millennials and generation Z share similar consumption behavior. First, they care a lot about instant gratification (Christine Barton, Jeff Fromm, and Chris Egan, 2012). Millennials and Generation Z want to have it fast and now. They favor fast service, delivery, and convenience in all their purchases. As the basic concept of luxury is related to the time concept and the idea that consumers need to face obstacles and wait a certain time to purchase a product, luxury fashion brands need to rethink their strategy to target these consumers. Luxury fashion brands need to make sure that their products and services are accessible in a fast way to these generations of consumers. Through this strategy, brands can use multiple ways such as stores, department stores, and media channels to reach these consumers in a hurry.
  • 34. MBA Thesis - Sustainable Luxury Fashion 34 These generations aren’t brand loyal as they are extremely skeptical about brands as they can check almost everything online. Thanks to social media and brands rating websites like Good on You or Clear fashion consumers have the direct power to analyze brands' societal responsibilities and product quality. Then, if luxury fashion brands want to earn their trust, they must work hard on their transparency. Another characteristic of these generations is that they favor word of mouth advice from their friends or relatives. Indeed, according to Dr. Ganesh Shermon, 2017, an expert who is “a person with the credibility to recommend brands, products, and services” referred to as professional or academic credentials is defined differently by millennials and generation z. According to these ranges of consumers, an expert is more a peer or a friend with firsthand experience with a product or a brand. Then they referred more to friends and peer for products and services pieces of advice. Millennials and Generation Z favor crowdsourcing to get product information. Crowdsourcing is defined as an online, distributed problem-solving that tap the collective intelligence of online communities (Daren C. Brabham, 2017 and Christine Barton, Jeff Fromm, and Chris Egan, 2012). These new consumers then, use more online reviews while shopping. According to Christine Barton, Jeff Fromm, and Chris Egan (2012), 53 percent of the Millenials interview said using a mobile device to read user reviews and research products during their shopping, while only 21 percent of non-millennials reported doing the same. The increase in accessibility and reach of social media is changing the way consumers access products and brand information. Nowadays, every brand’s users can become an expert in brands and products information. Users' reviews and advice are spread even faster thanks to social media and forums where consumers are sharing their consumption experience. Then, as consumers are reaching faster brand information, brands must rethink their clients-service strategy to make sure that their brand image will stay positive. Another important aspect that fashion luxury brands have to take account of through their reach of new consumers is that millennials and generation Z are extremely connected. For example, through Figure 9, we can observe that Millennials are spending on average 3:38 hours on their smartphones and Generation Z are spending 4 hours on it. According to the website of data analytics Statista 2018, 81% of the U.S population has a social media profile but the range of the population using the most social media are millennials. 12,
  • 35. MBA Thesis - Sustainable Luxury Fashion 35 Figure 12: Social media use for Millennials and Generation Z from the Global Web Index. Millennials and Generation Z use social media to connect with more and more people at the same time. Indeed, as they are time-saving, the use of social media allows them to connect with a large number of individuals at once. As they like to connect with their friends on social media, they like to interact with brands online. Indeed, through social media millennials and generation z create real bonds with their followers. Likes and comments help them to get validated by the community. Then when brands communicate online, likes and comments help consumers to recognize community recognition and feel the need to purchase their products and services to get as well the community recognition. Fashion luxury brands need to be part of the digital revolution and to be active on social media to create real bonds with consumers. These bounds will push millennials and generation z to recommend the brand to their friends and to consume more. Finally, another common characteristic of millennials and generation z is that they have been raised to protect the environment and make the world a better place. Indeed, since they have been raised with environmental awareness and the idea that each behavior can have an impact on the planet, they tend to prefer brands that have a positive impact on the environment. Furthermore, through their purchase Millennials and Generation Z need to express their “status currency”. It is “the status and values that consumers wish to project through their purchasing decisions and their brand affiliations” (Christine Barton, 2014). Then eco-friendly brands allow consumers to project their engaged values in their purchase.
