People are still spending money, but their hearts are calling the shots.
4 min read
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During the past decade, many luxury brands and markets are losing profits and gaining bad press.
Luxury brands like Burberry, Chanel and Louis Vuitton all admit to burning unsold stock to ensure it doesn't re-enter the marketplace at a lower rate, leading to environmental concerns and a debate over the common luxury brand practice.
Luxury vehicles are proving to be too niche for a changing market, as they are not embracing electric or standing out with a strong brand message. Maserati and Bently are both losing profits year over year and are predicted to discontinue new models in the upcoming years.
Related: Only Conscious Brands Will Survive The 2020s
The new luxury
As we move into the holiday season and 2021, consumers are re-examining their values and seeking out the “new luxury” — conscious brands.
Both examples above explain why brands that lack social responsibility or do not have a purpose-driven model may soon be extinct. Consumers are skipping over traditional luxury brands to purchase from companies that embody sustainability, inclusivity and a higher purpose.
A recent study by Sprout Social reports that two-thirds of consumers say it is important for brands to take public stands on social and political issues like immigration, civil rights and environmental issues.
The intensity of 2020 has only shed more light on these issues as we experienced the pandemic, the Black Lives Matter movement and the election.
As the population has been staying home, there has been no reason to dress for success and no need to drive a luxury car to work or out on the town.
Conscious intent
The focus has shifted from fancy details and scarcity of a traditional luxury product, to design, function and conscious intent. The new luxury consumer is mindful and proving to be loyal to brands with solid principles and practices.
It’s not that they are not willing to invest and or to treat themselves. In fact, online sales rose 43 percent amid the pandemic in September. People have more time on their hands and are still spending plenty; they are simply shopping with their values.
Brands who have embodied conscious practices have a chance to not only share where they stand on specific public issues but to drive real change. This presents an opportunity, and a responsibility, to stand for something.
The Honest Company, founded by actress Jessica Alba, is a perfect example. The website describes its beliefs. “We’re a wellness brand with values rooted in consciousness, community, transparency and design. And we’re on a mission to empower people to live happy, healthy lives. Every day and in every way, we hold ourselves to an Honest standard. Because we believe that what you put on, in, and around your body matters. A lot.”
Their baby care, personal care, feeding and nutrition products company was valued just under $1 billion as of October 2017, proving conscious intent and ethical consumerism is on the rise.
Related: Pivoting For a Need: Why Brands Are Changing Their Narrative in 2020
The opportunity
As we move further into a new decade, this less opulent form of luxury will continue to rise to the top.
In a recent BCG consumer survey, more than half of the respondents expected their preference to increase for luxury items that are understated, everlasting and values-based.
Corporate and social responsibility is evolving from being a “must-have” to being a lever to truly transform business.
Social commitment is a critical priority and can be achieved by beginning to integrate the following to remain relevant.
- Sharing your purpose and values, and demonstrating authenticity in all touchpoints.
- Take steps to address consumer demand for purpose and social consciousness.
- Focusing on diversity, inclusivity and sustainability throughout the business.
Brands that address the opportunities now will be in a better position to navigate the future. What remains to be seen is if traditional luxury brands will pivot or fade away.
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November 10, 2020 at 05:30PM
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Why Traditional Luxury Branding Is Out (And What's In) for 2021 - Entrepreneur
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