  • 36. MBA Thesis - Sustainable Luxury Fashion 36 For example, through Figure 13, millennials worldwide place high importance on ethical brands when purchasing high-end fashion or luxury worldwide in 2017. In the survey, we can observe that 30.7 percent of respondents said they always made sure a luxury item is sustainable or from an ethical brand before purchasing. Figure 13: The Importance of sustainability and ethic to millennials when purchasing high- end fashion or luxury items worldwide in 2017. Then, we can see that luxury fashion brands must be more sustainable, respect the environment and take responsible initiatives in their actions to target millennials and generation Z. Another reason why millennials and generation Z are valuing eco-friendly brand is because of their specific mindset characterized by their intrinsic value. They are valuating more lifestyle than the actual stuff. They value more the quality over the quantity (Jeff Fromm, 2017). These range of consumers want to live a purposeful life and use products that will fit their lifestyle and that will feel valuable. The products they want to purchase need to add value to their life by giving them a chance to express their intentionality, creativity and frugality. Through their purchase they need to feel that the product identity will fit theirs (Jeff Fromm, 2017). They are also careful about how they spend money. New generations don’t want to spend the full price for products. Jason Dorsey, a Gen Z consultant and researcher who delivered a TEDx Talk said that value can be achieved in two ways: - “by shopping for clothing from brands that already have low prices - by buying more expensive things that last longer.”
  • 37. MBA Thesis - Sustainable Luxury Fashion 37 However, because of their constant connectivity on social media Generation, Z and Millennials feel the pressure to constantly wear new and original clothes as they are likely to be the most photographed generation. This aspect appears in opposition to generation z and millennials’ eco-friendly mindsets. Thus new ethical consumption behaviors are emerging. Nontraditional modes of shopping such as rental and resale or thrift are becoming the new trends. These new shopping modes allow consumers to access very unique items with a very low carbon impact. If luxury fashion brands are willing to stay competitive they should invest in these new shopping modes. In 2019, the resale market is growing 4 times faster than the traditional luxury goods market and is worth 22 billion euros. It is expected to reach 31 billion euros by 2021. According to the fashion network 2019, “ Chanel, Louis Vuitton and Gucci top the ranking for second-hand sales, followed by Burberry, Dior, Balenciaga, and Alexander McQueen.” New generations use items to express their identity. They put a high value on the perception of others on the brand they are wearing (Christine Barton, 2014). They like to mix different items to create their style and identity. Brands need to make sure their brand will be authentic, so consumers can wear products that will match with their unique style. Finally, even though generation z and millennials have a lot of similar characteristics, they also do have differences that I have decided to present in a recapitulative infographic in Figure 14 (see Figure 14).
  • 38. MBA Thesis - Sustainable Luxury Fashion 38 Figure 14 : Differences and similarities of consumers behavior between Generation Z and Millennials Then to conclude, millennials and generation z are the future generations that will impact and influence the most luxury fashion brands market. Young generations are a paradox, they are environmentally engaged as well money conscious, seduced by new trends and getting items at a fast pace. To stay competitive brands must adapt their communication and business strategy to fit with their high expectations. To do so I will present in the next part, how luxury fashion brands should develop a relevant brand strategy through their unique brand equity to keep consumers loyal.
  • 39. MBA Thesis - Sustainable Luxury Fashion 39 2.3. Luxury brand equity management : earn consumers’ loyalty through an omnichannel strategy A product is something that is made in a factory; a brand is something that is bought by a customer. A product can be copied by a competitor; a brand is unique. A product can be quickly outdated; a successful brand is timeless. Stephen king WPP Group, London As we talked about in the previous parts, through the definition of luxury and fashion, a luxury brand can be defined as one that is selective and exclusive, and which has an additional creative and emotional value for the consumer that is perceived as timeless (Michel Chevalier. 2008). Consumers of luxury fashion brands used to be perceived as extremely loyal to luxury fashion brands and willing to pay for their brand image but as millennials and generation Z are non- loyal and are becoming the consumers of tomorrow, brands must rethink their strategy. A high brand image pushes consumers to purchase products because of the symbol and representation of the brand. A good brand reputation means that customers are preferable for this product on attitude; which means that they will take action to buy the brand products. Then we can say that a good brand reputation is positively influencing consumers' brand loyalty. Customers are more likely to “retain optimistic faith, attitude, and action if they face a brand with a strong reputation” (Junjun Mao, 2010). Brand strength can be measured by its high and spontaneous brand awareness. To develop a strong brand and consumer loyalty, brands have to invest in their brand equity. David A. Aaker, 1991, defined brand equity as a “set of assets such as name awareness, loyal customers, perceived quality and associations (e.g. being “pure”) that are linked to the brand (its name and symbols) and add (or subtract) value to the product or service being offered”. As explained previously, the luxury fashion market is evolving. Luxury fashion brands are perceived as late adopters of digitization processes and digital marketing. Indeed, during a long period luxury brands used to be skeptical towards digital marketing and the use of multiple channels to reach their consumers. Luxury consumers used to look for personal interaction and touch with brands that were only possible through in-store interactions with products, brands, personnel and services (Heine & Berghaus, 2014, Kapferer and Bastien 2009, Dell’Olmo, Riley
  • 40. MBA Thesis - Sustainable Luxury Fashion 40 & Lacroix, 2003). However, since the last few years, luxury fashion brands are adopting new strategies facing the digitization of services. Nowadays, consumers have new needs and expectations. The increasing use of digital technologies has empowered luxury consumers. They need to interact, influence and be the brands they buy. As we can see in Figure 15, on the old one-way communication (Linear Model of Communication), brands used to interact with consumers through a single channel without any feedback. Nowadays, luxury fashion brands need to adapt to their clients through multiple channels to interact and make them part of the brand (Figure 16, Interactional Model of Communication). Figure 15: Linear Model of Communication: Shannon & Weaver. Figure 16: Interactional Model of Communication.
  • 41. MBA Thesis - Sustainable Luxury Fashion 41 Now, consumers tend to purchase through different retail channels during their purchasing process. To adapt to this changing consumer behavior brands need to offer a multichannel retail experience that will provide full customer interaction and retailer integration. As we can observe in the following figure, lines between digital and physic are blurring and touchpoints are increasing : Figure 17: Shopping Intention Survey Wave 2012 from Ipsos OTX/Google According to McKinsey in 2019, customers shopping journeys comes down into three categories which are: ● Transparency and reliability ● The flexibility of the services and speed ● Interaction, personalization, and attention to their needs Thus brands must take into account these elements to build strong brand equity. Through the adoption of an omnichannel strategy, the vertical digital transformation of a brand is possible. The omnichannel strategy is defined by Nick Winkler, 2019 as the “integration of each touchpoint to offer the customer exactly what they need, the moment they need it, anywhere they are and on any device.”. The omnichannel is based on a multichannel approach to sales that provide customers with a smooth shopping experience, from online on mobile or desktop devices to offline in a brick and mortar store. (Search Online Experience, 2019). (see figure 18 to better understand the omnichannel experience).
  • 42. MBA Thesis - Sustainable Luxury Fashion 42 Figure 18: In 2019, consumers are expecting a seamless omnichannel experience by CHRIS WALTON. Nowadays, an omnichannel strategy is a must for luxury fashion brands if they are willing to offer the best consumer experience. It has been shown that brands could highly increase their profits by adopting this strategy, based on Shopify through omnichannel “customers spend 4% more on every shopping occasion in-store, and 10% more online than single-channel customers.” Through the adoption of an omnichannel strategy, consumers are more rapidly trusting brands leading to higher brand loyalty and higher customer retention. Indeed, as we have seen previously millennials and generation Z aren’t loyal consumers. To gain their trust, brands must satisfy their needs and show transparency in their communication strategy. Thus, the adoption of an omnichannel strategy will show brands’ transparency across all channels. This global transparency shows that brands have earned their reputation which pushes consumers to better and faster trust it.
  • 43. MBA Thesis - Sustainable Luxury Fashion 43 Figure 19: Impact of an omnichannel customer experience strategy by Aberdeen Group. The implementation of an omnichannel strategy for luxury fashion brands is related to four dimensions that affect the company at all touchpoints: time, finance, space, and equity. To implement a relevant digital strategy that will enhance luxury brand’s equity, brands have to make sure to implement their digital strategy in all their departments and not only focus on just one area, such as Marketing or Sales or individual programs or projects – with limited or very slow returns. To implement a smooth and even digital strategy in all their departments, luxury fashion brands should be careful about their content design. Luxury fashion brand content should be designed to support the brand narrative and allow consumers to purchase the brand’s product easily. Brands’ content should be related to “customer’s profiles, product characteristics, and availability, services” (Ozuem Wilson and Azemi Yllka, 2018) such as product special features. The content design should also take into account the kind of technology customers are using in their daily life, their geographical position and what is the purpose of their purchase. To implement a relevant omnichannel strategy, luxury brand brands should also focus on the context design. The contexts are defined by Ozuem Wilson and Azemi Yllka, 2018, as the way in which customers access the content at different stages of their journey. The environment
  • 44. MBA Thesis - Sustainable Luxury Fashion 44 where consumers will access luxury fashion products will play an important role in the rich experiences of the purchase. Great consumer experience must include content that identifies consumers’ geolocalization and react consequently. (Ozuem Wilson and Azemi Yllka, 2018). Ibeacon technology, Wifi based systems and RFID (radio frequency identification), are relevant technologies to track consumers and offer personalized content based on their buying habits. Thirdly, luxury fashion brands should also focus on their infrastructure design. Infrastructure is defined as a mix of channels (digital and physical), that will permit an effective consumer experience (Ozuem Wilson and Azemi Yllka, 2018). This mix of channels should be perceived as a single one that will help to deliver a seamless experience in which consumers do not feel any change between a digital or physical channel. Furthermore, another important aspect of the adoption of an omnichannel for luxury fashion brands is the use of catwalk. Catwalks are now used as a final market promotional tool more than a channel support. Indeed, the collection design and promotion process are changing due to the adoption of the omnichannel strategy. The role of fashion weeks and catwalks in the new collection entry in the retail market has changed. Fashion weeks are traditionally designed to present the product to consumers to start the manufacturing process. For this reason, fashion weeks have always been presented months before the beginning of the season to make sure new products will be delivered to consumers on time. However, because of the introduction of e-retail, the option to make the collection available just after the catwalk is possible. This new element affects luxury fashion brands at all levels. From the communication calendar to the whole merchandise, to the collection design process, the manufacturing cycle, and the supply chain, brands have to rethink their entire internal organization. The products have to be ready right after the fashion show, which means that brands have to anticipate their consumer’s behavior and purchase. Brands like Tommy Hilfiger and Burberry, have already implemented this omnichannel strategy during their catwalks. For example, the catwalk will take place later in the year than a few months before the collection
  • 45. MBA Thesis - Sustainable Luxury Fashion 45 release. The show will be broadcast on digital media to allow consumers to purchase the products just after the show. Furthermore, one of the last changes luxury fashion brands need to be aware of in the adoption of omnichannel strategies is the changing role of physical stores. The salespersons have to make sure to drive consumers toward different brand channels. Stores used to be the only point of purchase where store employees were creating bonds with consumers and selling products. Nowadays, stores are used as an interaction point with consumers where employees promote multiple brands’ channels. This impact the skills and the way salesperson are motivated and remunerated. This new element has to be integrated into the strategies of brands to make sure that the employee recruiting and training process will feet their new role. Thus, the digitalization of luxury fashion brands is key in our century where brands have to rethink their organizational culture to put more and more consumers at its head. To implement correctly an omnichannel strategy and digitalize their brand, luxury fashion brands should make sure to design and implement different interactions through the customer journey. Ozuem Wilson and Azemi Yllka, 2018, suggested that brands should call consumers for actions at a different level of their communication process. The implementation of a luxury brand digitalization has to be done progressively to make sure it will be integrated vertically in the companies. Schallmo 2013, defined the digital transformation of a brand as the generation of new applications or services (demand predictions) through the use of technologies (big data). Daniel J. Power (2013) defined Big Data, as the phenomenon of capturing and trying to use all of the semi-structured and unstructured data. The use of big data is key but has to be incorporated strategically to brands’ business decisions. Indeed, trust and purchase intention are highly related. Data must be used wisely by brands to offer personalized offers that will gain consumers’ trust.
  • 46. MBA Thesis - Sustainable Luxury Fashion 46 Figure 20: Data collection for a better consumer understanding and shopping experience. Data collection and analytics need to be prioritized by luxury brands to make sure they understand the mindset of their consumers. Through their digital tools, brands can collect consumers’ information about their consumption behavior, product habits, decision drivers and, preferences. This data collection can help brands to better know their consumers by segmenting their market based on their profile. Brand strategies can then be developed to reach properly customers' groups based on their needs and expectations. As we have seen previously consumers are more and more valuing personalization and authenticity. They don’t want to only buy a product anymore, but to be part of the brand. To do so luxury fashion brands can offer ultra-personalization in their shopping experience. “To achieve this ultra-personalization, information access and analytics need to be incorporated in luxury fashion brand management strategies” Roger Lay, 2019. Today, the quality of big data is transforming. Big data is no longer only semi-structured based on demographic and basic consumers' information such as their sex, name, income or age. Because of the rapid real-time flows of information collected through the internet, data collection is now mainly based on unstructured data such as high-end customer engagement across an omnichannel purchase funnel, consumer social media comments on luxury pages, or influencers photos likes and comments (The Economist, 2019).
  • 47. MBA Thesis - Sustainable Luxury Fashion 47 Simon Beauloye, co-founder and CTO of mOOnshot digital, said that “Brands who are capable of combining their online customer data with offline insights will gain market shares.” He also said that even though digital-first brands have integrated the digital market years ago compared to luxury fashion brands, luxury brands beneficiate from a unique competitive advantage which is the important size of their offline retail stores. Thus, by providing a unique consumer experience through their digital and physical platforms luxury fashion could gain back digital presence. One example of a digital brand personalization through the use of big data is digital clienteling. This process is a new way to deliver a personalized customer experience across multiple channels (Roger Lay, 2018). This process is used traditionally in highly expensive areas and department stores where sales associates greeted know frequent consumers and serve them champagne and coffee in special rooms and offer them an unadvertised discount at the point of purchase. This ultra-personalization used in traditional retail channels is now used in the digital world. As the implementation of big data analytics is an increasing process for fashion luxury brands, luxury brands are more and more implementing digital clienteling. The different interactions brands have with customers through their laptops, feature phones, and tablets, permit brands to collect more data about customers. Through the collection of data, brands can evaluate customers’ value and target the right consumers range for their advertisements and discounts. One of the most popular luxury fashion brand offering a personalized consumer experience through data collection is Burberry. Indeed, the brand has adopted an omnichannel strategy where data collection is key and where the digital and physical worlds are mixed to offer the best consumer experience. For example in London, the brand has created a digitally integrated showroom where thanks to what clothes consumers are trying on, (thanks to the RFID technology) consumers profile are defined. Through these profiles, Burberry is personalizing its offer and messaging on its digital platform and physical store. The use of big data has also allowed Burberry to map its consumers and identify the key role of Millenials in their sales revenue. As millennials are highly connected and tech-savvy, Burberry decided to reorganize its marketing department and put up an internal creative content media team. Furthermore, another example of how digital and physical is mixed and integrated into Burberry strategy is the internal referring to its website. More consumers are now visiting
  • 48. MBA Thesis - Sustainable Luxury Fashion 48 Burberry’s website than their offline retail stores globally. Thus Burberry began to refer inside the company to its website as “the million square feet store”. Then, luxury fashion brands' management strategy is evolving due to the change in consumers' needs. The change from a single channel to a multi-channel to omnichannel strategy is due to the changing needs of consumers who are now expecting to interact personally with brands. Though the adoption of an omnichannel strategy, luxury fashion brands can stronger their brand equity and gain loyal consumers, through their global transparency by showing they have earned their reputation across all channels. After analyzing how luxury fashion brands should optimize their brand equity to gain consumers loyalty, we will analyze how the concepts of luxury fashion and sustainable development are linked to each other and how luxury fashion brands should integrate it to satisfy the needs of younger generations based on transparency, brand value, sustainable impact, and fast items access. 3.0 Luxury and sustainable development : relationship “I think we can only talk about luxury now if it is sustainable. I look forward to the term "sustainable luxury" becoming a pleonasm.”Barbara Coignet, 2019. Nowadays, consumers are expecting brands' radical transparency. With this transparency comes the need for corporate integrity and social responsibility. To survive in the current fashion industry, companies must provide transparency beyond the surface level. According to Kati Chitrakorn “Unless fashion brands adopt best practices from outside the industry and improve supply chain transparency from within, consumers will begin to wonder what they have to hide.” To adopt a transparent strategy, brands must adopt a more ethical approach. Indeed, given the situation emergency, the economy must react to ensure its sustainability. However, it is possible that luxury, by its very nature, has additional reasons to integrate sustainable development. According to Jean-Noël Kapferer, 2015 :
  • 49. MBA Thesis - Sustainable Luxury Fashion 49 "Very close to sustainable development because it feeds on scarcity, the luxury sector that sells intense happiness can not by definition accept to pollute and contribute to the ugliness of the planet". Luxury fashion must integrate sustainable development into its business strategy as younger generations are more and more demanding about brands’ transparency. Luxury fashion and sustainable development might look like opposite terms but many similarities are existing between luxury fashion and sustainable development. When sustainable development and fashion meet it forms the term: Sustainable fashion. Sustainable fashion is defined by Green Strategy 2019 as “clothing, shoes, and accessories that are manufactured, marketed and used in the most sustainable manner possible, taking into account both environmental and socio-economic aspects.“( 2012 – 2019 Green Strategy). If we take the trouble to go beyond appearances and return to the very definition of luxury, it appears that sustainability and respect for the environment should be an integral part of its DNA. 3.1. Durability and longevity of fashion items. First, because luxury fashion places great importance on the longevity and durability of its products. Luxury is by nature a vector of a timeless elegance that escapes the seasons, the ephemeral, it designs and manufactures quality products that accompany throughout a lifetime and thus carry in them implicit sustainability: consume better and less, unlike products with short life cycles and impulsive consumption stimulated by low prices. Luxury is in a long-term perspective, it does not feed on planned obsolescence, whether it is in the functions that it fills thanks to solid materials, contrary to fast fashion products whose quality is intentionally mediocre, or in its design, which aims timelessness. According to Kapferer & Bastien, 2009, “Luxury items are durable and even see its value grow over time". Luxury fashion items are passed from generation to generation. "Luxury is what you repair," says Jean-Claude Ellena, of Hermès. Therefore, most luxury brands provide after- sales service themselves and carry out repairs in their workshops. For example, Louis Vuitton guarantees its leather goods for life.
  • 50. MBA Thesis - Sustainable Luxury Fashion 50 3.2. Scarcity and garment respect As seen in the components of a luxury product, it is based on the scarcity principle. Raw materials are used to produce luxury products. It is then the role of luxury brands to preserve raw materials to keep their production efficiency. This scarcity principle thus pushes luxury brands to produce in lower quantity making the luxury and sustainable development compatible. Furthermore, luxury also takes account of garment respect. When producing, many fashion luxury brands are being careful of the respect of the garment at try to reuse most of it in their production. For example, in 1930, Emile Hermès came up with the idea of creating leather agendas to value unused scrap and kept in his workshops. Later, even smaller falls gave rise to the "Petit H" art collection. 3.3 Human and work respect Luxury items are designed and created to be timeless and sustainable in time. Timelessness refers to the fact that luxury goods go through the times while preserving their identity. In other words, they have a long history and their development takes place in respect of manufacturing traditions. Luxury favors skilled work and helps to enhance and preserve rare jobs. Luxury and sustainable development put the human relationship at the center. The luxury product is handmade and sold from one individual to another. To favor the method of artisanal production rather than the factory work at the chain is to respect the craftsman and his work. Hermès is the perfect illustration: using nomads from North Africa for metal belt buckles, the brand respects their pace and way of life, does not impose any time constraint on them and ensures them fair compensation - the exact opposite of the methods of sweatshops providing mass consumption. Belts are put on sale when the available volume is deemed sufficient, without a predefined schedule. Luxury distribution is also job-creating, unlike retail and more generally self-service, which dehumanizes and reduces staff to a few unskilled employees. The product (and even more the service) of luxury requires the intervention of the hand of the man and thus guarantees the maintenance of the jobs. Also, it is anchored geographically, and does not suffer offshoring: employment is therefore local and paid precisely, and the product does not travel too far. It's
  • 51. MBA Thesis - Sustainable Luxury Fashion 51 better to boost the economy with luxury than digging and filling holes. Luxury is a great way to increase Gross National Product (GNP), create jobs, promote international trade and increase wealth (Jean Castarède, 2008). In other words, they have a long history and their development takes place in respect of manufacturing traditions. The relocation of luxury is likely to be a break with the past of luxury homes and thus break the dream that consumers aspire. According to Jaffé and Nebenzahl 2001, the perception of brands for prestige or status products is strongly linked to that of their country of origin, which would make any relocation impossible. However, even if luxury and sustainability share common characteristics, many luxury fashion brands due to the intense competition of the fashion industry and the pressure of consumers to get items at a fast paste have outsourced their production and adopted a linear production model which is out of the basic principles of luxury. In the next part, we will analyze the current crisis luxury fashion brands are facing and how they should change their production model to a more sustainable one and get closer to the basic principles and definition of luxury.
  • 52. ACT NOW FOR A MORE SUSTAINABLE SUPPLY CHAIN IN THE LUXURY FASHION INDUSTRY IN LUXURY FASHION 52
  • 53. MBA Thesis - Sustainable Luxury Fashion 53 4.0. Act now for a more sustainable supply chain in the luxury fashion industry 4.1 Current crisis of the fashion Industry - The issues of the actual linear value chain According to the online journal TechTarget, a supply chain can be defined as the entire network of all the resources, activities, technologies and organizations involved. In the fashion industry the value chain is composed of different steps: 1. Growing fibers 2. Harvesting fibers 3. Ginning and spinning 4. Knitting and weaving 5. Processing 6. Cut-make-trim 7. Trading 8. Retailing Nowadays, many luxury fashion brands are working under a linear value chain model. The linear value chain model is defined as the process of extracting raw materials are from resource countries, shipped to manufacturing powerhouses, like China, and processed into fashion items. The issue with this mode of production is that it creates pressure on natural resources, pollutes the environment and creates a negative impact on society. This model is using an important quantity of nonrenewable resources to produce clothes that are worn for a shorter period than in the past (see figure 21) which end up in landfills or are incinerated. from resource
  • 54. MBA Thesis - Sustainable Luxury Fashion 54 Figure 21: Growth of sales and decline in clothing utilisation since 2000. Euromonitor International Apparel & Footwear 2016 Edition (volume sales trends 2005–2015); World Bank, World development indicators – GD (2017). Through linear manufacturing and distribution a high volume of scraps are produced and waste to satisfy increasing consumers’ needs and expectations to update constantly their wardrobes at a fast paste. Through fashion production, polluting chemicals such as dyeing chemicals and also toxic gases are released. Figure 22 : Simplified representation of today’s clothing system - Ellen MacArthur Foundation, drawing from Braungart & McDonough, Cradle to Cradle (C2C)
  • 55. MBA Thesis - Sustainable Luxury Fashion 55 It has been proved that fashion production has huge negative impact on the planet and biodiversity. The production causes resources depletion, water pollution, air pollution, habitat deconstruction, human rights abuses, food insecurity, animal suffering and climate change. Moreover, the huge volume of packaging and inefficient employees’ energy management in linear manufacturing and distribution are slowing down the production process. According to Ellen MacArthur Foundation, “less than 1% of the material used to produce clothing is recycled into new clothing, representing a loss of more than USD 100 billion worth of materials each year.” Figure 23: The negative impacts of the textiles industry are set to drastically increase by 2050. Circular Fibres Initiatives Analysis. If the fashion industry continues to produce as it does today the consequences could potentially be catastrophic. Indeed, if the fashion industry continues this path, it could “by 2050, use more than 26% of the carbon budget associated with a 2°C pathway” (Ellen MacArthur Foundation 2017). All fashion brands should thus change their current linear system to not reach the 2°C global warming limit.
  • 56. MBA Thesis - Sustainable Luxury Fashion 56 Furthermore, new regulations are implemented by governments globally to reduce fashion pollution and engage in better work conditions which will push brands to take action. For instance, in Bangladesh where the Rana Plaza factory collapse has killed more than 1,100 people and injured 2,000 people, new important regulations have been implemented. As an example, a strong program has been carried out in Bangladesh called “the Fire and Safety”. To improve security, prevent another manufacture's collapse and improve manufacturing facilities stricter rules and audits have been implemented in Bangladesh to improve working conditions for employees. According to the Business and Human Rights resource center in 2018, the remediation measures have permitted to reduce life-threatening and increase safety by 84% in Bangladesh with “proper fire exits and alarms” and “structural factory retrofitting”. However, even with these efforts, other achievements are required to successfully address workers’ and human rights in the fashion sector, notably discrimination, child labor, fair wages and freedom of association. Covering these gaps call for an important supply chain management system for the fashion industry. Based on a study on 457 fashion companies developed by Sustainalytics.com, the majority of fashion industry brands aren’t managing correctly their supply chain. Indeed, 56% of the companies audited were not disclosing supply chain management programs meaning these brands can still be exposed to reputation issues if new polemics emerge (see Figure 24). Figure 24: Supply Chain Management Programs (Percentage) from Sustainanlytics Research 2018.
  • 57. MBA Thesis - Sustainable Luxury Fashion 57 Thus, luxury fashion brands are facing many challenges all at once in 2019: ● the internationalization, ● the acceleration of the trend cycle, ● the increasing demand for quality and transparency, ● the environmental impact of their production, ● the need to reduce losses and increase profits in an increasingly competitive market. 4.2. Vertical Integration Strategy a solution to better control the supply chain In the past, luxury fashion production strategy was mainly based on a vertical strategy. A vertical integration strategy is a strategy where brands have control over their “suppliers, distributors or retail location to control the entire value or supply chain.” (Will Kenton, 2019). This strategy is extremely efficient to retain control over the quality and uniqueness of the merchandise and thus allows brands to ask for items premium price (Brun et al., 2008). Indeed, vertical integration is extremely efficient to control the entire production, distribution process, and improve efficiency due to the reduction of intermediaries in the supply and distribution chain. The vertical integration strategy can be integrated into all these production steps or only some steps: - Creation, design; - The production of intermediate goods (fabrics, leathers ...); - The manufacture of finished products; - Distribution, wholesale then retail. Due to increasing consumers' needs to update their wardrobe brands are outsourcing their production as they are being put constantly under pressure. According to the European House - Ambrosetti four elements are pushing luxury fashion brands to produce even more: 1. The proliferation of special projects, such as capsule collections and other collaborations. 2. The increase of the frequency of the launches 3. The unpredictability of the volumes 4. The obsolete information systems
  • 58. MBA Thesis - Sustainable Luxury Fashion 58 5. Luxury fashion houses are looking to reduce cost benefits through the outsourcing of their production to lower countries labour cost. Quelin in 1997 notes five factors that have pushed companies to massively outsource some of their production to third parties countries. This process is called disaggregation, where each activity of the supply chain is located in diverse locations. Figure 25: Value Chain Disaggregation, Mudambi 2008. The first element that pushes luxury fashion brands to outsource their activities is the refocusing of strategic activities. This first element means that only the functions that significantly contribute to the company's competitive advantage will remain in the fold of the brand. The second reason why luxury fashion brands have decided to outsource their production is the economies of scale and cost. Quelin said that "in some cases, economies of scale are much more easily achieved by the supplier than the company". A supplier providing orders of several brands could thus be able to deliver more efficiently than if each of the brands had their individual manufacture. The third element of brand production outsource is the reorganization of their politics. Luxury fashion brands are focusing their work more on their core activities based on their business type and more outsourcing activities having a less closed direct relationship with the brand. The fourth element is the technological changes. Brands are outsourcing because new technologies and information systems push brands to implement stronger and more strict controls. Thus, the outsourcing of production is a great way for brands to not take risks in investing in new technologies if they aren’t sure of it.
  • 59. MBA Thesis - Sustainable Luxury Fashion 59 Finally, the last reason why brands are outsourcing their production is the increase of the global competition pushing brands to outsource their production to stay competitive. However, not all brands are outsourcing their production and some are choosing vertical integration in some part of the production process. As we can see in the following figure, the vertical integration of the production varies based on the product type. Figure 26: Vertical Integration of the production varies based on product categories, IFM. French couture brands like Chanel or Hermès have chosen to internalize the production function. This internalization has for main objective to keep control over the product quality and the artisan skills that structure the production of luxury goods. This internalization of the production as been proved to be extremely efficient for luxury fashion brands as it permits to keep control of the entire value chain and thus to share a transparent communication to consumers. Furthermore, the use of a vertical integration strategy can improve brand benefits and turnover. Franck Delpal, an expert in vertical integration and a professor at IFM, a fashion school in Paris, told the New York Times: "If you control most of your supply chain, you get margins every step of the way and in the end, it can be very profitable.” In 2013, Kering bought one of the most renowned tanneries in France, France Croco, a Norman tannery specializing in the sourcing, tanning, and treatment of crocodile skin. By integrating sustainability into its entire supply chain and setting targets for its sustainability strategy for 2025, Kering has achieved unprecedented results. More importantly, the company "aspires to find commercial approaches and supply chain solutions that contribute to the restoration and regeneration of natural capital, support the protection of biodiversity, and treat health and safety by eliminating dangerous chemicals and respect the highest standards of animal welfare. "
  • 60. MBA Thesis - Sustainable Luxury Fashion 60 The strategy of integration can thus help brands to have a positive environmental impact thanks to the global brand control and to reduce production costs. To reduce the environmental impact of luxury fashion brands new KPI has been implemented to measure and help fashion companies to reduce their impact. The most impactful KPI to measure the actions and sustainable performances of fashion brands is the Pulse Curve. This curve permits to measure brands' actions over time and compare their engagement compared to their competitors. In 2019, the premium segment saw its Pulse Scores increase by one to three points over the last year. Figure 27: Pulse Scores by segment and sizes 2019 vs 2018. To keep improving a “roadmap to scale”, has been offered to companies to prioritize their sustainable actions. Sustainable actions are based on 4 enablers which allow companies to improve their sustainability practices: ● resources ● strategy ● traceability ● communication Through the next part, we will analyze how the integration of these 4 elements can permit to positively impact luxury fashion sustainable practices.